Debates of March 19th, 1996

Supply

[John Richardson, Liberal, Parliamentary Secretary to Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, I am wondering whether the hon. member for La Prairie is sure of his facts because of the nature of the governments in the EU. Some of them are federal, some of them are unitary and some of them have taxation at the municipal level. Is he sure of his facts that they are all rolled up into one total? It seems to me from my studies that it was not the case.

[Richard Bélisle, Bloc, La Prairie, QC]

Mr. Speaker, I think that even if we do not take into account the debt of regional and local governments, what we call towns and municipalities in Canada, we could quite easily consider the debt or deficit of provinces. Since data are not always comparable between local, regional or municipal governments, it is true that they can hardly be added to the total amount.

If you consider only provincial deficits and add them to the federal deficit, there is no doubt that even next year or two years from now we will still be above 3 per cent of GDP. To be very conservative I would say that the percentage will be 5 per cent and in the case of provinces which are more indebted, like Newfoundland and Quebec, it could even be higher.

I concur agree with the hon. member when he says that an increasing number of provinces are eliminating their deficit. A majority of provinces will eliminate their deficit, in some cases this year but even more next year, but Ontario and Quebec still have large deficits. Therefore, if you add the deficits of the two main provinces to the federal deficit, I do not believe it will be at 3 per cent, but probably much closer to 5 per cent.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, I would like to begin by thanking my colleague from La Prairie, and congratulating him on his excellent address to us this morning, and

particularly on the quality of his research. We can tell that he has made a special effort to seek out information that was not readily available, particularly all the different labels for tax shelters, which are supposedly in place to stimulate economic development-but we may well doubt that.

I would like to hear the comments of the hon. member for La Prairie concerning the reaction in various quarters, particularly within the Bloc Quebecois, to the setting up of the "expert committee" the Minister of Finance has seen fit to create for the purpose of evaluating the business taxation system.

One comment made was that, because of its membership, setting up a committee of this type is in some ways like setting the fox to guard the henhouse. I would like to hear the comments of my colleague for La Prairie in this connection since this appears rather strange even for some members who are tax shelter specialists, particularly at the international level.

[Richard Bélisle, Bloc, La Prairie, QC]

Mr. Speaker, I thank my colleague for Trois-Rivières for his question. I think the government has gone half the distance. I concur with the Minister of Finance, who this week told the member for Saint-Hyacinthe-Bagot, the official opposition finance critic, that the government wanted tax haven expertise in setting up this committee.

I agree with him that the members of this committee on corporate taxation, a committee of experts, are well qualified in matters of tax havens. But only half the distance has been covered. In technical terms, the necessary expertise will be there. What the committee lacks, however, is political credibility-the other half of the distance to be covered.

For it to have political credibility in the eyes of Canadians and Quebecers, I think it would have to include-and this is what the member for Saint-Hyacinthe-Bagot calls for in the motion he tabled this morning-elected representatives, members of Parliament, to show Canadians and Quebecers that the committee would not be just in the hands of tax haven experts.

I would also like to point out that, in terms of credibility, the greatest weakness, as the opposition pointed out in question period yesterday, lies in the fact that six of the eight members of the committee annually contribute, and contributed in 1994, $80,000 to the Liberal Party.

I would have included parliamentarians, which is what the Minister of Finance should have done to increase the committee's credibility. With what we see of contributors to the Liberal Party, they-and I showed this earlier in my speech-will save tens of millions of dollars a year for their clients investing in tax havens. There is no credibility because there are no parliamentarians on the committee.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I listened with great interest to the remarks made by the hon. member for La Prairie, who says that the technical committee was established by the minister to review Canada's business taxation system and to ensure that this system is competitive world-wide. He said that the committee would not be valid since no parliamentarians will sit on it. But he forgets that, normally, in our system, any bill stemming from such reviews goes before Parliament first, then to the finance committee and then back again before Parliament. There will be ample opportunity for us, as parliamentarians, to discuss, to assess the bill and to question witnesses and the bill's sponsors. Our task, as parliamentarians, consists in dealing with the findings of reviews.

By asking some of Canada's leading experts to examine our business taxation system, we will not only get to know our system but also those of other countries with which we are currently competing for investments.

We must make sure that our taxation system is competitive, because in today's economy it is imperative to attract investments. We must retain in Canada those investments we have at present and, as we know, there are other countries where incentives and tax preferences are offered to attract investment, and thereby jobs.

The official opposition is trying to give the impression that the government has favoured the rich, has favoured corporations and has done nothing to deal with the taxation of them. Let me spend a few moments going over some of the measures we have taken in the three budgets which have been brought down by our government since taking office.

In 1994 we eliminated the $100,000 capital gains exemption. We reduced to 50 per cent the deduction for business meals and entertainment. We dealt with certain tax shelter schemes using convertible debt. We required that financial institutions recognize accrued gains. We eliminated the special 30 per cent investment tax credit. We modified the basis on which insurance companies could claim reserves. We tightened the rules applicable to foreign affiliates and increased the reporting requirements. We have tightened the rules on the forgiveness of debt. We have increased the refundable tax on dividends received from a private corporation. We have cleaned up some of the abuses dealing with research and development. We have increased the tax on large corporations by 12.5 per cent. We have increased the corporate surtax by 33 per cent.

We have introduced a 12 per cent capital tax surcharge on banks and other deposit taking institutions. We have dealt with family trusts. We have announced reporting requirements for all foreign investments made by Canadian residents that are $100,000 or over.

We have announced rules getting rid of tax deferrals which use private corporations as the vehicle. We have extended the taxation of non-residents on their gains with respect to Canadian capital property. We have dealt with premature recognition of tax losses.

We have dealt with some of the overly generous provisions related to labour sponsored venture capital funds. We have extended the temporary capital tax on deposit taking institutions. We are clarifying and tightening the rules on the resource allowance but we have made sure the accelerated capital cost allowance can now go to other projects, including the tar sands. We have also announced many new measures to deal with the underground economy.

This is not the record of a government that is stand pat, that is in the backpocket of any group of Canadian taxpayers or that is not prepared at any moment to examine the tax system in terms of its fairness and its equity.

I want to deal very briefly with some of the ideas put forward by the official opposition in terms of what it is suggesting we should do from a fiscal point of view.

