Madam Speaker, I am very pleased to take part in the debate which was instigated by my hon. colleague from Joliette and deals with tax evasion, especially in Barbados.
I said I was very pleased to speak on this motion, but let me add that it is not because I am very thrilled about the issue before the House, quite the opposite.
I am pleased because as members of Parliament it is our duty to take note of any situation that is completely contrary to the interests of our fellow citizens, to stand by our constituents and to expose such situations.
Earlier today, I heard the hon. member for Etobicoke North say that we were witch hunting, imputing motives to others and getting into name calling.
I just want to say that I would never resort to name calling or try to tarnish someone's reputation. First, it is not in my nature to do that, and second, I think it would be useless, pointless and superfluous. I think the members in this House and the people watching us are smart enough to come to the right conclusions and to make all of the obvious correlations.
I would like to begin by saying that, strangely enough, in 1999, the third most attractive destination in the world for private Canadian investments, after the United States and the United Kingdom, was Barbados.
Was this because Barbados is a great growth country? Was it because Barbados has an incredibly large consumer market? Was it because Barbados is a place where there are absolutely enormous investments in terms of infrastructure? Was it because Barbados has a fabulous manufacturing capacity? No. Barbados was the third most attractive country in the world for Canadians investors for none of these reasons.
Barbados ranks third, surprisingly, among destinations for private Canadian investments for the simple reason that it is a tax haven, and that is the only reason. The OECD clearly identified tax havens as a plague and a scourge affecting tax policies and measures in many countries, both developing and developed. The OECD urged those countries identified as tax havens to change their tax policies to make them more consistent with the international standard.
That is not the only problem. If Barbados being a tax haven was the only problem, we could perhaps tell ourselves that Barbados is not the only tax haven in the world. The problem is that, on the international scene, Canada is swearing up and down that it does not condone tax havens and calling on these tax havens, following OECD orders, to take appropriate tax measures.
But at the same time Canada concluded a double taxation agreement with Barbados. What does this double taxation agreement with Barbados do? It is quite simple. It prevents individuals or businesses operating or travelling in the two countries in question from having to pay taxes twice.
Given that Barbados is in and of itself a tax haven, it is an attractive place for a number of Canadian companies to make investments, via dummy undertakings—commonly referred to as shell corporations—and bring back into the country profits which were minimally taxed in Barbados and will therefore not be taxed a second time in Canada.
Is that really so very dramatic? Why are we making such a fuss about it this afternoon?
I will just give you a few examples. I heard the hon. member from Etobicoke North give us a knowledgeable presentation on the distinction between tax evasion and tax loopholes.
As wise as it was, it was thoroughly disingenuous. We know that governments—particularly the Government of Canada—very often set up tax loopholes in order to permit tax evasion.
This tax convention between Canada and Barbados is the kind of loophole whose only purpose is to permit tax evasion.
I will give you some examples. In 2002, six Canadian banks were able, through foreign investments in their subsidiaries in tax havens, to save more than $2 billion. The tax savings were about $841 million for the Royal Bank, $530 million for the Bank of Montreal, $463 million for Scotiabank, $235 million for the Toronto-Dominion Bank and $92 million for the CIBC.
And what does $2 billion dollars mean in real terms? What does it represent? Each and every one of us needs to understand what it means.
The Minister of Finance is saying that things are not so terrible after all, since Canadians got tax reductions of $100 billion over five years. That is bogus.
Apparently, there is $100 billion in reduced taxes, but most often, these reductions are highest for those with the highest income instead of the lowest.
If the government had gotten the $2 billion that the Canadian banks saved by investing in so-called foreign subsidiaries, then it could have granted not $100 billion in tax reductions but $102 billion. It is not just banks either. Many other big businesses do the same to save the money they would otherwise pay in Canadian taxes.
Obviously, even if companies pay much lower taxes than individuals do in Canada, they pay way more here than the mere 2.5% they pay in Barbados.
Since there is a tax treaty precluding double taxation, it is much better to pay taxes in Barbados than in Canada. Billions and billions of dollars do not make it into the coffers of the state thanks to this government and its kind cooperation. The taxpayers as a whole, which means mostly the middle class, must support the costs of maintaining programs.
This government boasted about putting Canada's fiscal house back in order. It asked Canadians to tighten their belts. But at the same time as this government was reducing health and education transfers to the provinces, as it was picking the pockets of Canadian workers contributing to the employment insurance fund, it did nothing to plug that tax loophole.
This tax convention between Barbados and Canada allows a number of this country's large corporations, many of which are apparently good friends of the regime, to save taxes to the tune of several billion dollars. At the same time, they have the gall and the audacity to tell us that it is nothing serious. They are granting tax reductions of a hundred billion dollars over five years. It is totally outrageous.