Mr. Speaker, I will split my time with the hon. member for Richmond—Arthabaska. The purpose of the bill before us is to implement tax conventions with a number of countries.
Of course, the Bloc Québécois supports the principle of this bill. That having been said, we support tax treaties that are concluded with countries whose tax system is comparable to ours, without being necessarily similar. As we know, societies' visions are not necessarily the same. Take the example of our American neighbours. They are not very strong on taxing, but then they are not very strong on public services either. This means that a whole segment of the American population does not have access to health care and to a number of other services which we, in Quebec and in Canada, view as services that should be provided to the public.
Other countries tax a great deal more than Canada. In fact, overall, Canada ranks in the middle of the pack, currently, in terms of taxation in OECD countries. Consequently, half of these countries have higher taxes than we do, probably because they provide more public services and greater social protection than we do. Half of them have lower taxes, probably because they have decided to provide fewer services to their citizens.
I talked about “comparable taxation” because unfortunately I heard some Liberal members trying to imply that the Bloc Québécois was demanding that all countries, including developing countries, adopt the same taxation rate as ours. This is simply not true.
However, we agree with the principle of having tax treaties to avoid double taxation. As I mentioned, we want to avoid the double taxation of Canadian citizens, be they corporate citizens or individuals, because if they pay taxes in another jurisdiction, it is quite normal for Canada, in calculating their taxes, to take that into consideration. In this respect, there is no problem. I think that most of the countries identified in Bill S-17 comply with this approach.
This means, when countries have insignificant, unreasonable or negligible taxation—I am thinking for example of Barbados, but also of tax havens in general—a tax treaty makes no sense because our goal is to avoid double taxation. If there is no taxation in the other jurisdiction, earnings, be they profits or dividends or even income not subject to tax in that jurisdiction, must be subject to full taxation in Canada.
For this reason, the Bloc Québécois is taking advantage of this debate on Bill S-17 to reiterate our opposition to the tax treaty signed with Barbados. As the House is aware, this is the only place in the world considered a tax haven with which Canada has signed a tax treaty. Canada has not signed such a treaty with Liberia, Bermuda or any place else.
Barbados is a tax haven in that it meets all the criteria set out in the OECD definition of a tax haven. I will read the House an excerpt from the 1998 report:
These territories and countries offer the foreign investor an environment with no or only nominal taxation, which is usually coupled with a reduction in regulatory or administrative constraints. The activity is usually not subject to information exchange because, for example, of strict bank secrecy provisions. [...] these jurisdictions are generally known as tax havens.
The Barbados fits the OECD definition perfectly. I know what the government will say, that the Barbados was not on the most recent OECD list of tax havens. In 1998, it was on the list. The Barbados had been identified as a tax haven by the OECD.
In 2001, in the subsequent report, the Barbados was dropped for essentially two reasons. The OECD found that this tax haven was cooperating with international financial authorities in terms of bank secrecy. Since then, nothing has really been done to make the banking and taxation system in the Barbados more transparent.
The second reason is that Canada and the United States have pressured the OECD to drop the Barbados from the list of tax havens. Nonetheless, when we refer to the 1998 definition, we cannot deny that the Barbados is a tax haven.
I will come back to this, but I want to touch on the fact that even the Auditor General—and it was a male Auditor General at the time—in his February 27, 2001, report identified tax havens as a very serious problem for the Canadian tax base, and I quote:
One of the biggest threats to the tax base lies in the international activities of Canadian taxpayers, particularly the use of tax havens.
That was in the 2001 report. Nothing has been done since, so that for foreign investments by Canadians in other countries Barbados has become the third ranking destination for Canadian investors. It is rather amazing that a small island with a population of 270,000 could attract $23.340 billion in Canadian investments in 2001, for example. That certainly creates a lot of investment amount per capita.
Over the years, Barbados have become Canada's tax haven. This makes it easier to understand why the Canadian government pressured the OECD to get it taken off the list of tax havens.
As I was saying, it is absolutely amazing that $23 billion in investments could go to a tiny island with a population of 270,000, but it is even more amazing that Barbados has become, as I also said, the third-ranking destination for Canadian investment dollars, after the U.S. of course, and Great Britain.
So there is more Canadian investment in Barbados than in Mexico, for example, where the figure is $4 billion; Japan: $6.4 billion, or France, $3.3390 billion. It does not take a genius to figure it out. It is simply that the tax convention with Barbados has encouraged individuals and corporations to make use of the mechanism made available to them in order to avoid their collective responsibility, that is to pay taxes in Canada.
For instance, Canada's five largest banks alone admitted in 2002 to having saved $10 billion over the years in Canadian taxes through tax havens such as Barbados in particular.
This is a well known fact. The Bloc Québécois, through the hon. member for Saint-Hyacinthe—Bagot, and myself when I was the finance critic, has been raising the issue since 1994. We have put forward motions in the House. These motions were supported by all opposition parties. Only the Liberals have objected to tightening the rules, especially in the case of Barbados, to prevent tax avoidance and close up these loopholes.
Why? Because the government is hiding behind appearances and denying the facts. We will hear that the tax rate in Barbados is approximately 40%. That is window dressing. International business corporations actually pay between 1.5% and 2.5% in tax. Not only did the Canadian government arrange its tax law to allow for this but it also made special arrangements to ensure that Canadian businesses would not be subject to Canadian taxation.
We are confronted with this totally objectionable situation where the current Prime Minister was the owner of a company—now owned by his sons, as hon. members know—which took advantage of this tax loophole. We believe that, over the past five years, this loophole has saved CSL International approximately $103 million in taxes, at the expense of all middle-class taxpayers and the social protections that could have been put in place both federally and provincially. That is totally unacceptable.