The Bloc Quebecois said on page 90 of its dissenting report to the prebudget report handed down by the finance committee on January 17: "The finance committee ought to have put forward many more specific recommendations for fighting the deficit. The Liberal MPs on the finance committee have chosen instead budgetary imprudence".

This is the opposition party which said: "You cannot cut payments to the provinces. You cannot cut spending on social programs. You cannot cut spending on payments to seniors". How was it recommending that we exercise even greater budgetary prudence? How was it recommending that we cut the deficit even further?

Let me use that party's exact words. It said: "We must eliminate those fiscal inequities that favour large corporations and high income taxpayers". The official opposition wants to impose more taxes on large corporations and high income tax payers. Well, I just went through a list of about 25 changes we have made in the past three budgets which affect those very groups.

What do Bloc members want in addition to those we have suggested? Let us look at their precise words. They suggested two ways it could be done. One, we must deal with all tax agreements signed with countries viewed as tax havens. They are ignoring the fact that the government has already undertaken measures dealing with the taxation of foreign affiliates and dealing with reporting requirements. What does the Bloc view as a tax haven? Any jurisdiction which does not impose taxes higher than Canada.

The hon. member for La Prairie commented that many of the countries we have signed tax treaties with levy much lower taxes than Canada does. It is obvious.

They do recognize that our rate of taxation in Canada is much higher than in many other parts of the world, including European countries and the United States, and not just in known tax havens, such as Barbados, the Turks and Caicos islands, Bermuda.

They do not recognize that we already have a system which does impose taxes on the income from these various countries.

If a Canadian invests through an offshore company in passive investments, all the income under the foreign accrual property income rules, FAPI, is taxed every year to the Canadian whether it is brought back to Canada or not. Full Canadian rates apply.

Do they oppose that system? They will say no, which is good. They want the income that comes from a tax haven even while it accrues to be taxed at full Canadian rates. Since they do not disagree with the rule that applies to individuals and corporations with passive investments in these countries, they must be suggesting the active business income earned in a tax haven must be taxed as it is earned and not as it is remitted to Canada.

We have a system with a global aspect of multi corporations. Some of those taxes are not paid because the income is deemed by the rules of Canada, the United States, Europe and every other major taxing jurisdiction as having actually arisen in that foreign tax jurisdiction, be it Bermuda, Switzerland, the Netherlands or the United States.

Are they saying that if the active business income earned by a foreign affiliate, by a foreign subsidiary of a Canadian company in the United States, is not taxed at rates up to the Canadian rate that it should be taxed at the Canadian rate? Suppose a foreign affiliate in Tennessee is taxed at only 30 per cent while the Canadian tax rate is 50 per cent. Are they saying the tax rate there should be brought up to the full 50 per cent Canadian rate on all of those profits even if they are not remitted to Canada? Obviously they are because to them-

-a tax haven is a country where the rate of taxation is lower than ours, in Canada.

Certainly they would say if it is earned in Bermuda we should be taxing it at the full Canadian rate of 50 per cent, even if there is an active business operation, actual employees and actual business transactions carried on there.

No other country in the world imposes taxation on that basis. They are saying that no matter what happens any Canadian company on its profits earned anywhere in the world must pay taxes at the full Canadian rate even if the profits are not remitted here.

We happen to have a totally different system at work in the world. It is a system where the host country, the country where the work is actually carried out, where the people are employed, where the business activities take place, is given the primary responsibility for international taxation, and this is right. If an American subsidiary carries on business in Canada its profits are taxed at the full Canadian rates, not at the American rates. This is the system we have chosen to enter into.

Why do we have tax treaties with most of these countries? There are two reasons. The first is to eliminate double taxation. In other words, if it is taxed abroad, in the country where the business activity is carried out, it will not be taxed in Canada. The second is to ensure that taxes are paid.

A major part of these treaties is to enforce the taxes that are justifiably owing by any of the two treaty partners. It is for the enforcement of taxation and the exchange of information among the taxing authorities in those two jurisdictions to see that this takes place.

I have a challenge for the Bloc Quebecois. A provincial budget should be brought down in Quebec in the next few months. Will their provincial colleagues tax every multinational corporation based in Canada at the Canadian rate of taxation instead of those rates imposed by the applicable foreign countries with which Canada does business?

Will the Parti Quebecois members in their next budget respect their colleagues here in the House of Commons and adopt the exact international tax provisions they are proposing to us? Will they impose that same type of tax regime on multinational drug companies in Quebec? Is that their intention?

Let us get real. I wish they understood the type of regime they are dealing with rather than only partially understanding it and saying: "Liberals, you cannot cut any transfers to the provinces. You cannot cut spending on any social programs but you have to be even more fiscally prudent than you are. In other words, you have to get the tax revenue up and you get it first of all from ending these so-called relationships that involve corporations doing business in other countries in the world that have a lower tax rate than Canada imposes".

Are they not more interested in the jobs and the investments that come from having a tax system which is internationally competitive because we are in a global economy?

I will bet their colleagues in the next budget in Quebec are more concerned about jobs, international competitiveness and having a fair tax system so that corporations pay their fair share but in a way that is multinationally, internationally competitive.

That is what this committee of experts established by the Minister of Finance is setting out to do. It is to look at whether there are impediments in a corporate tax system that preclude foreigners from establishing in Canada, creating more jobs in Canada, or that preclude us from having our fair share of international tax revenue. Dealing with these tax treaty systems was the one way, the one pot of gold to be tapped by the Bloc Quebecois members.

The second was they said there are certain corporations in Canada which pay no taxes but we will impose some type of minimum tax. If you have suffered tax losses in previous years you should not be able to carry them back in order to eliminate the taxes that might otherwise be payable by a corporation. They said: "There must be a true minimum tax on corporate profits. This minimum tax is not aimed at increasing the fiscal burden on business; it is aimed solely at those profitable businesses which manage to pay not a single cent in taxes".

A study was done by the NDP government in Ontario, carried out by the fair tax commission. It looked at the tax returns of corporations in 1989. It found that 23,000 Ontario corporations reported profits but paid no income tax. The commission tried to look into the reasons for this. Fifty per cent of the untaxed profits came from intercorporate dividends, i.e. one Canadian company owned by another Canadian company. The one company may be taxed on it but it then pays the dividends to another company. Are those profits to be taxed again?

