Finance Committee on Feb. 16th, 2021

[Gabriel Ste-Marie, Bloc, Joliette, QC]

This possibility could be considered. First, it depends on the negotiations; second, it depends on the will of the government. Does it want to keep public service jobs in the regions? Is it important to them? It is to us, of course.

[Alain Therrien, Bloc, La Prairie, QC]

In economics, this is called optimal resource allocation.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That is indeed one of the possibilities proposed by this bill. We could stop paying two people to do the same thing and use resources more efficiently. We economists understand each other.

[Alain Therrien, Bloc, La Prairie, QC]

So we're talking about 2,968 people available and already paid...

[The Chair, Liberal, Wayne Easter]

Thank you, both.

[Alain Therrien, Bloc, La Prairie, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

I'm sorry, Mr. Therrien. We'll have to end it there.

We have Mr. Julian next, followed by Mr. Kelly.

Go ahead, Peter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

Thank you again, Mr. Ste-Marie.

I strongly disagree with Ms. Dzerowicz, who just said that the federal government has taken some steps to counter tax evasion. As you know, the Parliamentary Budget Officer has already told us that $25 billion a year escapes from the Canada Revenue Agency because it ends up in tax havens. Why is that? Because, as we know, the government has never provided these officials with the tools they need. We were told that this summer and I know you are aware of that, Mr. Ste-Marie.

Officials said they could not reach a single person or large company mentioned in the Panama Papers, the Bahamas Leaks or other documents containing information related to tax havens because they lacked the legislative and administrative tools necessary to counter massive tax evasion, which costs us at least $25 billion each year.

Mr. Ste-Marie, can you tell us how we could change this situation?

On the other hand, one sometimes hears criticism of the information-sharing agreements that are currently in place with Canada. Could you tell us how this information would be transmitted under a single tax reporting system?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Julian, thank you for your comments.

I totally agree with you.

Like you, I believe that the illegal and immoral use of tax havens is a gross injustice. Why can the wealthiest and the multinationals use these systems with impunity?

Quebec held a parliamentary commission on the use of tax havens and one of its major conclusions was that the power is in Ottawa. Even if Quebec wanted to do more, it is very limited since it does not have access to information abroad.

This is the bet I'm making. If this bill is passed, Quebec will have the power to do more against tax evasion or tax avoidance. It could certainly inspire Ottawa to do the same, as it has done with subsidized child care programs and pharmacare. These are Quebec projects that you are pursuing. Quebec also collects QST from the Web giants, and Ottawa is now getting ready to do the same. This could prod Ottawa to move forward on tax havens.

At present, even if the Quebec National Assembly has the will to act, it does not have the power to do so since it does not have access to the exchange of information. However, the system would be fairly simple to put in place and the issue could be resolved by the adoption of this bill.

If we compare what Americans are doing about the Panama Papers and the Paradise Papers...

[The Chair, Liberal, Wayne Easter]

Thank you, Gabriel. You're on a roll there.

We'll go to Mr. Kelly and close off with Mr. Sorbara.

Mr. Kelly, go ahead.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Congratulations, Mr. Ste-Marie, on the passage of your bill at second reading.

I agree with you, it's a good idea.

We proposed more or less the same thing in the last Parliament. I know you supported the Conservative motion that we made then. It was a good idea then, and a good idea now, to get Quebeckers onto only a single tax return. I don't think anybody would want any Canadian to have to duplicate that process each year.

Your bill, though, is very specific to Quebec. What would you say or comment to other provinces that might wish to be the tax collector for their province? This is an idea that has been discussed in other provinces. The fair deal panel in Alberta examined the issue. I understand that this issue is, of course, much more urgent to people in Quebec, who already have to file two returns. I'm quite certain that nobody in Alberta would want to file two returns. Would you support any other province that might prefer that?

Alberta, for example, has its own tax collection department as well, but only for corporate income tax, not for personal. In Alberta, corporate filers, including small business operators, have to file two tax returns, and there are thousands of them in Alberta that do and probably would prefer to file only one.

Do you have any comment on how your bill or a similar one might apply to other provinces?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for your comments, Mr. Kelly.

First of all, I would like to congratulate you on the quality of your French. I took notes. You will have the opportunity to practice speaking your excellent French with us. Thank you for your consideration.

I would remind you that, according to the Constitution, taxation is one of the areas of provincial jurisdiction. Ottawa asked the provinces for permission to collect taxes after the First World War, then for debt repayment after the economic crisis, after the Second World War, and again for debt repayment. Ottawa assured the provinces that this was temporary.

In 1954, Quebec reminded Ottawa that these measures were to be temporary. Quebec therefore asked to manage its own tax returns.

Essentially, taxes are a provincial responsibility. Each province chooses to let Ottawa collect taxes, but there is no obligation to do so.

Currently, the law allows Ottawa to collect taxes on behalf of the provinces. However, the reverse is not true. This bill wants to allow that to happen. Since Quebec is a nation and since the National Assembly unanimously requests it, we want to allow Revenu Québec, therefore the Province of Quebec, to collect taxes for Ottawa.

The model has been set up. Alberta can use it as a model, if they wish.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

When we debated the single tax return motion in the previous Parliament, critics of the motion at the time raised concerns about the different definitions of income in Quebec. I would anticipate you're going to hear these objections again, perhaps directly from officials in the next panel. What would you say to critics who point to that as a significant obstacle to getting Quebeckers onto a single tax return?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for the question.

