Mr. Speaker, I thank the government for giving us this opportunity, through Bill C-70, to speak not only on particular provisions of the bill, which enacts certain measures put forward in last year's
budget by the finance minister, but also to raise the whole issue of reviewing Canada's tax system.
I can tell you right off the bat that the official opposition will not support Bill C-70 at second reading stage, not because of any specific measure, but because of the lack of significant action on the part of the government regarding tax loopholes and the review of the tax system the Bloc Quebecois has been requesting since the Liberals came to power, nearly 15 months ago.
A little while ago, I listened to the secretary of state talk about an in-depth review of the tax system, of the openness of this government regarding the inequity and unfairness of the Canadian tax policy. Pretending to be concerned with equity and social justice, this government has done nothing to plug tax loopholes since it came to power.
All this is contrary to what the red book said. The government no longer refers to the red book, which was waved at us month after month, because it is ashamed. It can no longer establish any parallel between its election promises and its action in the area of taxation. In fact, the red book contained many Liberal policy statements on tax fairness, pointing out to the fact that in this great country which prides itself on being fair from coast to coast, as the Prime Minister likes to say, there are totally unfair situations.
As a matter of fact, the red book mentioned a few. It said that some corporations had not paid a cent in income tax for years because of the previous government's laxness and the fact that it supposedly had many friends among big business, which was not the case of the Liberal Party. The Liberal Party, too, had criticized the fact that, since 1984, personal income tax had increased much more rapidly than corporate income tax. If I remember rightly, according to what the Prime Minister said at that time, it wanted to correct all the unfairness and injustice in the tax system in the first two years of its mandate.
Since they have been in office, the Liberals have not fulfilled their undertakings. They have not fulfilled the promises they made during the campaign in order to get elected.
Let me give you some examples of unfairness in the tax system. Let us take, for instance, the family trusts. It is not for nothing that, for the past 15 months, since our arrival here, we have been saying, over and over again, that the tax rules for family trusts are unfair to all the taxpayers in Quebec and Canada. It is no coincidence if we have been pestering the government about every second day since 1993 about family trusts. It is because this tax system is truly unfair to Canadians, from whom the government asks more and more sacrifices because its finances are in a sorry mess, while at the same time the richest Canadian families are allowed to accumulate capital gains year after year without paying any income tax for up to 80 years.
Even the tax experts are divided on that issue. Some work for the very rich Canadian families, others take a view more compatible with the interest of the general public. Some of these, for the last two to three years and even since the review, four and a half years ago, of family trusts and the 21-year rule, have sharply criticized the perpetuation of such a measure and the possibility to defer income tax on capital gains for up to 80 years.
As the official opposition, we have made this issue one of our favourite themes, especially since we obtained sketchy information from the private sector and some Canadian universities that lead us to believe that hundreds of millions and even billions of dollars could be recovered by abolishing certain privileges linked to family trusts. We know that those trusts have become a major means of tax planning for the wealthiest Canadian families, individuals and companies.
We are not talking here about the principle of family trusts, which can be a good thing. We are not talking about the principle of family trusts, which may apply, for instance, to families with a handicapped child who will need to be taken care of in the future, even once his parents are dead. We are not against the whole idea, nor the administration of these trusts, but what we have been questioning since we arrived here, and even before, during the election campaign, is the fact that a millionaire can use this system to defer indefinitely taxes on his or her capital gains. We cannot accept that.
What did the Minister of Finance give us in his last budget? He wanted to look good. He said: Since I cannot stand the official opposition complaining about such a blatant case of unfairness and injustice in the tax system, I will mention the words family trust in the budget speech to shut them up in the future. But he forgot that we have ears to listen, eyes to read and brains to analyze.
When he brought forth his measure, saying that he would eliminate fiscal benefits for family trusts in 1999, he took us for something that we were not. He also took Quebecers and Canadians for something that they were not, because he knew very well that, by putting off to 1999 the necessary change only for family trusts, he was warning rich Canadian families four years in advance so that they could get ready and take out the hundreds of millions of dollars, even billions of dollars that they had put into these trusts and transfer them to other financial vehicles, other powerful tools of tax planning. We have not dealt in any way with all the tax loopholes that these rich families and all the big Canadian corporations can benefit from.
Is that how the government sees social justice, and fairness in the tax system from coast to coast? Is this how the government shows its concern? This government has only one concern: to look good. It does not matter what the substance is; the impor-
tant thing is to look good. The last budget, like the previous budget and Bill C-70 before us, shows us this government's propensity for cosmetic changes, for phoney tax reforms that do not change anything.
One should also look at the tax agreements signed with countries considered to be tax havens. We in the opposition refuse to let the government get away with this. We have been hounding the government since the last election campaign so that, ever since the 1994-95 budget, the Minister of Finance tried to silence us, to stop us from denouncing the inequities and tax loopholes in these tax agreements by putting up a smokescreen.
At that time, the Globe and Mail called the Minister of Finance, with good reason, the stand-up comic of Canadian tax policy. The minister presented things very dramatically but with such a lack of substance that, a few minutes after he delivered his speech, it was easy to see that nothing had changed with respect to tax agreements. Even the Auditor General of Canada said soon after the budget was tabled that, with the exception of some administrative adjustments allowing businesses to take advantage of tax agreements with countries considered to be tax havens, nothing had changed in the tax system in this regard.
What does this mean, that nothing has changed? It means that, again this year, next year, and in two, three or 10 years from now, the Canadian tax system will still provide for this kind of agreement, which is not a bad thing per se but which makes a big difference when such agreements are signed with countries used to shelter billions in Canadian and U.S. dollars, and tens of billions of dollars in European and Japanese currencies.