Do we want double taxation of corporate profits? I put that to the official opposition and to the Parti Quebecois for its next budget. Is that what is intended, intercorporate profits by way of dividends taxed twice?

Eleven per cent of these untaxed profits came from loss carry overs. Are Bloc members suggesting that if a corporation makes a million dollars this year but loses a million dollars next year it should not be able to average those out?

In Canada we can carry corporation tax losses over for about 10 years. Maybe it is too generous. In the United States they can do it for 15 years. This is one of the provisions that should be looked at by this technical committee being established by the minister.

Thirteen per cent of the untaxed profits were due to capital cost allowances. Does this mean we should not allow businesses to write off the costs of acquiring new robots, new computers, new equipment, new machinery and new buildings? Is this what they are saying? Are they saying capital cost allowances are too generous?

[The Deputy Speaker]

I am sorry, but the hon. member's time is up.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, I listened with great interest to my hon. colleague's speech and I appreciate it. What we mostly wanted to consider in this House today is the motion put forward by my colleague, the hon. member for Saint-Hyacinthe-Bagot, with regard to the famous committee set up by the Minister of Finance, which-as the hon. member for La Prairie pointed out-is comprised of friends of the government. This is not a bad thing per se. This is not so terrible. These friends of the government are there to give advice to the Minister of Finance. They also make large contributions to the Liberal Party's coffers.

What the hon. member for Saint-Hyacinthe-Bagot proposes is to include in this committee parliamentarians from all political parties represented in this House, including Reform, who will be happy to attend and participate, as well as the Bloc Quebecois. Of course, the party in power, not wanting to be left behind, will also delegate some of its members.

The hon. member refers to parliamentary committees. It must be pointed out that most parliamentary committee members come from the party in power. It is simply human nature. If I were in their shoes, I would probably do the same. However, they sometimes make decisions that are contrary to common sense just to avoid embarrassing the government. Government members on the committee will use their majority to give priority to their own interests. This is what is happening in the parliamentary committees the hon. member was talking about earlier.

I would remind the hon. member that, despite all the good faith shown by parliamentary committees in the last 30 years, we still have to deal with a $600 billion debt. Whether the hon. member likes it or not, this $600 billion debt was not run up by the Bloc Quebecois. Yet there it is, bigger than ever.

The hon. member wanted to know why we wanted parliamentarians to sit on this committee set up by the Minister of Finance. It is precisely to explain things to those outside the party in power who have expertise in this area. Bloc and Reform members would simply like to show these people the auditor general's 1994 report, which referred to some cases of abuse by corporations with foreign subsidiaries.

Let us take an example: suppose it costs a mining company on Quebec's North Shore $20 to produce one tonne of iron ore. The company sells that ore to its affiliate in Nassau, Bermuda, or somewhere else, for $21 a tonne, thus making a profit of one dollar, which it reports to Revenue Canada and on which it is prepared to pay tax. However, the Bermuda affiliate did not do anything with the ore; it did not pay anyone. It resells the ore for $75 a tonne, thus pocketing a profit of $55 without having to pay any tax in Canada.

The hon. member says that the affiliate should not have to pay anything, since it did not do anything in Canada. Why should we tax some poor foreigners? The Auditor General of Canada raised the issue in his 1994 report. This is precisely what the Bloc Quebecois is discussing.

Obviously we have no interest, nor any right, in taxing a company in Timbuktu that does not even know that Canada exists. This is not the idea. We want to target Canadian affiliates that are set up on the sly, in a tax haven, to avoid paying considerable sums of money to Revenue Canada.

This is our goal, and I ask the hon. member who just spoke if he realizes that there are many such cases and that something ought to be done.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, whenever a Canadian corporation sells services or goods to a foreign affiliate, whether in a tax haven or elsewhere, the sale must be done at arm's length. Under Canadian regulations, the price cannot be artificially fixed to avoid paying taxes. Should a company attempt to do that, we would have grounds to go after it and we would also have the support of tax authorities in the other jurisdiction, because of our tax convention with that country. Indeed, we have signed such treaties precisely to try to solve problems like that.

The hon. member said that those selected by the minister to sit on that special technical committee are friends of the Liberal Party. I happen to know a few of these people and some have never voted for the Liberals. But I can also tell you that they will never vote for the separatists either. I personally have a great deal of respect for the professionalism, the expertise and the experience of those selected to sit on that committee. These people can help us because they are real experts.

We need this kind of advice to have a competitive system and to promote job creation in Canada.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, while I do not support the Bloc's motion today, I am somewhat surprised at the Liberal opposition. I know the hon. member for Willowdale has considerable business experience.

I am surprised, given the track record of Liberals and taxation, and looking for ways to wring more money out of the Canadian taxpayer and Canadian business, they are not writing down all the suggestions that the Bloc is putting forward as new ways to get taxes from Canadians and from Canadian business.

The member for Willowdale talked about the underground economy and how the Liberals are dealing with it. That brings me to the reason for the underground economy, the dreaded and hated GST.

Does the hon. member recognize that the GST is the single greatest contributing factor to the underground economy and does he recognize that the underground economy is not going to be conquered until this Liberal government lives up to its promises to abolish the GST?

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I thank the hon. member for Prince George-Bulkley Valley for his question.

The GST is not the single greatest cause of the underground economy. The GST is 7 per cent. A much higher tax is the personal income tax which is 54 per cent in Ontario.

If people were going into the underground economy to avoid taxes otherwise payable, they would have a 54 per incentive to do it in the personal income tax system, which I happen to think is at the ceiling of what can be charged and should come down as opposed to a 7 per cent tax incentive to do it on the GST.

When this tax is harmonized with various provinces, when compliance with the tax has been made more simple for small business, when the tax is included in pricing so it is fairer to consumers, it will be an even better tax. I know the member will support those provisions because they will cut down the cost of public administration, help small businesses and help consumers. It will be in the interests of all of us.

The member asked if I am not interested in finding ways, whether they come from the Bloc or not, of increasing taxes. We are interested in finding fair ways to ensure that the tax burden is shared. We want to get rid of the underground economy. It is not fair to those who are paying their taxes that there are some people who might be abusing the system and not paying their fair share. This is one of the big areas on which we want to clamp down. The minister mentioned ways in his budget and there will be other measures coming forward in the future.

