Mr. Speaker, I did not ask a question because I knew that I would have the opportunity to reply to my colleague from the Standing Committee on Finance. I am pleased to see that he wishes this committee to examine this issue once again. An agreement will be reached readily given that the government has already stated that it supports continuing with the review already begun by the Standing Committee on Finance.
I now know that the Liberal Party also supports proceeding and I have no doubt at all that the NDP would also like to examine the issue of companies that use tax havens such as Barbados, the most well known example, to avoid paying their fair share of tax.
I would like to spend most of my time on this subject. The tax agreement with the United States covered by the bill under consideration is not a problem. We all know that the United States is not a tax haven. The bill gives cross-border workers the same tax benefits as resident workers. It will institute a bipartite tribunal or board to settle tax disputes and to tighten rules for certain types of companies, making it more difficult to use various tax loopholes.
The bill eliminates certain provisions pertaining to double taxation of capital gains. We support this and I believe it has a great deal of support from parliamentarians. I do not wish to go into too much detail about this matter.
However, it is surprising that the government has time for such matters. That is fine, we are not criticizing them, but we are questioning their unwillingness to shut down tax havens.
I would like to backtrack a bit to have a better understanding of what is at issue. There is a general rule among various countries that sign tax agreements. If tax is paid in one country, it is not paid a second time on the same income when the money is repatriated to the country of origin. According to this principle, the same income is not taxed twice.
That said, in order to know whether companies have paid taxes in their country of origin, Canada negotiates tax treaties with other countries. Among other things, these treaties provide for the exchange of information about taxes paid in another country, so that Canada knows whether or not the money should be taxed when it is brought back here. If there is no tax treaty or exchange of information, Canada assumes that taxes were not paid and claims the corresponding taxes when the money is brought back.
In the past, in the Liberal days, a bill was introduced by the finance minister at the time, the member for LaSalle—Émard, to establish a tax treaty with Barbados, telling our companies that do business in Barbados and pay taxes there that they should not also pay taxes in Canada. At issue was a famous example of a company doing business in Barbados, Canada Steamship Lines International, which was of course owned by the family of the member for LaSalle—Émard.
Up to this point, everything is fine and seems to make sense. The problem is that the tax rate for international companies in Barbados is 2%. Obviously, it is rather ridiculous to say that these companies paid taxes in Barbados, since they paid 2%. Really, it was getting a gift. Then, companies such as Canada Steamship Lines are allowed to bring back to Canada the money they had earned from having their head office in Barbados, without having to pay taxes here.
There is another loophole in this mechanism that the Liberals themselves introduced. Obviously, the act requires there to be a real place of business in Barbados. It also states that the revenues must genuinely be earned in Barbados, and that they must not simply be a financing scheme to avoid paying taxes.
Members will probably remember the very telling report that aired in Quebec, aptly called Les évasions barbares, or The Barbarian Evasions.
A journalist went to Barbados, to the building that is home to the head offices of hundreds of companies that supposedly do business there. The journalist found that the building has about a hundred tiny rooms just big enough to accommodate a secretary and two filing cabinets. Obviously, the journalist demonstrated by this very fact that it would be impossible for a company that generates millions of dollars to really have a head office there, in such a small partitioned office with only a desk, a typist, a computer and two filing cabinets.
In reality, the decisions made by those companies are made in Canada or elsewhere around the world. Their activities take place in Canada or elsewhere around the world, but their financing is such that all revenue is artificially declared in Barbados and is subject to a ridiculously low tax rate, only 2%. They then send the money back to Canada, maintaining that they have already paid taxes in Barbados and therefore should not have to pay taxes in Canada.
This scheme is possible because of the negligence of the Liberal government at the time and we hope that the Conservative government will be proactive in this file, as it claims it will. At the time, the Liberal government was negligent and even had the audacity to adopt retroactive measures with respect to the tax treaty with Barbados. In fact, when the bill was adopted, the provisions were that the treaty would apply retroactively to 1995. By a curious coincidence, that was the same year that Canada Steamship Lines was established in Barbados. That was a rather interesting situation, especially since, when it comes to retroactivity, both the Liberals and the Conservatives seem to adopt a double standard.
Obviously, the guaranteed income supplement is a perfect example. For years, the Bloc Québécois has been fighting for the seniors who have been swindled out of the guaranteed income supplement. They are owed money because they were misinformed and were unable to claim the money at the appropriate time. They must be given full retroactivity, that is, they must be given the money that is owing to them. It is not a gift; they are entitled to this money. Yet, this is not being done.
Naturally, when people have to pay taxes because they have forgotten to declare income over the past five or ten years, retroactivity applies. Those at fault cannot tell the tax man that he caught them too late, so they should only have to pay for the past 11 months. If they get caught, they have to pay taxes for the past five or ten years.
The same goes for Barbados. New legislation was retroactive. No big deal, it provided tax shelters to companies so they could get off without having to pay any taxes. No big deal, retroactivity applied. In contrast, when it comes to reimbursing seniors, when it is time to give them the money they are entitled to, the government says too bad, it cannot be done.
The Liberals did not want to budge when people were asking them to. We challenged them on the fact that they were offering full retroactivity in terms of tax breaks for the richest companies, but were not doing the same for seniors. During the election campaign, the Conservatives said that they would grant seniors full retroactivity. Now they are refusing to do it because they say they are in charge and things have changed.
What does it mean for politics when a member or a minister says that now that he is in government, things have changed? Does it mean that he said whatever he wanted beforehand? Does it mean that the government has the right to withhold the truth and mislead the public? That is a very strange way to operate.
I really want to take this opportunity to emphasize something to all parties in this House. Even though the Bloc Québécois supports the bill before us concerning the tax convention with the United States, we want to re-examine issues related to other tax conventions between Canada and other countries, conventions that are designed not to help workers, but to enable companies to pay next to no tax in Canada and opt out of their fair contribution.
We will continue this work after the holidays. If the Liberals want to work with us, so much the better. I hope that the Conservative government will act as quickly as it says it will.