Finance Committee on June 22nd, 2021

[The Chair, Liberal, Wayne Easter]

Okay.

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

Mr. Gallivan has been here before. We haven't had the minister here in a while. The minister can answer the question, please.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, Mr. Kelly is asking questions about administrative matters. My role, as Minister of National Revenue, is not administrative, unlike the Conservatives when they were in power and did not hesitate to try to intervene in the integrity of the tax system. If Mr. Kelly wants to obtain accurate information in answer to his questions, Mr. Gallivan will provide him with it.

[The Chair, Liberal, Wayne Easter]

Okay.

If you have a very quick comment, Mr. Gallivan, I will give it to you, but be very quick.

[Ted Gallivan]

Again, I would say the discrepancy in time allowed is driven by the complexity of the case and the burden of proof, as opposed to any type of preference or softness on the part of CRA.

[The Chair, Liberal, Wayne Easter]

Okay. We'll move on to Ms. Dzerowicz, followed by Mr. Ste-Marie.

Julie.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I offer a warm welcome to the minister for being here today.

Mr. Gallivan, welcome to you in returning to our committee.

There's a false narrative put forward by the opposition that our federal Liberal government has done nothing to tackle evasion and tax avoidance. We heard from Mr. Gallivan that we've actually made a significant investment since 2015 in terms of tackling tax avoidance and tax evasion. There has been $444 million invested in 2016, $523 million in 2017, $90.6 million in 2018, $150.8 million in 2019, and an additional $304 million in this year's budget.

Minister, we also heard, as you mentioned, that this significant investment of over $1 billion has resulted in over $5 billion of identified additional tax avoidance coming into our coffers.

We've also heard that there's the International Consortium of Investigative Journalists, who do a bit of a ranking. They're the ones who broke the Panama papers and they've ranked Canada nine out of 80 in the world. We're among the top in terms of actually being able to tackle these issues on a global scale. Therefore, I want to give a huge thanks to you for your leadership, and a huge thanks for the leadership at the CRA, for the extraordinary efforts and work that they have done. Thank you for that.

To truly appreciate our efforts and how far we've actually come, can you take a few moments to add a little context to our government's efforts to fund the fight against tax evasion, by describing the situation at the Canada Revenue Agency when you took over as minister in 2015, after nearly a decade of Conservative cuts?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, I thank my colleague for her question.

I agree that combatting tax evasion is a difficult task for the government, a serious and complex one that takes time. We are tackling these very profound problems and very wealthy people who have the resources to hire the best lawyers and the best teams.

On the question of the Panama Papers, the government has invested over a billion dollars and has identified 900 Canadians. More than 200 audits have been completed and 160 audits are underway.

We have given the CRA the tools and resources to fight tax evasion. That fight was not a priority for the Conservative government, as was even confirmed publicly by one of their former ministers of national revenue, Jean-Pierre Blackburn.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Minister. My next question is the following.

As we speak here today, the Conservative Party is filibustering budget 2021. They're not only putting the continuation of COVID emergency support programs in danger, but they're also putting in danger a lot of the additional dollars.

I mentioned the $304.2 million allocated in budget 2021. They're putting all of that at risk in our fight to continue to tackle tax evasion and tax avoidance. Can you go into detail about why passing budget 2021 is critical and how the fight against tax evasion would be harmed if the Conservatives continue to hold it up?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, my colleague is asking me an important question.

In fact, all the work that has been started by the Canada Revenue Agency has to continue. In budget 2021, we propose to eliminate the loopholes that allow people to avoid paying taxes in Canada. We are providing an additional $304 million to modernize and improve the CRA's capacity to fight tax evasion. For the next steps, we want to modernize and improve Canada's general anti-avoidance rules.

I often hear the Conservatives talk about “the Liberals' pals” and it makes my hair stand on end. Because I have been at the Canada Revenue Agency since 2016, I have been able to see that it is the Conservatives who protect their pals. The Conservatives are the ones who don't want the wealthiest people, the ones with the means to pay lawyers and delay the processes, to pay their fair share. They are the ones who protect their pals, Mr. Chair, not the Liberals, who want everyone to pay their fair share.

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

Point of order, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

There is a point of order. Who is it from?

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

I raised a point of order, Mr. Chair. The Conservatives have not been in power for six years. We would like the minister to answer our questions rather than making partisan speeches.

[The Chair, Liberal, Wayne Easter]

Mr. Julian, that's not a point of order. That's debate.

You have about 50 seconds left between the two of you.

Ms. Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Maybe based on that question, as was already mentioned, over $1 billion has been invested into taxing tax avoidance and tax evasion, and that is recent.

I would give an opportunity in the remaining seconds to ask the minister to describe the impact of our government's investments in the fight against tax evasion.

[The Chair, Liberal, Wayne Easter]

Minister, you have 30 seconds or less.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, in 2019‑2020, more than 1,100 audits were done, unlike what was done in the past. For example, in 2013‑2014, 43 audits were done. So we see that the work is bearing fruit.

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll go on to Mr. Ste-Marie, followed by Mr. Julian.

