Mr. Speaker, I am happy to participate in the debate at second reading of Bill C-36, an act to implement certain provisions of the budget-not the last one tabled by the Minister of Finance, but the 1995 budget.
First of all, regarding the government's behaviour, it is quite remarkable that, more than one year after tabling a budget, the government reintroduces provisions that had been announced at that time while focusing on beneficial measures from the 1995 budget, which may appear small but which are in fact magnified a thousand times. This amounts to doing the same thing twice so as to heap praise on the government and the Minister of Finance. I think the secretary of state has become an expert on this.
In the next few minutes, I will go over four of the measures in this bill which are especially important. I will talk about two positive measures on which the official opposition agrees with the government, and about two measures which, in our opinion, are highly detrimental.
I will first approach Bill C-36 in a general way. When one compares the measures in this bill with the responses given by the Minister of Finance since the 1995 budget, it is like water and fire, like night and day.
Since the 1995 budget and again recently, the Minister of Finance has often told us: "Since the 1995 budget, and even since the 1994 budget, I have put in place tax reform measures to make the Canadian tax system more effective, to correct the inequity, the imbalance between businesses that pay no taxes and those that pay taxes every year. Since my 1995 budget in particular, I have taken steps to correct inequities between individuals who pay too much tax and some businesses that do not pay any".
We in the official opposition say again to the Minister of Finance that he has done nothing to make the Canadian tax system more equitable. He has done nothing to make global or specific improvements to the Canadian tax system since taking office, since his first budget in 1994 even. He has done nothing to close tax loopholes, and this lack of action, this laissez-faire attitude is apparent in Bill C-36.
Since this bill contains measures relating to tax deferral and corporate income tax, why did the minister not take the opportunity, in preparing to table his budget, to truly reform our tax system, as we have been requesting ever since we were elected to this place?
If those are the measures on the basis of which he boasts day in day out to have "plugged the tax loopholes", it is clear-plain as day, as we would say back home-that it makes no sense whatsoever. Referring to tax deferral measures, he claimed to have fixed the problem, rectified the inequity in situations where a corporation could defer tax, perhaps indefinitely, in combination with accelerated depreciation for instance, so that it never paid a cent in taxes. He claims to have resolved the problem. He keeps referring to the 1995 budget.
What does the 1995 budget provide for on the particular matter of tax deferral? According to this budget, any corporation that is not a business corporation must end its financial year on December 31 instead of carrying income forward 18 or 24 months.
That is not it. If that is the finance minister's basis for stating: "Indeed, we have managed to ensure that all corporations pay the tax they owe", it is skimpy. Very skimpy in fact, as it does not even meet one tenth of the target the Minister of Finance claims to have met.
This is so remote from the actual objective that recently, when the issue of the capital gains tax was raised, the Toronto Star showed the weaknesses of the Canadian tax system, including loopholes that were in no way eliminated by the finance minister, whether through Bill C-36 or even the February 1994 budget. The Toronto Star wrote that a Revenue Canada report''-not a Bloc Quebecois report, a Revenue Canada report-released last month indicated that, in 1991, assets worth some $60 billion-that is a lot of money, a lot of wealth-left Canada without the department being able to identify the origin and destination of this money''.
The Toronto Star suspected that these $60 billion worth of Canadian assets had been secretly transferred to tax havens, thanks to the permissiveness and flexibility of the Canadian tax system. Mr. Speaker, we are talking about $60 billion worth of assets.
If this was the case in 1991, if no corrective measures were taken, if the Minister of Finance only kept telling us that we were wrong, that the Canadian tax system was good, that it was airtight and that we could rely on it to prevent capital flight and outright tax
evasion schemes such as the ones mentioned in the Toronto Star , then we have a problem.
A number of parties, including the major Canadian banks, were identified as having taken part in this massive tax evasion scheme.
We keep repeating to the Minister of Finance, the Prime Minister and the former and current revenue ministers that it is not normal that major Canadian banks have some 46 branches in Caribbean countries alone, which are considered to be tax havens. It is not normal that these banks have twice as many branches in the Caribbean as in the rest of the world.
Now, we learn that, as regards the tax evasion scheme whereby $60 billion worth of assets left Canada, a finger could be pointed at the major Canadian banks.
Everyone in Quebec and in Canada knows that the official opposition energetically accused the government of being too soft and decried the tax loopholes, by pointing out the opportunities for the businesses and the banks, as well as some of the richer families in Canada, to avoid paying their share to Revenue Canada. Even if the Minister of Finance said: "You are exaggerating. It all amounts to a few dozens of millions of dollars", we now know that billions of dollars, as stated in a Revenue Canada report, could leave the country and dodge income tax, that is evade the Canadian tax system.
We now have the evidence. The Minister of Finance was proud of his 1995 budget as reflected in Bill C-36. He even told us that there were no problems.
