Mr. Speaker, I am very pleased to have the opportunity, through this motion, to discuss one the greatest scandals in the history of federal politics. The saga began last May 7, when the auditor general, Canada's watchdog over public finances, the one who makes federal public servants and politicians accountable, shed light on this scandal.
What happened is that the government allowed a Canadian resident, a billionaire, to transfer to the United States assets of $2 billion that were held in a family trust, without paying any tax on the capital gains realized on these assets.
How was the person able to transfer these $2 billion? After all, Quebec and Canadians taxpayers get sued if they owe one dollar in taxes to Revenue Canada. So, how did this billionaire manage to transfer his billions to the United States? He did two things.
First, he benefited from the complicity of officials from Revenue Canada and the Department of Finance and, second, he obtained an interpretation of a section of the Income Tax Act that normally only applies to non-resident holders of capital in Canada, such as Americans, Europeans and others from other continents. However, in the case of this scandal uncovered by the auditor general and involving the billionaire, a distorted interpretation of the section was made.
On December 12, 1991, Revenue Canada issued a ruling to the effect that this billionaire and trustee did not have the right to transfer billions of dollars tax free. However, on December 23, when everyone had left for the Christmas holiday and had turned their attention to their families, to the festivities and to what was in store for 1992, some officials from the revenue and finance departments in Ottawa somehow found a way to reverse Revenue Canada's ruling, so that the billionaire could transfer his billions to the United States without paying his due to the taxman.
This process is all the more shocking because there is no record of any meeting. There are no minutes from these meetings of December 12 and 23, the outcome of which was that, initially, the billionaire was told no, and later on was told yes, with the blessing of Revenue Canada and the Minister of Finance, and billions were transferred tax free. No paper trail. And that is one of the main discrepancies raised by the auditor general in his last report.
When this scandal came to light, it was quite something to see the Liberal members on the public accounts committee, the committee that receives the auditor general's report for study and that calls witnesses to appear before it to shed more light on the scandals uncovered by the auditor general. It was a sight to behold to see the Liberal members rising solemnly before the cameras and saying that the Liberal government would get to the bottom of this scandal.
The member for Brome-Missisquoi stood before the cameras and said: "This is ridiculous, this took place in 1991, under the Conservatives; we will get to the bottom of this". And he worked himself into quite a lather.
Two days later, he was nowhere to be seen. Two days later, the member for Brome-Missisquoi had disappeared. The story was that he was in his riding attending to urgent matters. He stayed there nearly two weeks. Lip zipped, he hid, because he knew very well that he had perhaps said a bit too much, that perhaps his government, the Liberal government, lacked the political will to get to the bottom of this billionaire scandal.
And indeed, since then, we have found out from the government side that it was perhaps not just the Conservatives who were behind this scandal, that if we scratched the blue a little, there would also be a little red underneath. The attempts to bury this scandal are quite astonishing.
First, the question of this two billion dollar trust was referred to the finance committee for study. I have nothing against the finance committee, and do not wish to run down what it is doing, but it is not that committee's place to cast light on this sort of financial scandal. Moreover, the government has seen fit to give the finance committee a very clear mandate, which was necessary in order to avoid coming up against this type of ambiguity in the Income Tax Act in future.
The mandate was not to bring in experts, or public servants, or even politicians, who were behind that shameful decision in 1991, in order to ask questions and really get to the bottom of the matter. Not in the least. That is the mandate of the public accounts committee. Passing the scandal over to the finance committee for analysis was the first way of clouding the issue.
Second, in early June my Bloc Quebecois colleagues and myself-my colleagues in the opposition-were witnesses to a session in which the auditor general's mandate, reputation, integrity, and competence were smeared during his appearance before the finance committee.
It was shameful, really a cheap shot, as they say, to have the chairman of the finance committee, the Liberal chairman of the finance committee, lecturing the auditor general because he had, on behalf of the people, and on behalf of the Parliament of Canada, brought up one of the worst financial scandals to have occurred in the federal administration for decades. It was embarrassing to see the chairman of the finance committee depriving all of the MPs sitting on that committee of the right to speak, while he alone grilled the auditor general, trying in every way possible to back him into a corner and undermine his credibility. Committee chairmen have resigned for less in the past.
We must understand who the auditor general is. It is important to understand this because if he is being denigrated by the Liberal majority, there must be a reason. He must have found out something. He must have found out about a scandal that might affect the senior levels of this government. The auditor general is the one who, on behalf of Quebecers and Canadians, scrutinizes government accounts, departmental accounts and the attitude of public servants.
