Mr. Speaker, I would like to recall that I am splitting my time with the member for Chicoutimi—Le Fjord.
In the first part of my presentation, I talked about interest deductibility. I would now like to talk about income trusts. I was explaining how, like the Liberals in the past, the Conservatives have bungled this file.
We recall that under the Liberal Party, there were hesitations and contradictory statements by the then Minister of Finance on the future of income trusts. Would they be taxed, and how much, in the near future? There was a moratorium on income trusts, which was subsequently lifted.
In addition, an RCMP investigation was conducted further to some suspect stock market movements prior to the announcement on income trusts by the then Minister of Finance.
Still, the Liberals are not the only ones to have bungled this file. The Conservative government promised at the height of the election campaign that it would never touch income trusts and would not tax them. Some investors believed the Conservative government and invested massively in this type of company, thus inflating prices accordingly. Unbeknownst to them, they were taking a huge risk since they had faith in the word of the Prime Minister.
We know what happened. Last fall the minister announced that he was going to levy a tax on income trusts, contrary to the commitment that had been made. So he reneged on his promise and cheated the investors that had trusted him, and that is what is serious.
Basically the Bloc Québécois is obviously not against the fact that the income trusts are being taxed. We think that this business model can be applied in some cases, depending on the nature of the commercial activity, but it is not always appropriate. A company must not structure itself like this for the sake of tax considerations alone. That was the problem to be dealt with. An increasing number of companies or corporations were turning themselves into income trusts.
This was becoming worrisome, particularly for our economy's productivity. Some companies, such as Bell and BCE, were forced to convert to income trusts to cater to their shareholders' wishes for very large profits in a very short time, even if it was not good for the company in the long term. Income trusts are required to redistribute all their profits each year, and they cannot set money aside to invest in the development and improvement of their business. In the long term, they are put at a considerable disadvantage. This must be fixed.
For these two reasons, we will vote against this motion. On the one hand, we have not finished examining interest deductibility, which needs some further work, and on the other hand, even if the Conservative government has betrayed investors by deceiving them into thinking it would not touch income trusts, this correction was necessary. The Bloc Québécois suggested extending the transition period to 10 years. Unfortunately, the Conservative government did not go for this proposal, which is too bad.
The last reason we will not support this motion is that it does not mention tax havens. This has been a longstanding battle for the Bloc Québécois since the Liberals were in power. We remember the epic battles we led so that businesses would no longer be able to avoid paying taxes in Canada by setting up shop in Barbados and other places.
Essentially, a clause in regulation 5907—if my memory serves me correctly—enabled them to bring back foreign-earned profits, tax free, even though they were not truly taxed in Barbados, where the tax rate is ridiculously low at 1% or 2% in extreme cases. We thought this was inappropriate.