Mr. Speaker, as I have said in the House before, it is abundantly clear that on this issue the Minister of Finance is entirely out of his depth.
Having said that, I would like to start on a positive note.
The Liberal Party, especially now that we have a new leader, would like to present some solutions. It is true that we attack the government when it does something stupid—which happens fairly often. But, at the same time, we want to offer Canadians different solutions.
First, I would like to elaborate on the Liberal thinking on the matter of deductibility. In my opinion, our thinking is similar to the comments by my Bloc colleague.
Let me outline the essence of our proposal. First, on April 16 the leader said in no uncertain terms that the government must scrap its policy. A few days later I, as finance critic, said the government must launch a major consultation. Today the leader has made it clear that the slower implementation of a policy that is bad does not thereby make it good, so that is an unacceptable proposal.
Our proposal consists of the following five points.
First, appoint a task force comprised of respected tax experts, business people and economists. Economists are sometimes useful.
Second, the mandate of the task force would be to review Canadian international tax policy in order to both nurture a Canadian advantage for our companies rather than create a disadvantage, as is currently proposed by the government, and also to tighten up the system where appropriate.
Third, the task force would review Canada's international tax treaties that have been negotiated with some 90 countries with a view to ensuring that the treaty partners are living up to the original policy expectations. In cases where this is not the case, for example, the emergence of preferential systems or a lack of transparency, the task force would recommend appropriate action.
In other words, if there are cases where low tax jurisdictions are behaving in ways that are abusive or inappropriate, then we would review our relationship with those countries. In line with the recommendations of this panel of experts, the government would receive recommendations to take appropriate action.
Fourth, the task force would review such issues as debt dumping and double dipping, and make recommendations designed to both sustain the Canadian advantage and protect the tax base.
Fifth and finally, the task force would review all other areas that it deemed relevant to its mandate.
I think this is a rational, responsible approach to a complex issue. It would take some time. These issues are complex, but it would lead Canada to have a modified reformed international tax policy which both nurtures the Canadian advantage, promotes our own companies, thereby creating jobs in this country, and also takes measures to address any abuses that there might be in the current system.
What a contrast between this rational policy which we are proposing and the chaotic, day by day changing of positions, to the point where the whole world is confused, that we have seen emanating from the Minister of Finance. He has received a barrage of criticism from all experts. I do not know of one expert who is supporting the government on this policy.
I am sure the parliamentary secretary will have searched very hard to find such an expert. When she has one, she can quote one, but might I just say that even Jack Mintz, the man whom the minister loves to quote and who was the author of the 1997 report that he uses to justify this, has totally abandoned ship.
The co-author of the Mintz report, Allan Lanthier, is the one our leader quoted as saying this is the worse policy to come out of Ottawa in 35 years.
Terry Corcoran, another favourite of the Finance Minister, just today in this morning's National Post, came out with an article saying that this was a bad policy.
I will just give you one quote from the CEO of Alcan on April 27, 2007 where he said:
[This policy] would adversely affect our profitability. It would result in less taxes paid in Canada and would make us a weaker company, more vulnerable for someone to buy us.
Prophetic words, Mr. Speaker.
Why is it important to have head offices in this country? It is important for jobs. Let me give two examples as to why head offices are extremely important for good jobs, for well paying jobs, that were so important for Canada in the past and will be into the future.
The first example, which I have mentioned before in the House, is my own father, who worked for over 20 years for Alcan in Montreal, in precisely the kind of job that would not have existed had Alcan in those days been owned by a foreign company like Alcoa. He is no longer there, but hundreds and thousands like him are, and whatever the assurances of the foreign buyer may be in the short term, we can be sure that those jobs will leave Montreal, those jobs which are so vital to our city centres, big cities and small cities across the country. They will wither away and leave this country.
A second example, slightly less personal than my father but personal enough, comes from my own riding, where a Canadian-owned company called ATI Technologies last year was sold to an American company called AMD, which is based in San José. Guess what happened? Four hundred jobs were cut as a consequence of this consolidation. How many jobs were lost in San José? Zero. How many jobs were lost in my riding of Markham? So far there are 130. That is what happens.
I am not opposed to all foreign investment necessarily. Much foreign investment brings benefit, but what is totally irrational and totally incompetent is to deliberately tilt the playing field against Canadian companies in favour of foreign companies to make it all that much easier for them to acquire our companies at huge cost in terms of valuable, high paying, head office jobs. That is why this policy is so misguided.
I have just about run out of time, but I have only touched the tip of the iceberg in terms of the economic incompetence of the government. I am not sure which is more incompetent between income trusts and interest deductibility. It is a close contest.
However, regarding income trusts, a sensible government would have taken a surgical approach, like our policy, and put a moratorium on new income trusts and a moderate tax, refundable to all but the foreigners, on income trust distributions.
What did the government do? It dropped a nuclear bomb on existing income trusts, thereby breaking a promise, thereby costing hard-working Canadians $25 billion, thereby depriving seniors who need their savings income to pay their bills from a valuable savings instrument, and thereby, and this is the connection with interest deductibility, weakening our once thriving energy trust sector which had been repatriating foreign capital. It has instead caused that depressed sector now to be prey to foreigners coming in to acquire them, which is precisely what is happening.
Another thing that is entirely illogical and stupid about the government's policy is that it claims it wants to get more tax revenue, but guess what? The unit holders of those trusts used to pay lots and lots of tax. Those foreign companies buying our income trusts will now pay no tax at all.
This is an unfair policy because it costs people who trusted the Prime Minister $25 billion. It deprives Canadians of access to income trusts while giving that access only to the fat cat private equity buyers in the United States.
Fairness has become unfairness. “Advantage Canada” has become disadvantage Canada. That is why I urge the government to come to its sense and not only adopt the Liberal proposal on interest deductibility but once it concedes one thing, it is easier to concede the next. It should come to its senses the second time and adopt the Liberal policies on income trusts.