Mr. Speaker, before I get into this subject any further, in the limited time at my disposal, I must take a moment to situate this bill. Bill C-70 implements measures from the budget, last year's budget, that is. It was tabled at first reading before this year's budget. It is a series of fairly technical measures, highly complex ones true to the image of today's tax system. We will be examining these measures further in committee, so I will spare you all the details.
One measure was the focus of discussions before and after the elections and within the Liberal Party and has been raised by the Bloc Quebecois as well since the elections. It is the whole issue of foreign affiliates, commonly known as tax havens, raised by the Auditor General. This fairly voluminous bill contains various measures. A number are indeed positive. However, it does not go very far and it skirts a number of issues. This could be called a timid reform, which enables the government to say that it has satisfied some of the Auditor General's requests, but it does not go far enough. There is no mention of the list of countries with which we have tax agreements. Sixteen countries are listed as having agreements deemed to be sources of problems.
The aim of tax agreements is to avoid or enable businesses to avoid double taxation. This is laudable and understandable. The problem arises when different countries have different tax rates. At this point we start talking about fickle businesses. They produce in various countries, sell their products from one business to another and with the cost transfers, manage to switch profits and losses between countries. This causes problems because profits are transferred to places with the highest rate of taxation and losses can be deducted in others.
And then you have countries like Canada, where interest charges are allowable expenses. This makes matters worse and it is an extremely complex task to tackle corporations with operations in several countries. Slightly higher, stricter standards are set for them, to determine whether they are really producing, but the fact remains that it is not easy to figure out, particularly when rates vary widely. So, there is a need to look seriously into this and not in a piecemeal fashion as it has been the case for a while now.
This brings to mind the whole Liberal approach to taxation. When they were in opposition and during the election campaign, the Liberals used to say that the way to deal with taxation was not piecemeal but comprehensively. So far, not much has been done in this respect. A piecemeal approach continues to be applied to very technical, complex issues. Sometimes positive measures are taken. Still, they miss the main point, that is to say streamline the whole system, make the tax system less complex and easier to understand, which furthers the goal of transparency and restores people's confidence in their institutions and elected representatives, particularly as regards this trust that was lost.
I wish to take this opportunity to draw a parallel with a tax matter on which the government made a rather clear commitment, namely to do away with the goods and services tax. If you think back a little, originally, when this legislation was first passed, it was fiercely opposed by the Liberals in this place, the other place and everywhere. They opposed it even more strongly in the days and months that followed, going as far as promising, during the election campaign, to replace it within two years, that is to say by January 1, 1996, eight months from now. But there is no concrete proposal on the table yet. Considering how long it takes to develop and draft this kind of document and how quickly the GST was implemented, causing a great many problems, it is safe to assume that the government will be unable to honour and fulfil its commitment in the next eight months. Furthermore, this is another reform characterized by a piecemeal approach.
I will get to elaborate further on this subject in the second part of my remarks, to be continued when debate is resumed. I just want to say for now that this bill contains some good measures, which we will consider in committee. There is one in particular that we will consider thoroughly and it deals with foreign corporations. But we will do so bearing in mind that this piecemeal approach must end. A more comprehensive approach to taxation must be taken.