The government has made quite a few blunders, Mr. Speaker. An unkept promise about the GST; what amounts even to the most federalist of Canadians to a $1 billion partisan agreement to buy the maritime provinces; the many more blunders on constitutional issues. Now, with flights of capital of such magnitude, we realize that the Minister of Finance did not improve the tax system. This all adds up to a lot of bad points for the government.
So much for the overall approach. Let us now examine the more specific measures.
Bill C-36 deals in part with family trusts. The Minister of Finance is not a fast worker, since it took him more than a year to implement last year's budget. In 1995, the Bloc Quebecois called the Minister of Finance a "stand-up comic" and said that the minister was putting up smoke screens.
The Minister of Finance pretended to address an issue that is close to the hearts of the official opposition members, because it is quite a scandal, and said: "We have taken some measures concerning family trusts". You can take any measure on any possible issue and still not do your work, and that is exactly what the Minister of Finance did in 1995.
He said he was going to amend the rule allowing taxes on assets held in family trusts to be deferred, a rule that had been amended by the previous government and that allowed a taxpayer to defer taxes up to 80 years. Under the provisions of this rule, it was possible to defer tax on capital gains until the death of the last exempted beneficiary.
The Minister of Finance told us this would be corrected and we would go back to the old rules. We were happy, because under the old rules you had 21 years, which, while not perfect, was better than 80. At least after 21 years, taxes were paid on billions of dollars worth of assets that were accumulating in family trusts.
But the Minister of Finance immediately followed this up with the announcement that the 21 year rule would not take effect until 1999. If you were a trustee, if you had billions, tens of millions, even hundreds of thousands of dollars in a trust, what would you do? I ask the question and I will give the answer. I think you would investigate all the fiscal options open to you with a view to minimizing the tax you had to pay to Revenue Canada.
The Minister of Finance has given very rich Canadian families and large businesses, which also use trusts, an opportunity to analyse all the financial and fiscal vehicles available, and he has given them four years to transfer their money from family trusts to other vehicles, or worse yet, outside Canada.
When we voiced our objections, the Minister of Finance said: "Well, what do you expect, the official opposition is just a bunch of separatists". The usual attack, and the usual rhetoric we have come to expect from this government. There always has to be a scandal somewhere, something has to happen. Even though we have been saying and shouting for two and a half years that the government is losing hundreds of millions if not billions of dollars in taxes, it always takes a bombshell for the government to finally see the light.
This bombshell came three weeks ago when the auditor general said that two family trusts had transferred $2 billion worth of assets to the United States without paying any taxes on these assets. The finance minister said that family trusts were not a problem, that he would deal with that but we had to give him four years to do it. That meant we had to give Canada's richest families, like the ones that transferred $2 billion worth of assets to the United States, four years to find ways not to lose money.
But the ordinary Canadian taxpayers will pay. They are the ones who will pay for those $2 billion that were transferred to the United
States tax free because of this government's laxness. Taxpayers will pay, consumers will pay, unemployed people who are the victims of this government's cuts in the unemployment insurance fund will pay. It is outrageous.
Considering the sacrifices that ordinary Quebecers and Canadians are being asked to make, that the real taxpayers who are supposed to be represented by the members of this government are being forced to make, we will continue to ask not only that the issue of the 21 year rule be dealt with, but also that the appropriateness of maintaining an instrument such as family trusts at the expense of Quebec's and Canada's real taxpayers be looked at.
A second aspect of Bill C-36 which has something indecent about it. The Secretary of State was saying this morning "As a government, we have met our responsibilities. We have taxed the major chartered banks. We have levied a special renewable $160 million tax".
There is a special tax of $160 million on the chartered banks, banks which have amassed some $5 billion in profits. Yet those banks, if we can believe a Toronto Star article which reports on the contents of a Revenue Canada report on tax evasion and refers to the $60 billion in assets siphoned off to the U.S. and just about everywhere else, are not paying the federal government, Revenue Canada, its just dues. They are taking advantage of tax loopholes to transfer part of their untaxed funds into branch operations, particularly in the Caribbean. As I have said, there are 46 of these. It is easy for them to plan their affairs so as to pay the minimum in taxes.
Mr. Speaker, since you are indicating that I have two minutes left, I will end with this measure and continue after question period. The banks are being hit with $160 millions in taxes-a temporary measure-when, at the other end, there is $60 billion in tax evasion and $2 billion that went to the United States untaxed through family trusts.
We should compare the $160 in special tax on the banks to the billions it is costing Quebecers and Canadians with the restrictions in unemployment insurance, for example, and with the cuts to social assistance, post-secondary education and health. I think Quebec and Canadian taxpayers will realize that this government is working, but not necessarily in their best interest. It is working more for big business; for the powerful families, like those that succeeded in transferring $2 billion through family trusts without paying tax; and for certain financial institutions, including the banks. I will return to this in my analysis of Bill C-36.