We want to end abuses that take place through the use of offshore companies just as Bloc members suggest. However, they have come up with a whole new system: offshore profits must be taxed at full Canadian rates. We would be the only country in the world that was doing this. What would happen to Canadian based multinationals? What jobs would flow out? Are they going to do this for Quebec based companies in their next budget? They would be insane to and they will not do it. I will make that prediction.

If some companies are abusing the system, such as using unfair transfer pricing or not having fair market value attributed to goods and services, then we will come down on those companies, be they Canadian or foreign owned, like a ton of bricks. That is our promise.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, I am always surprised when I hear about the very knowledgeable experts who will be advising us. We have been listening to experts for thirty years and the debt stands at $600 billion. So perhaps we should start to look seriously at who the real experts are in Canada.

I am speaking to the motion put by my hon. colleague, the member for Saint-Hyacinthe-Bagot. This motion essentially says that the technical committee to examine taxation announced by the government is in complete conflict of interest.

I am pleased to speak today on this topic, which is of concern to all citizens of Quebec and of Canada, but which does not seem to be all that troubling to the government. I want to talk about taxation, because that is what people are talking about. They are talking about tax collection. Taxation is admittedly not a very popular topic these days, with the state of the economy going from bad to worse. But, in fact, we are going through some difficult times economically. We are also witnessing the gradual disappearance of the middle class, another topic that is not often discussed.

The people of this country have had it up to here with taxes, with having their pockets emptied by one government after another, with watching each successive government hand over the deficit to the next for 30 years now. And all the government can come up with as a solution is cuts. It cuts certain programs and overburdens taxpayers in an attempt to make up the shortfall. In this year's budget, the Minister of Finance was supposed to be reassuring with his announcement that there would be no tax increases.

This cosmetic budget, as was shown in the speeches that followed its reading, is just a show aimed at saving face for the government. It does nothing more than camouflage the real cuts. It will be recalled that the 1994 budget saw government cuts of $44.9 billion over five years. In the 1995 budget, the government again cut $42.7 billion. This year's was perhaps intended to be reassuring by making only another $1.9 in cuts to various programs, yet this is the year taxpayers will bear the full brunt of the measures passed earlier but coming into force only this year.

Why do cuts have to be made? Because public finances have to be put back on their feet. The deficit must be eliminated, of course. The government claims that it has gained the upper hand and that it has solved Canada's financial problems. These are false statements. According to its own projections, the present Liberal government expects that, by the end of its mandate, this year's mandate, it will have added close to $110 billion to this country's debt. We are on the verge of clicking over to the $600 billion mark-our Reformer friends would be able to tell us when, since they are doing a countdown minute by minute.

The Minister of Finance has also announced a deficit reduction. He is patting himself on the back for it, claiming the honours are his. Let him if he wants to, but the only reason the deficit has lessened is that the economic situation last year was better than in previous years, and the Liberals had little to do with that. It is the low interest rates, the increase in exports and the unemployment insurance fund which have contributed to reducing the deficit. Digging into the UI fund is almost like garnisheeing everybody's pay cheques. Without those three things, we would be back in a recession.

Concretely speaking, this year's budget marks the end of efforts to restore Canada's finances. With this budget-and the same goes for all previous ones-the Liberals have done nothing to settle the matter of public finances. Yet we know that this is the one and only thing the public is calling for.

The Bloc Quebecois has long been calling for the government to get its finances in order, ever since we came to this House in fact. Not by getting more out of the ordinary taxpayer, but by collecting from those who do not pay their fair share into the public purse. Regardless of what our friends opposite have to say, a lot of people in Canada do not in fact pay their fair share. Last year, there was over $6 billion in unpaid taxes, and the government was unable to reduce this amount compared to the previous year. As we just said, it preferred to draw $5 billion out of the unemployment insurance fund, which amounts to a general confiscation of people's salaries.

We have also been calling in the past two years for major government reform of tax treaties between Canada and certain countries. Business taxes must be completely overhauled. According to the Minister of Finance's most recent estimates, approximately $10 billion in incomes go untaxed. Not only must the tax system be overhauled, but an end must be put to tax avoidance, also known as tax havens, because this is where we lose the most. My colleagues in the Bloc speaking before me have clearly shown how, in recent years, companies providing advice on the use of tax havens have made a lot of money and are tripling, quadrupling and sometimes quintupling their clientele.

I would like to talk about tax havens very briefly. There are real loopholes in some of the treaties between Canada and other countries, which allow individuals and companies to lower their

level of taxation significantly. What is not paid on one side, is obviously passed on to others. This is how a number of foreign countries become what are called tax havens-not for the middle class, but for the companies using them.

The area of tax havens is a highly complex one. We cannot hide the fact that the Canadian Income Tax Act is the most complex piece of legislation of all, and my colleague for Saint-Hyacinthe-Bagot, who spoke before me, pointed out that the greater the complexity, the easier it is to find loopholes. So, the section on foreign corporations is no doubt the most complex section in this most complex law.

Since Canada deals with several countries, and since each country has its own tax system, it is difficult to get our hands on exact figures-especially in those countries where they are confidential-regarding the extent of the problem and the amounts involved. But financial experts agree that nearly all major Canadian multinationals use tax havens as part of their tax strategy.

It has become a tax strategy in itself. They are not abroad necessarily to produce something. Corporations use tax havens as a strategy to avoid paying taxes; they derive several advantages from this.

The same experts also agree that the popularity of tax havens has reached unprecedented levels. Several elements show the size of the problem. Earlier, my colleague from La Prairie mentioned several corporations such as International Privacy Corporation which use and give advice on how to use tax havens. He made his point brilliantly and I will not go over it again.

In order to fully understand this tax haven phenomenon, we have to get back to basics. The general rule is this: any business income and any income earned by a Canadian corporation must be taxed, whether earned in Canada or abroad. But to every rule there is an exception; therefore, the legislation provides that a Canadian corporation can receive a business income from an active affiliate, without paying any tax on it in Canada, provided that the foreign affiliate is located in a country designated under the Income Tax Act, that is to say one of the countries with which Canada has entered into tax arrangements.

In the end, this means that a Canadian corporation with a branch in a designated foreign country does not pay taxes on the branch's income abroad. This provision was originally included in the law to avoid double taxation, as the previous speaker from the Liberal Party has just explained, by both Canada and the foreign country. The Canadian government considers that the income earned abroad

is taxed at about the same rate as in Canada. Tax havens were created on the basis of this false assumption.

