House of Commons Hansard #122 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was havens.
Leon Benoit Canadian Alliance Lakeland, AB
Mr. Speaker, earlier in question period the parliamentary secretary said that she does not comment on RCMP investigations such as the one that is currently going on regarding the Royal LePage contract being cancelled.
Would the parliamentary secretary in fact confirm that there is an RCMP investigation going on regarding the cancelled Royal LePage contract and, if so, who initiated that investigation?
Wayne Easter LiberalSolicitor General of Canada
Mr. Speaker, the hon. member knows full well that that is an operational matter of the RCMP.
As the Solicitor General or as any other minister we do not get involved in those operational matters.
Presence in GalleryOral Question Period
The Speaker
I would like to draw the attention of hon. members to the presence in the gallery of His Excellency Nguyen Dy Nien, Minister of Foreign Affairs of the Socialist Republic of Vietnam.
Business of the HouseOral Question Period
The Speaker
It being Thursday, we have one additional question from the hon. House leader for the official opposition.
John Reynolds Canadian Alliance West Vancouver—Sunshine Coast, BC
Mr. Speaker, as we have returned from summer vacation and are stumbling toward the rumour of prorogation of the House, I wonder if the government House leader could tell us what business he has on for the rest of this week and next week, and any other time he has planned for the future.
Don Boudria LiberalMinister of State and Leader of the Government in the House of Commons
Mr. Speaker, I will be pleased over the following weeks to continue to elaborate on the program from now until December 12 for the benefit of the hon. member and for anyone else. More specifically, about the following week, I wish to express the following by way of the business statement.
This afternoon, we will continue with the debate on the opposition motion.
Tomorrow, the House will return to the motion to refer Bill C-49, the electoral boundaries bill, to committee before second reading. This will be followed by Bill C-45, the corporate liability bill, or Westray bill if you like, and Bill C-34, the ethics commissioner bill.
On Monday, we will begin with bills not completed this week, Friday in particular. We will then proceed to Bill C-46, respecting market fraud, Bill C-50 respecting veterans, Bill C-17, the public safety bill, and finally Bill C-36, the Library and Archives of Canada bill.
Tuesday will be an allotted day.
On Wednesday and Thursday, the House will begin consideration of Bill C-48, respecting resource taxation, and will then return to any of the business just listed that has not been completed.
Leon Benoit Canadian Alliance Lakeland, AB
Mr. Speaker, I rise on a point of order.
In question period, the parliamentary secretary to the public works minister, the member for York West, said that she could not respond to a question because there was an RCMP investigation going on. I then asked a question and gave her an opportunity to confirm that in fact there was an RCMP investigation going on, and she refused to do that.
How can we have a parliamentary secretary to a minister hiding behind an RCMP investigation and then not confirming that in fact there is one taking place?
Don Boudria LiberalMinister of State and Leader of the Government in the House of Commons
Mr. Speaker, one can check the blues. I do not believe the sequence of events is actually as has just been described. I believe the sequence of events was roughly as follows.
Someone asked about an RCMP investigation. The parliamentary secretary replied that she did not comment on RCMP investigations. To subsequently ask about that does not constitute the parliamentary secretary confirming that there was an RCMP investigation because, as we know, parliamentary secretaries nor ministers neither confirm nor deny that there are or that there are not RCMP investigations.
Points of OrderOral Question Period
The Speaker
We are not going to get into a debate on the answers and questions in question period.
Points of OrderOral Question Period
The Speaker
It is a shame, but there it is. Question period is question period. Now we are moving on to other items of House business and jolly as it is to continue these debates after, that is not a point of order.
If the hon. member for Lakeland believes the answers were confusing or, heavens, possibly even inaccurate, he will have ample opportunity tomorrow. We have a question period tomorrow and Monday and Tuesday, and at least until Thursday next week from what the government House leader has said in the answer we have just heard. He will have plenty of opportunities to straighten the whole thing out by asking his questions again possibly of different ministers and maybe getting somebody else to answer. Anything can happen as we know in question period. So we will leave the matter for another day.