Mr. Ste-Marie, I believe you're in the room. Go ahead. The floor is yours for six minutes.

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

Thank you, Mr. Chair.

Like the minister, I too want to wish you a happy birthday, Mr. Chair.

I am going to start with a statement. Then I will ask my questions.

Hello, Minister. Thank you very much for being here this afternoon.

The committee has already been working on the problems of tax evasion and tax avoidance for some time, in particular on the tax schemes put in place by KPMG, providing a financial vehicle to enable certain of its clients to reduce their tax payable. In light of the internal documents relating to this plan provided to the committee by KPMG on May 17, 2016, this could be a form of tax evasion, so of something illegal.

All these problems are extremely complex, as you acknowledged and pointed out in your speech. Today, for example, we can read in La Presse that data from the Canada Revenue Agency show that its recent efforts to combat tax evasion by the richest Canadians have not led to any charges or convictions. The same kind of article can be read on CTV.

Experts have appeared here to tell us that there is a feeling of impunity toward the government and the CRA, among the users of the tax havens and the tax law experts who create their schemes. We have been told that to put an end to this kind of behaviour, the United States brought out the heavy artillery to deal with KPMG: investigations by the Internal Revenue Service, threats of searches and of charges of obstructing justice, penalties, criminal charges of fraud and conspiracy against the firm and its officers, and threats to charge the firm with being a criminal organization. Here, there has been none of that. Instead, the CRA has proposed voluntary disclosures and still nothing has been resolved with the clients who did not agree.

The experts reminded us that it is not possible to control what we can't see. Unfortunately, as you said in your testimony, the Canada Revenue Agency does not have access to all the information for doing these audits. For example, KPMG keeps going to court so it doesn't have to share its information with the CRA. The experts denounce the appearance of impunity and unfairness for the rich clients and the companies that create these schemes. They conceal their information from the CRA and contest the requests in court. At the committee, it is extremely difficult to get answers to our questions, to shed light on this entire matter. There are even witnesses who refuse to appear, in spite of the summons issued by the committee. These are no jokes!

I repeat: it is important to shed light on this entire matter and get to the bottom of things. We have to be able to put in place laws, regulations, processes and guidelines to prevent any form of tax evasion. That is why I am asking you, as Minister of National Revenue, to initiate a public inquiry into the matter of the schemes created by KPMG that enabled Canadian taxpayers to collect money in the form of gifts or otherwise, money that was not included in the tax returns of the recipients, from companies in the Isle of Man or any other country, as section 231.4 of the Income Tax Act empowers you to do. I believe the committee could also adopt a motion to that effect a little later.

Do you want to initiate a public inquiry, Minister, please?

Thank you.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Thank you, Mr. Chair.

I thank my colleague for all of his preamble and his long question. I have sincere sympathy for the victims of fraud and I understand how much it can affect their lives. However, I can say that under the provisions of the Income Tax Act, I can't comment on any specific case. As my colleague knows very well, I cannot give and I will never give the CRA any instructions concerning criminal investigations.

As is the role of our government, my role is to provide tools and resources so that the CRA, which is autonomous, can do its own work. Out of respect for the obvious principles of judicial independence, politicians must not ever interfere in investigations. That would be really very inappropriate.

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

If I may, that is not at all what I asked. The committee's limitations are clear, and the only solution, the only tool, for shedding light on the entirety of KPMG's offshore activities is the public inquiry.

We are not talking about an investigation before the courts. You, as the Minister of National Revenue, are the only one who has this power under the Income Tax Act; you can ask for a public inquiry to be held to get to the bottom of things and shed light on the situation. In my opinion, that is what should be done.

I will ask you again. Please, can you ask for a public inquiry to be held into this entire matter so we can get to the bottom of things?

Thank you.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, as you all know, committees are independent. You manage your own business.

What I am seeing at present is that my colleague wants to play police officer. I invite him to give up his seat as a member and apply for a position as an investigator with the RCMP, where there are vacant positions. He would probably be happier there than in his present position.

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

I am extremely disappointed to hear such nonsense being given as an answer.

In the United States, a senate committee held an inquiry that has changed things. It is our role to do that here. My role as an elected representative, and our role as a committee, is to ask the minister to initiate a public inquiry to get to the bottom of things. There are enough points to be raised to ask for that.

We are not getting any answers, other than being told to change jobs. What a load of nonsense. She is the one who has the power.

Is she going to do it, yes or no?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Chair, I am going to ask my colleague to vote on budget 2021, which sets out proposals that really are even more useful for eliminating the loopholes used to avoid paying taxes in Canada, and that allocate additional money to the CRA so that it can modernize and improve its capacities.

In addition to all the work done and the agreements signed by the countries, I am also very happy to see that the United States has embarked on the same path. We are therefore going to work in collaboration with our partners. As I said at the outset, this is a long and complex issue, and I understand very well that the public are offended. We are continuing our work and we truly want to combat tax evasion. This is a priority for our government.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Julian will be next, and then we have a split between Mr. Falk and Mrs. Jansen, followed by....

Mr. Sorbara, if you're replacing Mr. Fraser, you're in the next round after Mrs. Jansen.