This has had two major consequences. First of all, some countries have very low tax rates that hover around 2 or 3 per cent, while Canada's tax rates are in the 40 per cent range. Technically speaking, this gap can only lead to a tax inequity that costs the Canadian government millions of dollars.

Second, foreign subsidiaries can transfer their dividends to the controlling Canadian corporation without paying any taxes on them. In other words, the law allows corporations to transfer the losses of foreign subsidiaries to the parent company, to transfer Canadian corporate income abroad, and finally to shelter income that is normally subject to tax by transferring capital to foreign subsidiaries. One of my colleagues gave a very good explanation earlier of how corporations manipulate prices by buying something in Canada at a certain price from a foreign subsidiary and then selling it on foreign markets in order to make a profit in a tax haven.

The auditor general's 1992 report-which was widely quoted at the time but which was also, like all other reports by the auditor general, shelved and largely forgotten after being talked about for ten days-gives some 20 examples of tax havens. I will quickly go over four of them to at least show what the Auditor General of Canada thinks about this.

The auditor general gives us four examples. First, a U.S. corporation affiliated to a Canadian company has $684 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the affiliated U.S. corporation was used to reduce its U.S. tax losses. Interest charges on the money invested in the U.S. corporation are deducted in Canada. Although the Department of National Revenue, Taxation considered that investment income was subject to a source deduction, this manoeuvre allowed the corporation to transfer U.S. tax losses to Canada. That is what the auditor general tells us.

Here is another example. An American corporation affiliated with a Canadian company holds $672 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the American corporation has been used to absorb its American tax losses. The interest costs on the funds invested in the American affiliate are deductible in Canada. This scheme has effectively transferred American tax losses to Canada. Mr. Speaker, how lucky these people are to be able to transfer their losses just about anywhere.

A third example quoted by the Auditor General of Canada in 1992, specifically on the use of tax benefits, tax avoidance and tax havens, is that of a Hong Kong corporation affiliated with a Canadian company and holding $62.4 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the Hong Kong corporation has been used to absorb tax losses incurred in Hong Kong. The interest costs on the funds invested in the Hong Kong affiliate are deductible in Canada. This scheme has effectively transferred Hong Kong tax losses to Canada. The tax avoidance section at Revenue Canada-Taxation has been following this case since 1990.

One last example-out of several pages of examples-is that of the Canadian company which has an interest free advance of $1.6 billion and a $133 million investment in an affiliated corporation in the Netherlands. This investment has generated $130 million in income, which is not taxable as foreign accrual property income for the foreign affiliate. In spite of the fact that this foreign affiliate's income has not been taxed at a rate similar to the one applicable in Canada, these $130 million can be transferred to the Canadian company tax free. Not only is this foreign income not subject to tax when brought into Canada, it entitles the corporation to federal and provincial tax credits for dividends paid abroad. These companies end up getting credits on top of it all.

I explained earlier how the Income Tax Act, the taxation legislation, is one of the most complicated acts in Canada and I think that the examples I have just given you are cases in point. The Auditor General of Canada works hard at making sure that very complicated cases can be understood by the general public. Nevertheless, a great deal of concentration is still required to read things like that. And these are just a few examples.

However, they illustrate how widespread the situation is. There are other indicators of the scope of the problem. In his 1992 report, the auditor general took a look at Revenue Canada's data bank. He discovered that, until 1992, Canadian corporations had invested $92 billion in non-resident companies with which they did not deal at arm's length. In 1990, these Canadian corporations received dividends totalling over $4.2 billion from foreign affiliates.

Of these $92 billion, $5.2 billion was invested in businesses in Barbados, which is a tax haven. In 1990 alone, Canadian corporations received over $400 million in dividends from companies based in Barbados. These dividends were not taxed in Canada.

All these figures are taken from the auditor general's report. A total of $10.9 billion was invested in businesses in Cyprus, Ireland, Liberia, the Netherlands and Switzerland, all considered to be tax havens. In 1990, Canadian corporations received over $200 million in dividends from companies run in these countries alone. These dividends entered Canada free of tax. That was in 1990. Then there is 1992 and other tax havens.

Recently, we have been hearing a lot about the Cayman islands, and also the Turks and Caicos islands. These places have become very popular, not as sunny destinations, but for wealthy Canadian individuals and corporations. Corporations do not go there to enjoy the sun, but to take advantage of the tax benefits. The information returns compiled by Revenue Canada do not, of course, provide an accurate idea of the scope of the financial dealings taking place

between parties in Canada and abroad. Some data is incomplete and certain types of transaction are not listed.

But it is a known fact that people who do business in tax havens are allowed some degree of discretion and do not have to report to Revenue Canada all the profits made in these tax havens.

What the auditor general said was that it could reasonably be assumed that hundreds of millions of dollars in tax revenues had already been lost and would continue to be at stake.

I could have added another ten pages to my speech, but I see that my time is slowly running out. However, I would come to the following conclusion. Faced with the Bloc's proposals to review Canada's tax system, which we have kept reiterating ever since we have been elected to this place, the minister now says that he will finally set up a technical committee on taxation.

When our colleagues opposite tell us that the greatest experts in Canada will sit on this committee, we do not dispute that fact. I am totally convinced that the best experts in Canada will sit on this committee. However, what we are questioning is what has become obvious to everyone else, which is that this will be a closed committee, a committee on which no members will be allowed to sit but that will be made up of the very same people who advise companies on tax havens. There is an obvious conflict of interest here.

We are talking about the very same people who use these tax havens and a lot has been said about these companies, such as Price Waterhouse and Ernst & Young. These companies have affiliates in at least five tax havens. They are right in the middle of a conflict of interest, and all the minister has to propose is a mini-reform done behind closed doors.

In other words, we will bring together the best experts in Canada, the very same people who show corporations how to avoid paying taxes, and we will ask them to carry out a study on the best way to ensure these companies do pay taxes. This does not make any sense. If the government, the opposition or even the Reform Party have no representatives on this committee, it will be a phoney committee which will not even have an agenda.