The House resumed consideration of the motion.
Jocelyne Girard-Bujold Bloc Jonquière, QC
Mr. Speaker, I will be sharing my time with my colleague, the member for Argenteuil—Papineau—Mirabel.
This is a most important day for the Bloc Quebecois. Through this motion, the Bloc Quebecois is saying to all those who are watching us and to all Quebeckers and Canadians that:
In order to ensure tax equity, the government should terminate Canada’s tax convention with Barbados, a tax haven, which enables wealthy Canadian taxpayers and companies to avoid their tax obligations, and should play a leadership role at the international level in activities to eliminate tax havens.
This motion allows parliamentarians to express their concerns, because it is important to have fairness in our tax system. Everybody pays taxes. It is not fair that the richest among us can get away with paying so little.
There must be tax equity, because all taxpayers have to bear the cost of tax evasion by some businesses, some banks and even some individuals.
As mentioned in the motion, we will be talking about the tax agreement between Canada and Barbados, a tax haven according to the original definition established by the Organization for Economic Co-operation and Development, or OECD.
Tax havens are countries with a very low or nonexistent tax rate. Their lack of fiscal rigour encourages wealthy taxpayers to discreetly transfer a portion of their fortunes there, and many businesses to set up subsidiaries there, in order to shelter part of their income from the tax collector.
In 1998, the OECD drew up a list of tax havens, based on four criteria. Tax havens are places with no taxes or nominal taxes, a lack of effective exchange of tax information, a lack of transparency, andno substantial activities or performance obligations for businesses in the country.
The OECD found 35 countries that met all these criteria and pointed to 47 others which, although not tax havens, had some harmful fiscal practices similar to those in tax havens.
Given all these facts about tax havens, it is also important for people to know what a tax convention is. It is an agreement between two countries. There have been tax conventions in the past. Some people get tax conventions confused with tax havens.
A tax convention is an agreement between two countries enabling them to exchange tax information concerning taxpayers with income in these countries. It also prevents taxpayers from having to pay income tax in both countries. There is an agreement: it is called a tax convention. A clear distinction has to be made between a tax convention and a tax haven, otherwise, these two goals will be completely misunderstood.
Let us take Barbados as an example. We know that the member for LaSalle—Émard knows Barbados very well. It is a country with which Canada has a tax convention. Since we are all family here, let us imagine a Canadian company, say, for example, the company owned by the former minister of finance and current member for LaSalle—Émard, Canada Steamship Lines, which has a subsidiary in Barbados. The subsidiary in Barbados, which need be nothing more than an empty shell, can declare enormous profits. Its tax rate in Barbados will be ridiculously low, perhaps 2.5%.
Imagine the situation when we realize all the profits they make. It was in the papers over the summer, but being summer I am certain not many saw it. Their companies recorded $82 million in profit—scandalous.
There are also a number of Canadian banks with direct foreign investments. These investments total $389 billion. We are not talking millions, but billions. Of that total, $38.7 billion was invested in Barbados, the Bahamas and Bermuda, three tax havens according to the OECD. That is what tax havens are all about.
What is more, the Canadian government is encouraging these havens right now. I would like to give those listening some examples, since we all do business with banks.
In 2002, the total saved in taxes through the use of foreign subsidiaries was: Royal Bank, $841 million, or $61.9 million more than in 2001; Bank of Montreal, $530 million, or $29 million more than in 2001; Scotiabank, $463 million. For the Toronto Dominion, it was $235 million, $5 million more than in 2001, and for the CIBC it was $92 million, a tax saving of $8 million over the 2001 figure. In all, that makes 2 billion,161 million dollars.
I had thought that the present finance minister would adopt a different approach than the former one. But no, he sanctions the same situation and makes no changes, claiming that Canadians have nothing to complain about, because of their $1 billion tax decrease over five years.
