Mr. Speaker, I am pleased to join in the debate on Bill S-17. It is an important discussion on tax policy in general and the degree to which we allow for tax avoidance or tax evasion. It has been a very curious intervention by the parliamentary secretary for finance with his suggestion that there are certain appropriate ways in which one should be allowed to avoid paying taxes in the context of the bill.
Bill S-17 on its own is a reasonable initiative on the part of the government. If one looks at it in isolation just for its own merits and in terms of the specific provisions in the bill, it is clearly an improvement in terms of the overall situation we are grappling with today. It is a bill that seeks to implement new tax conventions and treaties between Canada and the countries of Gabon, Ireland, Armenia, Oman and Azerbaijan.
It is an important initiative because the bill attempts to ensure that there is a way to avoid double taxation and the prevention of fiscal evasion. We know from previous speeches on this matter, and I refer specifically to the interventions by Senator Mac Harb, who at the time was spokesperson in the House on this bill, that Canada has been trying to increase the number of tax treaties in place and through this bill would increase those treaties to 87.
The senator went on to suggest that Canada had signed treaties or amended protocols with an additional 14 countries since 1976. However what was done in this instance and what is still a problem today is that the government has refused to address where such tax havens continue to exist and has failed to account for its tardiness in ensuring treaties are signed and precautions are taken with respect to tax havens between Canada and a number of other countries.
Before I address the concerns of many groups with respect to tax havens and tax evasion, it is always important to talk about tax policy in general and public policies that address the matter of productivity. In that context it is fair to point out that for all the rhetoric and all the protestations by Liberal members in the House on both these issues, we have yet to see a comprehensive, meaningful and progressive set of ideas or policies with respect to taxation in general and on our collective agenda to ensure a more progressive tax system so that those with the ability to pay are taxed accordingly and those at the lower end of the income scale are able to benefit from the riches accrued as a result of development and investments in this country.
We have heard a great deal from the government in the past about how it has put in place such a progressive taxation policy and how it has ensured that our taxation initiatives today help ensure that low income people are given some tax relief. However, as we look at this whole issue in the context of Bill S-17, the government has missed the boat and has neglected its responsibility in terms of ensuring a fair taxation system where those with the greatest burden and the greatest need are able to reap the greatest benefits from our policies.
Instead of ensuring such an approach, we have seen over the last number of years a government that continues to provide tax relief for those who have the most ability to handle that tax load. The government has provided tax relief for the biggest corporations and the wealthiest individuals in our society and done little to deal with the burden facing low and middle income earners.
Over the past number of years the government has used a considerable portion of the available surplus to provide tax relief for wealthy individuals and large corporations. We continue to be astounded at the fact that the government had the audacity to bring in a $200 billion tax initiative spread out over five years to benefit the wealthiest in our society while those at the bottom continue to struggle.
The other issue that has to be addressed is productivity and the role of corporations in that regard. The finance committee has just been through numerous debates leading up to the finalization of our report on pre-budget consultations. I was surprised at how often Liberals spoke about the need to provide more tax breaks for large corporations through the taxation system and their suggestion that in order to be competitive with the United States we had to continue to reduce the taxes on corporations.
That approach has been tried but we have not seen much benefit over the last number of years. The government continually focuses on corporate tax relief in the hope that it will increase productivity and boost our economy but we have not seen that. We have not seen the kinds of benefits that the Liberals espouse as they pursue this narrow program of tax benefits for the wealthy and money being set aside for lowering the debt without considering the impact on low and middle income Canadians.
Unfortunately, after trying this for a good number of years and seeing no results we still have a government that is wedded to an idea that has no basis in fact and for which there is no scientific evidence to suggest that approach should be continued.
In the context of Bill S-17, it is time we started talking about the responsibility of corporations to the country and what their obligations are to increase productivity. We cannot keep blaming workers and the tax structure. We need to ask corporations to what extent they are investing in Canada and to what extent they are taking the profits earned and produced as a result of the work of Canadians and putting those profits back into the economy to ensure Canadians have new economic opportunities and educational training opportunities that allow people to contribute to the best of their abilities and to use their talents in this country.
I find it rather strange that we are again dealing with a bill that deals with part of the problem but in the course of the debate we find that Liberals are less than enamoured with the idea of finding ways to ensure that corporations pay their fair share. We expect ordinary Canadians to pay their fair share and not to evade taxes so why would we not expect corporations to do their part in investing in Canadian industries, in Canadian economic opportunities and in community economic development and all that that implies?
I, frankly, get a little tired of hearing time and again from Conservatives and Liberals in the House that we have to lower our tax burden on corporations so we can compete with Americans and therefore create this happy scenario where everything will be fine. What they forget is that the United States is trillions of dollars in debt today, which is not necessarily an example for Canada. A country that does not provide any semblance of support for its citizens in the way of access to health care, education and social services, is surely not able to claim it is competing on a level playing field with Canada.
Canada should not be considering that in order to be competitive all it has to do is lower the corporate tax rate without taking into account the great contribution that all taxpayers in this country make through the taxation system to ensure we have a national health care system and some semblance of a post-secondary education system, even though it is falling into greater and greater disrepute as a result of government cutbacks and neglect. Canada is a country that at least recognizes as part of its identity the values of cooperation and community, of compassion and caring, of sharing the wealth, of ensuring that everyone has an opportunity. We distinguish ourselves from the American model of laissez-faire market approaches, a dog eat dog, survival of the fittest philosophy of life and any notion of civil society.