We are told that a report will come out later and that, when it is released, the population will be able to review it. When will that be? After the next election? After another referendum? There will never be a tax reform and we are sorry about that. We also regret that this committee will be both judge and judged. We regret the committee's lack of openness and we hope that members of Parliament will take part in the tax study this technical committee will carry out.

[Bernard Patry, Liberal, Parliamentary Secretary to Minister of Indian Affairs and Northern Development]

Mr. Speaker, I want to thank the member for Anjou-Rivière-des-Prairies for his speech. I would like to make a comment because I do not want Canadians to be left with the impression, after what the member just said, that the present government is reducing the deficit on the back of workers and on the back of the most vulnerable people in our society.

When we took office in October 1993, the deficit for 1993-94 represented about 5.9 per cent of the GDP. For the fiscal year ending at the end of this month, we have brought the deficit down to approximately $32.7 billion, with a cushion for the finance minister. This will be about 4 per cent of the gross domestic product. For the coming year, we had predicted in our red book that the deficit would be down to 3 per cent of the GDP or around $24 billion and, furthermore, the finance minister has told us that, for the 1997-98 fiscal year, the deficit will be down to $17 billion or 2 per cent of the GDP.

I want to remind the member that, when we took office, government spending amounted to $120 billion and that it will be down to $109 billion for the coming year and possibly to $106 billion for 1997-98, which is a reduction of $14 billion or 12 per cent.

The member also talked extensively about tax havens in his speech and my question relates to that. According to the member, it seems that thousands and thousands of Canadians do business with other countries to avoid paying taxes here.

Can the member please tell me and tell the House how many Canadian corporations take advantage of tax havens, according to his research?

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

That is a very good question to which I have no answer. And I have no answer precisely because we are being presented with a committee of experts on which we have no seat. We would just like to work with this committee, which will include Price Waterhouse, and Ernst & Young, in taking a thorough look at taxation.

If, after that, we see that there actually are not a lot of companies using tax havens to evade taxes, we will bow to the facts. However, in 1992, the Auditor General of Canada spoke of billions of dollars, from what little he could tell, that were not being taxed and recommended a review of the tax system. What we are being served up is a phoney review, which will be carried out behind closed doors, without representatives of the government or the opposition or even the third party, without any sort of parliamentary representatives, and we are being asked to reply to questions to which we do not wish to reply.

I hope that my hon. colleague will be among those who will try to convince the government that there should be representatives of Parliament on this committee of so-called experts, and we will be able to give him figures at that time.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I will be sharing my time with my colleague from Durham.

Today, the opposition has decided to move a motion deploring the federal government's decision to hold consultations on the taxation system.

I wish to congratulate the government and the Minister of Finance for this initiative, for it is a highly significant one. I cannot personally claim to be an expert in tax reform, nor do I believe that any of my colleagues here in the House are experts in that area.

If they are, my colleagues will all have time to voice their opinions, whether Liberal, Bloc or Reform. After all, every day in this House we have a chance to make proposals, to pass on our ideas and proposals to the government and to the Minister of Finance, not only on tax system reform, but on any other matter before the House of Commons.

I would respond to my colleague by saying that, since we were elected, the federal government has taken all, or most, of the measures required to put a dynamic economy in place, one that satisfies the public.

One need only look at what the government has done over the past two years in connection with the deficit, which is a matter of concern to all Canadians. Our government has promised to control the deficit. I am sure my opposition colleagues will be able to find it in themselves to congratulate the government for controlling the deficit for two years running. We hope it will continue to be controlled in the years to come.

The private sector has long been asking the government to control the deficit, because, by controlling the deficit, there will be a lot more money for social programs, old age programs, youth programs and health programs. It will also create an atmosphere that would encourage the private sector to create jobs in Canadian society.

Another thing the private sector has long requested of the government is control of the rate of inflation. At the moment in Canada, inflation is at its lowest point in 30 years. This is quite extraordinary, and we should be proud of what the government has done in this area.

The other thing Canadians and the private sector have asked the government to do is control interest rates. People in business, people with mortgages on their home and people who need to borrow to pay their debts will have an opportunity to borrow at a low interest rate. Since our arrival here, the interest rates have been low.

The third thing is economic indicators. If we look at what the government has done up to now, we see that Canadian society and Canada's economy are the strongest among those of all the industrialized countries. The economic indicators are very encouraging. This is one area where the federal government should be congratulated, because it has done something very interesting and of great significance for the private sector and the people of Canada.

Furthermore, in the budget the Minister of Finance delivered in this House, an extraordinary program was implemented. I wish my hon. colleagues opposite would congratulate the government on taking action. For instance, they should look at what the Minister of Finance said in this House about improving assistance to Canadian companies and industries involved in research and development; they should look at what this government has done in terms of reforming seniors programs; they should look at what it has done in terms of reforming programs for Canadian youth, and for students in particular, who will be out looking for work within two or three months and in the next year; they should look at what the government has done for exports. Finally, the Minister of Finance told us that the government would be introducing concrete measures to help Canadian companies export even more.

Why did he say that? Because, ultimately, Canada's economic growth depends directly on the export rate of Canadian products. We must realize that many of the jobs we have in Canada exist only because one company or another is exporting to other countries. It is therefore very important that we put in place measures to help these companies trade in exports. I would say that our government has taken active measures in this respect. My colleagues and myself congratulate the Minister of Finance on his action in this area.

There is also the fact that small and medium size businesses in Canada have been creating and continue to create the majority of new jobs in this country. Again, the federal government took active measures, especially regarding banks that lend money to small and medium size businesses. The government has invested some $50 million in helping small business.

I would expect my hon. friend from the opposition to congratulate the federal government. I would not expect the Bloc Quebecois to use an allotted day just to attack the Minister of Finance's initiative. The Minister of Finance wants to involve experts in the taxation reform. He wants to discuss this matter with the public.

He is looking for proposals and suggestions. This does not prevent any of our colleagues, on either side of this chamber, from telling us how they would go about revising the taxation system. Mr. Speaker, I thank you for allowing me to say a few words on this

subject and I expect that now one of my hon. friends opposite will jump to his feet to congratulate the government on a job well done, right?

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Yes, congratulations.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, of course, I will not go as far as to commend the Minister of Finance for this initiative, which I think is phoney. I remember very well that, last week, the Secretary of State for Agriculture, no less, told me they had consulted with dairy producers before cutting their subsidies by $8,000 a year on average.