If I were not taking this so seriously, I would die laughing at that one. But what is going on here is too serious. They are really taking us for fools. They must think we just fell off the turnip truck.
The $2 billion the federal government is letting the banks have represents, for example, the amount that has been committed in transfer payments to Quebec for health. Now they are backtracking because there is no longer any certainty of a budget surplus.
If the banks were taxed, we would have that money for health. We know how important that is, but no. The former finance minister, the member for LaSalle—Émard—as everyone in Quebec and in Canada knows, we hear it everywhere—owns several companies operating out of Barbados.
It should be noted that the taxation system in Barbados has the following characteristics and that is why it wants so many companies to have their head offices there. In Barbados, the tax rate is 1% for profits over $15 million US and 2.5% for profits under $5 million. There is no tax on capital gains, no deductions at source and no surveillance or control over exchanges.
We know that the current member for LaSalle—Émard is in love with Barbados. I can understand, considering all the money he makes there.
I have run out of time, but if the people who are listening to us would like to have statistics and be truly aware of everything that is going on with the current member for LaSalle—Émard, who will soon be Prime Minister of Canada, all they have to do is call the Bloc Quebecois. It would be our pleasure to provide them with information. The Bloc Quebecois, with its motion, is telling this government to refuse to have tax agreements with countries that are tax havens.
Marlene Catterall Liberal Ottawa West—Nepean, ON
Mr. Speaker, I rise on a point of order. There have been discussions among the parties and I believe you would find consent for the following motion. I move:
That at the conclusion of the present debate on the Opposition Motion, all questions necessary to dispose of this motion be deemed put, a recorded division deemed requested and deferred until the end of government orders on Tuesday, September 23, 2003.
SupplyGovernment Orders
The Speaker
The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, I will ask the following question of the member for Jonquière. Considering the enormous revenues lost through tax evasion, I would like the member to relate that to the hardships that some people in her riding and throughout the province of Quebec are facing, to tell us about the good that this money could do if it were recovered. It could be used, among other things, to help the softwood lumber industry, where hundreds and even thousands of workers are having trouble getting their jobs back.
Jocelyne Girard-Bujold Bloc Jonquière, QC
Mr. Speaker, I want to thank my colleague, the hon. member for Argenteuil—Papineau—Mirabel, for his excellent question.
He just put his finger on the problem. We know what has been happening on the softwood lumber issue over the past two or three years. All that money could have helped our workers. The region I represent is among the hardest hit by the crisis in the softwood lumber industry. There are currently 3,000 workers receiving EI benefits. Sometimes, when they are no longer eligible for EI benefits, they go on welfare and then stop showing up in the statistics.
There is also mad cow disease. No cases of the disease were found in Quebec, but still our producers have been unable to export their products for months now. We could also talk about health care or the underprivileged.
Last night, the House voted. Members of Parliament wanted a discretionary envelope to be able to provide assistance to organizations that need help. The government said no. They could hand this $2 billion to members of Parliament who could, in turn, distribute it among the poor in their regions. I could give the House thousands of examples. What we have here is a heartless government that would rather help the rich than the poor. They keep on taxing us, but where does the money go? To their friends, that is where.
That is why it is important for the Bloc Quebecois to use this allotted day to raise this issue and tell Canada about what the government is doing for the rich but not doing for the poor.
Roy Cullen Liberal Etobicoke North, ON
Mr. Speaker, I think it is scandalous that the member for Jonquière and previously the member for Saint-Hyacinthe—Bagot would attack the member for LaSalle—Émard when he is not here to defend himself. It is one thing to attack the policy of the government but it is another thing to attack someone personally and they should be ashamed of themselves. However we know why they are attacking him.