You know that such tax treaties enable certain Canadian businesses to open dummy subsidiaries offshore, carry out no business activities offshore, pay no tax or very little abroad, yet claim in Canada losses they did not even incur abroad, just for the sake of reducing their operating results in Canada and avoid paying their fair share to the Canadian tax authorities.
We are not talking about small and medium size businesses, the vast majority of which do their corporate duty and pay their fair share of taxes, but large corporations which can take advantage of loopholes in the Canadian tax system that were plugged neither in last year's budget nor in the finance minister's latest budget and are allowed to remain, although the Liberal government claims to be concerned about fairness in the tax system.
These tax treaties signed with 16 countries considered as tax havens are key to or at least instrumental in the federal government's improved performance in managing the Canadian tax system. Yet, the Minister of Finance continues to maintain that these are good tax treaties, that there is nothing wrong with these treaties and that, in this age of globalization and internationalization of trade, it is natural to sign tax treaties with other countries.
We have always maintained that it is natural to have tax treaties and that, when businesses open subsidiaries offshore and pay taxes abroad roughly equal to what they would have paid in Canada, such treaties should be signed to prevent double taxation and ensure that the production system in which Canadian businesses operate is fiscally equitable, promotes job creation and so on.
However, we are utterly opposed to signing with tax havens treaties which, in the opinion of the Auditor General himself, make no sense whatsoever. The internationalization and globalization arguments do not hold up when, by raising very little if any tax revenue from large corporations taking advantage of such tax loopholes, the fiscal position of Canada is not only threatened but made worse.
The Department of Finance stopped releasing figures because they are too shameful. In 1991, the last year for which such statistics were available-as statisticians would say-the last year before the previous and the current government felt to ashamed of these results, no less than 77,000 Canadian businesses did not pay a cent in tax. But then again, we were told it had to do with the businesses' production cycle. That is understandable.
We can understand that a business may need to develop its products or services over a period of one, two or maybe three years before turning a profit, gaining a share of the market, or preserving a share of the market for a specific product. However, there is a problem when the production cycle lasts for a period of five, seven, ten or twelve years, during which the business does not pay any taxes but registers a profit every year, such as the banks which made profits of $4.8 billion last year while paying hardly any taxes.
When I see that CN makes profits, pays its president a salary of $350,000 per year and grants him an interest-free loan of $400,000 to buy a house in Westmount, while at the same time acting in an inhuman if not barbaric fashion in the rail dispute, I wonder about this government's intentions and its election commitments regarding equity, social justice, the respect of rights, as well as fairness in general. Something is wrong somewhere. Incidentally, CN did not pay taxes either.
There is a problem with taxation and these few measures-although we feel some are valid-are so minor given the scope of the flaws in the Canadian tax system, which has not been reviewed in 35 years, that we simply cannot support and praise the government for such minor initiatives.
Among others, Mr. Séguin, a former Quebec revenue minister, says that, for 30 years now, the only changes to the federal tax system-I am not quoting him directly- were the inclusion of new elements or some minor reforms to that system, and that all this was essentially a top-loading exercise, in the sense that
new measures were added to existing ones, thus turning the Canadian tax system into a monster.
As a new member in the House, particularly as the finance critic, you do your very best to have a thorough grasp of all issues. And in order to do so, during the first months, in order to learn every aspect of the issues, you request a lot of documentation. I challenge you, Mr. Speaker, to try to read all the documents on Canadian fiscal policy. It is quite an ordeal when you consider all the explanatory notes, all the bills, all the related regulations, all the sub-regulations that have been added on. I challenge you to read all that within a ten-year period, and I will congratulate you if you succeed.
In the United States, under Mr. Reagan, they had the same problem. We all remember that one of Mr. Reagan's constant refrains was a reformed and simplified income tax system, even if he was more favourable to businesses than to individuals, but the intention was there. He reformed the American tax system and simplified it at the same time. You can always question the fairness of this process, the propensity to favour corporations and high income earners instead of low and medium income taxpayers, but in the end the tax system was simplified. People can see exactly what the taxation levels are. They can see where the system is unfair.
Here, we have to rely on experts or the members of the official opposition to scrutinize the tax system and tell the Canadian population what it really looks like. To point out to the Canadian people, for example, that 50 years ago, 50 per cent of all tax revenues were paid by individual taxpayers and 50 per cent by corporations. However, corporations nowadays account for around 17 per cent of all tax revenues and individual taxpayers make up the rest. We have to tell the people, because they will not hear about this from government members who tend to hide these things, just like the Liberal Party did during its first mandate.
I remember that it was then that the gap between individual taxpayers and corporations began to come to light.
Friends of the Liberal Party had already been taken care of during the earlier mandate of the Liberal Party of Canada, and it is still going on. Anyone can compare the list of large donors to the chest of the Liberal Party of Canada and the list of tax policies that have not been reformed because they are just what big corporations want.
When we see that the Royal Bank, for example, pours over $45,000 each year into the chest of the Liberal Party of Canada, we understand why in the last budget Canadian banks had nothing but a small income tax increase of $150 million over two years even though they made profits of almost $5 billion. We also understand why they are the main beneficiaries of the computer development programs provided by the federal government. When we see that the large corporations managing family trusts give between $35,000 and $67,000 to the Liberal Party's chest, we understand why they have until 1999 to adjust to the new family trust provisions. I find it-