Mr. Speaker, I am pleased to speak to this bill today in the House. I will be brief, since I had the opportunity to speak at second reading and to speak in more detail in committee. This is a very technical bill whose purpose is to address some shortcomings in the Income Tax Act which make it possible for some people to avoid paying the taxes they should be paying.
We spoke about this this morning. All the parties agree with the bill, so there is not much to debate in terms of content. However, I will take this opportunity to talk briefly about tax havens. When the Liberals were in power, we talked about these havens a lot, since the then finance minister, and current member for LaSalle—Émard, had modified the tax treaties. He signed tax treaties with Barbados and made the act retroactive to allow companies—including his own, Canada Steamship Lines—to use this tax treaty to bring profits back to Canada that had been earned in Barbados, without paying taxes.
This is something that has worried the Bloc Québécois for a long time and we are very concerned. A great deal of work remains to be done to fix this problem.
When the Standing Committee on Finance studied tax havens, stakeholders told us all kinds of stories. Some were very interesting, and others were hard to believe, such as the claim that Barbados,for example, is not a tax haven.
That is a little ridiculous. Even if it is true that income tax levels for ordinary companies based in Barbados can be as high as 40%, companies known as international business companies or IBCs, which operate internationally out of Barbados, pay fixed fees on the order of $250 per year, plus taxes amounting to 2.5% on the first US$5 million. Then the tax rate declines gradually to 1% on profits over $15 million.
The OECD defines tax havens as countries that do not cooperate with other taxation authorities, meaning countries that collect no income tax or that do not share their data, that hide information and that lack transparency. Even if that is not exactly the case here, it is still fair to say that this is a very appealing situation for a business. When it comes to tax havens, we have to talk about Barbados, or at least the IBCs in Barbados. In fact, nearly all Canadian companies operating out of Barbados are doing so under the IBC structure.
There are very few requirements for becoming an international business corporation. That is part of the problem. The company must be registered in Barbados—which is pretty easy—and have its headquarters there. The media have reported on this issue. In Quebec, a journalist with Enjeux put together a report called Les Évasions Barbares—that would be The Barbarian Evasions in English—which revealed that there are plenty of large buildings in Barbados, containing many corporate headquarters offices, most of which are practically empty.
Among the other conditions that must be met, the company must hold its board of directors meetings there. In reality, a conference call will suffice. It must also keep its board meeting minutes there—all that takes is a filing cabinet—and have a Barbadian resident as one of its directors.
However, an analysis published in 2002 by the PricewaterhouseCoopers office in Bridgetown estimated in its brochure concerning Barbados, that an independent director in Barbados can be hired for only $1,500 a year.
As we can see, these restrictions are not very serious, especially for a very powerful multinational that could save millions of dollars in taxes. These conditions are not very hard to meet. And finally, in its international activities, the multinational could use Barbados as an avenue to get out of paying taxes in Canada, once those taxes are brought back to Canada.
As we can see, there is a real problem and many companies—which once included and probably still include Canada Steamship Lines—are not really located in Barbados and do not really operate out of Barbados. They are simply an empty shell there, a mere legal entity in order to take advantage of the Income Tax Act and pay less in taxes.
I hope the Standing Committee on Finance meetings on tax evasion will encourage the government to legislate quickly on this matter. In short, the Standing Committee on Finance will table a report when the House resumes sitting next fall, and I hope this will inspire the government.