The member for LaSalle—Émard is one of the most scrupulous members of the House. What the members opposite do not seem to understand at all is that there is a difference between tax avoidance and tax evasion. They do not seem to understand at all that the former minister of finance was the lead on the OECD initiative on harmful tax competition, which is designed to deal with those tax havens to make them more transparent and to ensure that they share information. If there are companies or individuals in Canada trying to evade taxes, those jurisdictions will share information and allow a thorough examination so the Canadian authorities can take the necessary action.
I thought it was quite ironic that the member for Drummond earlier talked about a case of a capital gain that ended up in a certain situation perhaps not taxable. The Canadian Customs and Revenue Agency launched an investigation and it reversed the tax treatment of that company or individual. It seems to me that this is an example of a success story where the revenue agency has taken the right action.
Could the member discuss what the views are of the various tax havens around the world? Barbados is just one.
Jocelyne Girard-Bujold Bloc Jonquière, QC
Mr. Speaker, it is sad to hear such things from a member I used to hold in high esteem. I think he is kowtowing to the future Prime Minister. He wants to be one of his lackeys, to be by his side. For my part, the only role I want to play here is to inform my constituents and tell them the truth about what is going on in Ottawa.
The amount that Revenue Canada will not get from these rich shipowners who fly the flag of Barbados or Panama, where there are also banks, is $2 billion a year. The member tells me we are engaging in demagoguery. No, actually we are educating people. It is quite different.
I believe it is time that in Canada, in this Parliament, we start telling things as they are to the real people who are listening to us. The members across the way are not listening.
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, I am pleased to rise after my colleague for Jonquière, who so eloquently stood up for Quebeckers and the men and women of her riding. Too often we do not do that in this House. We should be careful when we make statements such as the last speaker for the Liberal party did when he said that we were attacking someone who was not in the House. We are attacking the former finance minister, who signed the last treaty with Barbados, not just anybody. It is he who negotiated the treaty for the Canadian government to sign.
Of course, if he had wanted to defend himself all he had to do was to show up today. The Bloc Quebecois announced a long time ago that its opposition day would be dealing with this matter. So if the member has decided not to be here today, it is his choice.
I will use the time I have to deal with only one aspect of the issue, namely banks. My colleague from Jonquière did a good job of presenting the whole issue, but I would like to spend a bit more time on it as we are talking about millions of dollars in tax savings for the big Canadian banks.
The Royal Bank: $841 million up to 2002; the Bank of Montreal: $530 million up to 2002; Scotiabank: $460 million up to 2002; the Toronto Dominion Bank: $235 million up to 2002; CIBC: $92 million in savings up to 2002. That is a total of $2.161 billion in taxes they did not have to pay in Canada.
Why? There is the rub. If these banks had such astronomical savings, then should the fees that our constituents paid with their hard-earned cash not have been greatly reduced. That is not what happened.
Over the past three years, user fees have increased. So, where are these profits going? To lower credit card interest rates? While the Bank of Canada interest rate dropped and has never been lower, these banks have managed to increase the ordinary credit card rate by 1% annually for three years. That is the reality.
Once again, agreements allowed the five major banks in Canada to save $2 billion, and Quebec and Canadian taxpayers are not the ones profiting. This has not translated into reduced bank account user fees nor lower interest rates.
What has changed? The dividends paid quarterly to the shareholders of these banks. These shareholders are friends of the former finance minister. That is the hard truth of the matter. They are the ones putting $9 million into his bank account so he can win the Liberal leadership race and scare all his Liberal opponents across the way.
That is what happened. It is that money, the dividends paid quarterly, that allowed his friends to benefit from the agreement with Barbados. Let us not be mistaken. For the benefit of those listening to us, there are more than 80,000 voters in my riding, and only a few hundred of them can afford to buy shares of any of these five major banks and collect, every three months, dividends authorized by the management of these banks.
Once again, this is what the Bloc Quebecois is denouncing today and what we must put a stop to. It has been condemned by the OECD and the Auditor General. We must stop providing incentives for tax evasion to big corporations.