It is his task to oblige these senior executives and government ministers to give an account of themselves. That is his duty. If the auditor general finds out that money is being wasted in the departments, as he has pointed out in successive reports since this venerable institution first came into being, and as he will surely do next Thursday when he tables his report in the House, the government is then forced to act to clean up public finances, to restore integrity to the administration of public funds and also to plug tax loopholes as he recommends.
The auditor general is not the government's auditor. He is the auditor of Parliament. He is the people's auditor. He is the one who says when public moneys are well managed, when taxpayers' money, money they worked so hard to earn, is well spent or misspent or the Income Tax Act is properly enforced. Since early June, the Liberals have done nothing but tarnish the reputation of the auditor general. That is a very sad commentary on this government.
This scenario went on throughout June and July, when the finance committee sat and the chairman of the committee unilaterally decided to invite his expert friends. Six of the eight experts invited to the finance committee were people who, without wishing to undermine their credibility, certainly had no credibility in this particular case. And why not? Not only because they were invited by the Liberals, but because these experts are the very people who help wealthy Canadian families find all kinds of tricks to avoid paying their share of income tax, to avoid paying taxes to Revenue Canada.
Backed by government officials and perhaps also by politicians, as we may find out some day, these same experts helped transfer $2 billion to the U.S. without a penny being paid in taxes.
How can you ask these experts who help wealthy Canadian families evade tax, which means that these families do not do their share to put our fiscal house in order, to take a stand against a tax provision that enabled these families to transfer billions of dollars to the U.S.? That makes no sense. They cannot be both judge and judged.
Just last week, the Liberal majority on the finance committee decided to submit their recommendations to the government, so that such "ambiguity" would not be a problem in the future. What did the Liberal majority say in its report? It said three things.
First, listen to this, the same scenario was continuing. They pursued their smear campaign against the auditor general, saying that he was unable to understand these matters, did not understand how the Income Tax applies to billionaires who want to transfer billions of dollars tax free.
They even said he may have been remiss in his duties since the information he gave made it possible to guess which family was behind this scandal, when in fact the information was leaked from Revenue Canada to the Globe and Mail . It was probably a public servant who was also outraged by his colleagues' actions in this matter who revealed the owner of this trust fund to the Globe and Mail . It was not the auditor general. Again, in polite terms, the Liberals presented this fact as though it was the auditor general's doing. It is a disgrace.
They added that the Income Tax Act had to be implemented properly, that it had to be fair and unambiguous. The government's second recommendation was to say: "Now that the scandal has been uncovered, now that we have put our finger on the so-called taxable Canadian property tax provision"-which originally was to apply only to non-residents and which allowed the $2 billion to be transferred out of the country in one of Canada's worst financial scandals-"instead of maintaining this ambiguity, we will open the gates so everyone can use this taxable Canadian property clause to do just about anything, like transfer hundreds of millions or billions of dollars to the U.S. or to other places around the world
without paying a penny in tax on the capital gains from these trust funds".
Just try dong that as the average taxpayer. Just try to get out of paying $10 in federal tax, and they will be after you. Even when we get notices telling us we made a calculation error, when there is a difference of 50 cents between what we calculated as tax owing and what Revenue Canada has calculated, we have to make out a cheque for 50 cents. And now they are letting two billion in assets go to the U.S., which represents hundreds of millions of tax dollars in lost government income. And, by the way, that lost income of hundreds of millions of dollars will be made up for by you and me, and all the taxpayers in Quebec and in Canada, while they are just allowed to slip out of the country with no problem.
The senior officials had an advance ruling; they can do as they please. What is more, the Liberal majority report, which has become the official government position since last week, becomes the law. This is anarchy, this is a free for all for millionaires and billionaires. They can do what they please in future, while the average taxpaying wage earner will be crushed by the Canadian taxation system.
In the last three years, and even during the time of the previous government, so much in the way of sacrifices was called for, the taxpayer has been bled dry, the law has been so tightened up. To take unemployment insurance as an example, workers have become so marginalized, workers and entire families in Quebec have become marginalized they experience a great deal of difficulty in getting back into the work force. Yet the millionaires and billionaires are fine, no more problems for them, they can do as they please.
This government, this Prime Minister, this Minister of Finance, despite their high calling, serve only millionaires and billionaires, not the average taxpayer; it is not true, not with their scheming, not with such an attitude and certainly not with recommendations that, in a matter of hours, managed both to tarnish the reputation of the auditor general, the watchdog for the government's finances, and to open up the gates for millionaires. Mr. Speaker, this is not right.
If we look at the process alone, they did everything they could to obscure matters. They went so far as to tarnish the auditor general's reputation, to question his competence, and then opened the gates by saying that henceforth, this exception, cooked up on December 23, and approved with millionaires and billionaires in mind, will now become the law in Canada.