Yes, just by chance, as my colleague from Gaspésie—Îles-de-la-Madeleine says.
Since then, a foreign-incorporated holding company owning businesses engaged in international shipping is considered to be involved in shipping itself. It is therefore exempt from Canadian taxes, even if its profits are brought into the country. The provision is retroactive, again just by chance, to 1995, the year in which CSL International moved to Barbados.
The bill affects only a limited number of taxpayers. In fact, the Canadian Shipowners Association has only 11 members including eight active in international shipping, among them CSL International.
In 2000, a group of 13 countries, including Canada, proposed loosening the OECD regulations on tax havens. Since then, the correct term is no longer “tax havens” but “uncooperative tax havens”. This measure reduced to 11 from 35 the number of countries on the list of countries with which the OECD recommends not concluding tax treaties. In 2001, the same group of 13 countries, still including Canada, proposed even more flexibility in the OECD rules. As of that date, a country only needed to agree to share tax information in order to be considered cooperative. In 2002, the black list shrank from 11 to 7, and to 6 in 2003. Barbados is no longer on the OECD black list. It remains, just as my colleague from Joliette has said, a tax haven nonetheless.
In 2002, the government introduced Bill S-2, the Tax Conventions Implementation Act. Far from denouncing the 1980 tax convention between Canada and Barbados, Bill S-2 simply renewed it by amending its schedules.
To illustrate how to avoid paying taxes in Canada, let us take a random example. I will take Canada Steamship Lines, as a random example.
Its subsidiary in Barbados, Canada Steamship Lines International, may be nothing more than an empty shell, as I said earlier, that can declare exorbitant profits. The tax rate in Barbados is ridiculously low, between 1% and 2.5%. On average the tax rate is somewhere around 1.12%. Once these few taxes are paid, the parent company, a Canadian company, can bring these profits back to Canada and be completely exempt from paying taxes in Canada since the tax conventions prohibit double taxation.
As my colleague from Joliette said so well a few moments ago, this is a matter of roughly $103 million that could have gone to public services such as health and education, among other things, for the people of Quebec and Canada. It is just another scandal.
I will conclude by saying that it would be very easy for the government to shut down the Barbados loophole. It would simply have to abolish, by order, section 5907(11.2)( c ) of the Income Tax Regulations. Income brought back to Canada by Canadian companies with subsidiaries in Barbados would be taxable in Canada, at the applicable rate in Canada, less the amount of tax paid in Barbados.
This simple measure would generate at least $350 million in additional income for the federal government. It is a constructive solution. It is up to the government to act.