In that context we have to look at Bill S-17. It is always amazing just how little the government brings forward in terms of cracking down on tax havens and programs that allow for tax evasion. I do not think it is good enough for the parliamentary secretary to suggest that it is quite normal and that everybody looks for ways to avoid paying taxes. He says we all do it and therefore there is nothing wrong with having policies in place that do not enforce treaties between Canada and countries like the Barbados and the Cayman Islands.
Most Canadians would be appalled at that kind of thinking and rationalization of a very untenable and despicable process. Canadians are expected to pay their taxes. When they avoid or evade their taxes, they are hounded and pestered until they pay. They are penalized accordingly. Were it only possible for the government to apply the same principle to large banks and corporations.
It is important for us to recognize in the context of this debate that it is organizations like Oxfam that have called on the world's richest countries to make a genuine commitment to global poverty reduction. It is important to reference the millennium development goals under which we are doing an abysmal job. The report calls for powerful nations to invest in a strong and effective public sector in the developing world and suppress weak regulations and tax havens.
I repeat that the report addressing the millennium development goals calls for governments to address weak regulations and tax havens. It is noted that this is an essential element of the fight against corruption in developing countries. There is an inherent obligation on our part to do what we can here in Parliament to address the continued presence of tax havens and provisions that allow for tax evasion in terms of relations between Canada and other countries.
This whole issue was really brought home this week by an editorial in the Montreal Gazette on Sunday. It reiterated some of the concerns that members of the Bloc and the New Democratic Party had raised in the House. It had a way of raising the profile of this very serious issue. I want to quote very briefly from the editorial, which begins by saying:
Even as Canada's five largest banks announced record profits last month, they withheld from the Canadian treasury billions of dollars in taxes. Many big corporations in other industries were able to do the same. The corporations do this through the perfectly legal manoeuvre of funneling some profits through off-shore branches, conveniently located in tax havens such as Barbados, the Cayman Islands, the Bahamas and the Channel Islands.
The article goes on to suggest:
Canada's big banks have a total of 73 branches in such places, jurisdictions where the tax rates are much lower than in Canada. Under tax treaties, profits declared there are taxed there, and what's left can be repatriated to Canada with no tax liability here.
We have a very major issue to address in the context of Bill S-17. We have to get an understanding from the government as to how it intends to clear up this reprehensible state of affairs that continues to exist today. If we are talking about trying to find ways to build this country, to create jobs and opportunities, then surely we have to start by looking to ensure that profits generated in this country are invested back in this country and are not allowed to be shipped offshore for tax relief.
I fail to see any rationale in the argument presented by the Parliamentary Secretary to the Minister of Finance on that matter. When a profitable corporation takes money that is earned here on the backs of workers, as a result of efforts and creative energies by Canadians, and invests it offshore because of the tax benefit, I do not see how we benefit at all in this country.
We had the issue recently of operation loophole. A large family, identified in the press as the Bronfman family, invested $2 billion offshore. A small group based in Winnipeg, Manitoba called Choices, a social justice coalition, took it upon itself under the name of an individual, George Harris, to take on the Government of Canada over this absolutely reprehensible policy that allowed a wealthy family in this country to move $2 billion offshore and not pay a penny in taxes. It went all the way to the Supreme Court. Although George Harris did not win his case, it was clearly indicated that there had to be changes in policy and that the government had a responsibility to clarify this issue.
Have we had any clarity? Has there been a clarification? Has there been a change in policy to prevent the movement offshore of money, profits earned in this country as a result of workers' input, for tax evasion purposes and tax avoidance purposes? Have we learned anything from the furor and the uproar around the Prime Minister's own company, Canada Steamship Lines? Have we learned anything about the possibilities for conflict of interest when that kind of situation has arisen? Have we learned anything about what messages we send to Canadians when we have such a double standard?
The lesson for us today in the context of Bill S-17 is to find ways to crack down on such tax evasion and tax avoidance.
Bank profits continue to skyrocket. We have seen that in the news. Net profits for the six major Canadian banks reached $13.3 billion this year. According to La Presse , that is up 20.5% since 2003. Yet despite these massive profits, billions of dollars are withheld from the Canadian treasury each year. This is accomplished by the funneling of money through branches in tax havens such as Barbados and the Cayman Islands.
On top of the big banks' earning huge profits and moving money offshore, they are taking away services from Canadians. The double whammy occurs. Canadians are denied the benefit of profits reinvested in this country and at the same time the big banks have the audacity to destroy communities by eliminating all bank branches, by denying ordinary people, working families, access to financial services in their own communities.
We have a lot of work to do with respect to big banks and big corporations. Let us look at the facts. Last year the six big banks paid about $9.5 billion in Canadian taxes. This sum accounts for 89% of total taxes paid by the banks. The rest was paid in other regions, most notably in tax havens.
I will conclude by referencing the work that was mentioned in the Montreal Gazette and raised by my colleagues in the Bloc, about a month ago vis-à-vis a study released by Université du Québec Professor Léo-Paul Lauzon. He castigated the big banks for the exploitation of tax havens. According to Lauzon, as reported in an article, the tax bill for the Canadian Imperial Bank of Commerce would have been roughly $844 million but it dropped to $239 million, largely due to the bank's use of tax haven branches.
There is evidence around us. There is scientific fact. There is empirical evidence pointing to the problems with respect to tax havens and tax avoidance.
This is the time for Canadians to deal with it. This is the time for Parliament to address it. It is not sufficient to rest with Bill S-17, but to deal with the whole gamut of opportunities that corporations and banks use to take advantage of tax havens and tax avoidance.