He seemed to suggest that dairy producers had agreed to let the Minister of Finance cut their subsidies by $8,000 a year. In fact, dairy producers were not consulted. I simply wanted to draw an analogy with the phoney consultation our good Minister of Finance is in the process of setting up.

He is travelling all over the place to sell his ideas, which we are already familiar with. Earlier, my distinguished colleague from Anjou-Rivière-des-Prairies talked about numerous Canadian companies that get incorporated in islands with very low tax rates, including the Bahamas. The Minister of Finance, who is listening to us, knows exactly what I mean, since he himself takes advantage of some corporate tax loopholes.

The consultations they are about to hold remind me of those that took place in the dairy industry. A few days before the referendum-and I would like my colleague to comment on this-Laurent Beaudoin was interviewed on Maisonneuve à l'écoute . In response to Mr. Maisonneuve's question, the Chairman and CEO of Bombardier revealed that they had paid no income tax in the last three years and that he could not even remember the last year in which they had paid taxes.

You must be uncomfortable. Your hands must be shaking when you vote in favour of legislation cutting funds for the little people, including UI recipients, when you let millionaires, even billionaires avoid taxes entirely. There is no need to consult anyone.

[The Deputy Speaker]

The hon. member must always address the Chair. I believe a question was put. We will let the other hon. member reply.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I will simply say that the hon. member's reaction shows that the government is on the right track. As for the matter he raised, to the effect that some company did not pay any tax last year or the year before, I will not go into the specifics of the case, but one must be able to do some basic calculation. When a company makes profits, the government is there to tax it. However, when a company does not make profits, the government simply cannot tax it. This is very simple and this is what the government has done. I want to point out to the hon. member that 500,000 jobs were created since our government took office. These 500,000 jobs were created thanks to the tax measures taken by our government.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

You also put 500,000 people out of work; therefore, the end result is zero.

[Mac Harb, Liberal, Ottawa Centre, ON]

I can tell the hon. member that our government's initiatives in the last two years have resulted in an increase of 500,000 jobs in the Canadian economy. Therefore, the hon. member should rise to congratulate the Minister of Finance and the government.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

You will have to wait for a long time.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I am happy to share my time with the member for Ottawa Centre.

I rise in debate today on the Bloc motion which is basically concerned about the government's hiring a technical advisory group to advise on the issue of business taxation.

It is an odd thing. From time to time we discuss business taxation here in some very strange formats. The reality is corporations are fictitious creatures of the legal system. There is no such thing as a corporation. We cannot touch it. We cannot feel it. The reality is when we tax corporations they simply use that taxation to turn around and treat it as a cost of production and allocate it to consumers. The only true taxation is taxation of individuals.

The underpinning of this motion is a concern that people who are experts in the field of taxation somehow should not be advising the government. Of course, nothing could be further from the truth. As I look over the roster of the people who are in this technical advisory group, I see Mr. Brown, chief executive officer of Price Waterhouse, and Nancy Olewiler, a professor and chair of economics at Simon Fraser University. These are people who are eminently involved with economics and business taxation from across Canada.

This is not the end of the process. These people are basically advising the government in the areas of business taxation.

The concern of a lot of people is with two things, tax simplicity and fairness. There is a great feeling that our system is not fair. There is a great feeling also that it is far from being simple.

We have to continue to keep our corporate structure attractive for Canada to be a place to do business in. Clearly if our corporate tax structure was such that we inhibited businesses, new businesses would not start in Canada. Consequently we would not reap the benefit of employment caused by that.

The whole issue of fairness talks about how people are taxed under the existing system. I will deal with one aspect of fairness which concerns me. It concerns me so much so that I presented a

private member's bill, Bill C-215, now before the House. I do not think people realize we have had spiralling rates of taxation in Canada. As we have had spiralling rates of taxation we have asked our collection agency, Revenue Canada, to be ever more judicious in extracting that money from the general public.

As a consequence, some of the things we ask Revenue Canada to do, for instance the seizure of bank accounts, even the sale of a spouse's residence on the demise of her husband, are really questions of whether government should have those kinds of power and whether we should temper them.

My private member's bill addresses this matter. There is a taxpayer's bill of rights in the United States. In the United Kingdom there is a taxpayer's ombudsman. Basically that is what my bill proposes to give to the people of Canada, some kind of an intermediary between taxing collection authorities and people in general.

Many members have seen in their ridings situations of seizures of bank accounts. Sometimes Revenue Canada makes a mistake. We are all human and we sometimes make mistakes. When Revenue Canada makes a mistake the credit rating of the company or individual is blemished and there is no real recourse in the system other than a very expensive litigation process.

I refer to a single woman in my riding who because of the taxation of child benefits incurred something like a $1,500 tax liability to Revenue Canada. She is paying that back over a two-year period. She dealt with two or three collection officers and the third one decided to be very aggressive and seize her bank account, getting a total of $94. The woman had been paying as agreed. Through the process she had a heart attack and lost two weeks of work. She is out $800 and there is no real prospect of getting that back from the system.

My bill tries to deal with some of those inequities. In some ways the motion of the Bloc is concerned with the fairness of the system.

There is much talk that our tax system is not simple. Well over 50 per cent of individuals who file tax returns do so on their own. They do not require professionals to give them assistance. That is good news.

One thing that unites this country, if nothing else, is that at this time of year we are all sitting down with blue forms trying to figure out our taxes. That holds true from Newfoundland to British Columbia to the Northwest Territories. I do not know if that is a good or positive thing, but it is something we all do and I am sure we all agree we dislike the process.

The system is complex. As I said before, the reason is that we asked the system to ratchet up the amount and quantum of tax it extracts from the general public. When that is done it is very much like a water pressure system where the pipes are designed to sustain approximately 50 pounds per square inch. Now we are asking to put pressure in that system of something like 1,000 pounds per square inch and we get leaks from time to time and we are required to patch the leaks. It works the same with the income tax system. When we patch the leaks the income tax gets higher and higher.

When I was in practice every week we got a two or three-inch stack of amendments to the Income Tax Act. The reason it is complex is the amount of money we want to extract from the system.

This is not new. Economics books can take us back to the time of the Romans and even before and will show that every regime that tried to increase taxes exponentially eventually ran into a wall of complexity and evasion. There is a point at which people will evade the system because of the amount of money being extracted from the system.