The purpose of the bill is to make life easier for taxpayers. If the Canada Revenue Agency uses definitions other than those of Revenu Québec, it is entirely possible for Quebec to obtain the information and transmit it to the Canada Revenue Agency. This is what is done for the harmonization of the GST and the QST. Ottawa changes the percentage of the GST as it sees fit, and Revenu Québec collects the tax according to the income, quite simply.

If the single tax return is adopted and it turns out that the definitions are different, Revenu Québec will be able to automatically convey the requested information to the Canada Revenue Agency, and Ottawa will continue to exercise full sovereignty with respect to its tax policy in Quebec.

The goal is to simplify the process by eliminating duplication of work and reducing paperwork.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

We'll wrap it up with Mr. Ste-Marie with you, Mr. Sorbara, and then we have to go to a motion for Mr. Falk, a very fast one.

Mr. Sorbara, go ahead.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair. I have about two minutes, from my understanding.

[The Chair, Liberal, Wayne Easter]

No, you have three and a half or four. Go ahead.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

It's great to be here with everyone this afternoon on a very important topic.

Mr. Ste-Marie, it's always nice to see you. Thank you for your interventions today.

One comment and one theme that we've touched upon this afternoon has been the theme of tax evasion. We know we expect all Canadians and all Canadian organizations and businesses to pay their fair share of taxes so that we can provide the wonderful services that we do to Canadians. Through the pandemic, obviously, the federal government has provided the Canada emergency response benefit, the student benefit, the wage subsidy, and a number of programs, and also supported Canadians in long-term care homes, including in the province of Quebec. We had the Canadian Armed Forces, the Canadian military, go and assist in long-term care homes, both in the province of Quebec and in the province of Ontario. It's great to see a team Canada approach being taken during COVID.

With regard to tax evasion, though, Mr. Ste-Marie, and Mr. Julian as well, our government—and I sat on the finance committee for the first four or five years after we won the first election—made it a priority to fight tax evaders both here in Canada and abroad. For example, in the 2013–14 fiscal year, the CRA had the resources to perform only 43 audits related to international tax evasion. Remember the years under the Conservatives, when agencies and departments were starved and had their budgets cut back and couldn't get the resources, including shuttering veterans offices across Canada. We know the Conservative record. The number of audits that were taken went from 43 in 2013–14 all the way to 1,463 in the last fiscal year. We invested over a billion dollars into the Canada Revenue Agency so they can have the resources to make those investigations that are necessary.

To go on, Mr. Ste-Marie, and to my colleagues, I just want to point out that in budget 2016–17 we had anticipated these investments would generate additional assessments of $5 billion by fiscal year 2022. But in fact, by April 2020, we had already exceeded $6.6 billion in assessments with regard to fighting tax evasion both here in Canada and abroad. We currently have 55 ongoing criminal cases with an offshore tax evasion component, and we've had 32 criminal convictions for tax evasion. So when we look at the government's record over the last number of years....

What we also have to remember is that Canada must enter into tax treaties with foreign jurisdictions. One of them—and I was glad to work on the finance committee—was with regard to base erosion and profit shifting, BEPS. Again, the Canadian government was taking leadership with our partners internationally, doing what's right, ensuring that all Canadians, whether on an individual basis or organizations, pay their fair share of taxes.

I do need to correct the record, Mr. Ste-Marie, and—

[The Chair, Liberal, Wayne Easter]

What is your question?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

My question is this: Wouldn't you recognize that the Canadian government is doing what's right for Canadians across this country, including the wonderful people who live in Quebec?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you very much, Mr. Sorbara, for your comment and your question. It's always a pleasure to speak with you, here in committee and in the House. You have a brilliant mind, and I love to listen and interact with you.

According to experts in the field of combatting tax evasion and abusive tax avoidance, and according to international comparisons made in the Base Erosion and Profit Shifting (BEPS) project of the OECD, the Organisation for Economic Co-operation and Development, Canada remains at the tail end of the pack. This is the opinion of all international experts. The number of convictions in Canada is far lower than elsewhere.

So there is still a lot of work to be done, and Quebec would like to do a lot more. This bill would give it the means to do so and could perhaps inspire Ottawa in the future.

[The Chair, Liberal, Wayne Easter]

We will end it there, because we have another panel to go to.

Thank you, Mr. Ste-Marie, for coming forward. Congratulations on getting your bill this far. It was a very interesting exchange.

With that, Mr. Falk, you have a quick motion, I think, that you want to put before the committee, but before you do that—I see him sitting out there with a B.C. flag behind him—welcome to Ed Fast, a new member of the committee. He is the shadow minister for the official opposition, which brings better balance. Now we have two from the Atlantic and two from B.C. there, Ed. We'll balance it up with the central Canadians.

[Ed Fast, Conservative, Abbotsford, BC]

I'm glad to join you all. Thanks, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Welcome.

Ted, go ahead.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

I too want to welcome Mr. Fast to the committee. We're looking forward to his participation and leadership here at this committee.

Because of that, we're currently in a position where we have no vice-chair. I would like to nominate Pat Kelly to fill that position.