Today, I heard the Minister of National Revenue say that it was legal. We are the lawmakers in this Parliament. This government is the one that authorized the Minister of Finance to negotiate the last convention with Barbados. Worse yet, this government is the one allowing the promotion of tax havens.
On July 16, 1999, the Department of Foreign Affairs and International Trade of Canada—not that of another country—released, through CanadExport, its calendar of events, which included a conference entitled “Demystifying Tax Havens”. The topics covered were: the origin of tax havens; their use as a financial strategy; the criteria for selecting a good tax haven; tax havens and the Canadian taxation system; and how to get the most out of tax havens.
Do not tell us today that the government wants to counter tax avoidance and evasion. This Liberal government has been promoting tax havens, hosting conferences and telling businesses, “Here is how you can avoid paying taxes in Canada”. That is the reality.
The brochure published through CanadExport on July 16, 1999, and entitled “Demystifying Tax Havens”, was produced by us. That is the reality.
Once again, to the detriment of whom? To the detriment of Quebeckers, those hard workers who seldom have a chance to watch us in the afternoon, to know what we are saying on an issue like Barbados, this tax evasion and tax haven disaster.
The Bloc Quebecois is simply asking that this be stopped. And we are not alone. The Auditor General and the OECD have also asked that we stop encouraging countries that do no collect taxes and companies that use those countries to avoid paying the necessary taxes at home. That is the reality.
To summarize what my colleague from Jonquière said earlier and what I reiterated, the big five Canadian banks alone, that is the Royal Bank, the Bank of Montreal, Scotiabank, Toronto Dominion Bank and the CIBC, avoided paying $2.161 billion in taxes up to 2002. As I tried to explain, they could at least have lowered bank fees accordingly.
And yet, bank fees have never been higher than in the past five years. The big banks could have lowered the interest on their credit cards. And yet, rates have increased 1% a year on regular cards for the past three years, even though the Bank of Canada rate has never been lower.
Once again, they are allowing institutions like banks to make money off the taxpayers of Quebec and Canada, so that they can pay quarterly dividends to shareholders, that handful of wealthy people who can afford to buy bank stock, then pick up their quarterly dividend cheques and go off to cocktail parties organized by the hon. member for LaSalle—Émard.
That is the reality, no more and no less. We cannot let this go without comment.
I am getting the two minute signal, so I will conclude by saying that I will not list all the other companies and corporations. My colleagues have already done so, and will continue to do to. They will try to denounce them all.
The sector that bothers me the most, however, is the banking sector, because of their huge profits. In the last quarter, bank profits rose close to 300%. Depending on which major bank it is, the figure ranges between 100% and 300%. Once again, this does not reduce banking charges to the people of Quebec and of Canada, the customers who use their services. Of course not. Instead, those charges go up, and the government does not bring in any legislation to this House to limit those charges. Of course not. They talk of tax havens and even help out with them by renegotiating the agreements with Barbados.
There has been no legislation introduced in this House to limit the interest rates the major banks charge on their regular credit cards. Of course not. This was talked about in 1999, and an agreement was signed with Barbados to allow the banks, once again, to make greater profits to share with their shareholders every three months. As long as we have breath left to defend the interests of Quebeckers, of the people in our ridings, we have a duty to speak out about this, as my colleague for Jonquière has done. We cannot allow the capitalist system to impoverish the population, especially openly through legislation passed in this Parliament which makes it possible for big business in this country to get away with making profit elsewhere and avoiding taxes. They do not deserve to represent us, to carry on business. Let someone else do so.
Don Boudria LiberalMinister of State and Leader of the Government in the House of Commons
Mr. Speaker, there have been consultations among all House leaders about the following item and, further to that, consultation and agreement. I wish to seek unanimous consent to move that the fourth report of the Special Committee on the Modernization and Improvement of Procedures of the House of Commons be concurred in.
Committees of the HouseRoutine Proceedings
The Deputy Speaker
The House has heard the terms of the motion. Does the House give its consent to the motion?