My hypothesis today is that the system is complex not specifically due to bureaucratic wrangling but with the amount of taxes we want to extract from the system. My argument is we could put simplicity in the income tax system but it would have to be done by reducing the quantum of taxes we pay. This is certainly an objective of the government. We realize Canada's taxation system on a personal basis is the second highest of all OECD countries, France being the first.

To get simplicity back into the system it is obvious we have to reduce income taxes to individuals. How can this be done? The government has taken on a concerted program to reduce the deficit and debt. Obviously it has to do one thing at a time, get the deficit and debt situation under control before we can look down the road to actually reducing taxes on individuals. That is part of the process. The reality is both things cannot be done at the same time.

One provincial government wants to do both things at the same time, the Government of Ontario. It thinks it can cut spending while at the same time reducing taxation. This is not impossible but quite frankly unfair. What happens in that situation is it starts cutting back the basic social services people have come to expect and appreciate from the government. When it cuts back taxation, because our system is progressive, that is to say as you make more money you pay more taxes, eventually what it is doing is transferring the reductions in social programs to the people who are the most wealthy. It is sort of a reverse Robin Hoodism, if you will, of economics.

The federal government is not committed to that kind of concept. It realizes we have to cutback and make governments smaller, but clearly it cannot turn around and give the benefits to those who are most wealthy and who do not need the protection of that.

Why are rates progressive? Most of us in this country and indeed most of the western world have realized it is very important to have a redistribution of income. That is to say, as people make more, proportionately they pay more in income tax.

I can point out countries that do not do that for a variety of reasons, some which have systems that look like they are doing that but the result is actually the reverse. I look at countries in South America, particularly Peru, which I have visited. I talked to the people about their economy. I realize what happens when you do not have a progressive system. Basically you end up with a small group of people with a lot of money and you end up with a lot of people with no money. That is the kind of system we do not want to promote.

No one is better off in that situation because even those who are wealthy can longer find a market or trade for any business goods they have because there is no market. Nobody can afford to buy their products. That is why our system is progressive.

This leads me to the discussion of some of my Reform colleagues embracing the flat tax. The Hall-Rabuska study of 1985 originally put forward the concept of a flat tax. Ironically that flat tax was based on the concept of not only a redistribution of income but also a negative income tax that purported to be able to transfer money back out to people as a social welfare system. This is not so with the right wing movement both in the United States and apparently in our country as well. The flat tax system has been turned on its head.

What is a flat tax system all about? A flat tax system is doing away with progressiveness. That means as you make more money you pay the same amount as somebody behind you. In other words, we do away with the whole object that the wealthy will pay proportionately more as opposed to those who are less wealthy. Clearly that is not saleable. Politically that does not make a lot of sense.

The way we sell the flat tax is by linking it with something we can sell, and we can sell simplicity. In a sense what we try to do is link the flat tax with basic simplicity because everyone can understand it and they like simplicity in the taxation system.

What does simplicity have to do with a flat tax? They have very little in common. The proponents of the flat tax would like us to believe they can reduce the cost of tax collection. The reality is they cannot do that.

There are very few economic studies that will indicate the evolution of a flat tax actually reduces the cost of the collection system. Most people who support a flat tax system are basically attempting to sell their product by putting a little good in with the bad.

Sixty-six per cent of the total quantum of taxes in Canada are collected from the top 30 per cent of taxpayers. It does not take very long to understand-

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, I listened with a great deal of interest to the comments of the hon. member who just spoke. Unfortunately, he does not address the issue on the order paper today, this famous committee of experts set up by the Minister of Finance to analyze business taxation.

This is what we have been saying for the close to three years, and the Auditor General of Canada told the minister in his 1993-94 report that business taxation was deficient. But the minister does not appear to understand or to hear.

I would simply like to recount a short anecdote that the hon. member may find helpful. One day, a Japanese minister threw out a challenge to his Canadian counterpart, probably the finance minister, to see which of the two groups, the Canadians or the Japanese, would be able to row across the St. Lawrence River the fastest. The Japanese team showed up with four rowers and a coxswain. The Canadian minister of finance, mightily amused, turned up with one rower, two section chiefs, one director and an assistant deputy minister.

The race began. Half way across, the Japanese were already ten minutes ahead of the Canadian team. No matter, not to worry. The Canadians added another section chief, to motivate and encourage the rower. On they went. Three quarters of the way through the race, the Japanese had a 20 minute lead. Something had to be done. The deputy minister himself was called in, took up his spot in the boat and on they went. The rower must not lose motivation. Not surprisingly, the Japanese won the race hands down, with a 30-minute lead over the Canadian team. What had happened?

There was a post mortem . Many months and many hundreds of thousands of dollars later, a report concluded that they had fallen down in organization, productivity had not been good, and communications between management and employees poor. So they abolished the position of rower.

This joke is instructive. What we have here is the same thing. A committee will be created, that we in the Bloc Quebecois do not necessarily want-but since it is the wish of the Minister of Finance-a committee of experts to analyze business taxation. We say to you: "This committee should include members of all parties, who could contribute their knowledge, speak directly to the friends you have appointed, and try to get them to face the facts".

No, you say. You have things to protect, but it will end up the same as the joke I just told. After spending hundreds of thousands of dollars, and probably holding hearings across Canada, the conclusion will be that the rower was no good. In the end, it is the economy that is no good, with all your interfering.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I thank the member for his question.

Once again something is missing in relation to this committee. It is not an end in itself. People with expertise in the area of business taxation are being asked to provide their comments. Legislation is still the venue of this House and debate will occur here. You are attacking the whole concept of governments seeking outside expertise. You could use this argument with any area of government legislation.

The member's discussion concerning the Japanese and Canadians is quite apropos. In 1951 Japan and Canada had the same gross domestic product. That is quite interesting because by the year 2000 Japan's gross domestic product will exceed that of the United States. Japan is a country with half the U.S. population and almost none of its natural resources. We have to get on with the reality of making this country a more effective and dynamic economic institution.

I note some of the complaints the Bloc has about creating a national securities market. Capital has no boundaries. We have to create more dynamic markets to get our business community up and competitive in a global environment-

[The Deputy Speaker]

I would ask all colleagues please to address their remarks to the Chair. If they say who or you it should be to the Chair, not to their colleagues across the aisle.