House of Commons Hansard #198 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was system.
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
Mr. Speaker, in his presentation, my colleague primarily condemned tax evasion. What measures does he and his party propose to deal with this issue?
François Choquette NDP Drummond, QC
Mr. Speaker, I thank the hon. member for her question.
Several measures could be proposed. I am not an expert in finance, but I know that the Standing Committee on Finance is examining the issue. In fact, many colleagues of mine have recently held meetings on this issue. The Leader of the Opposition and member for Outremont attended these events and he delivered a speech.
We support the fight against tax evasion. That job must be done seriously and rely on various approaches. Concrete measures can be taken, such as those that I mentioned and that Ms. Alepin proposed. That is also the choice of a political party and government. As a government in waiting, the NDP will make sure to respect seniors and to leave a healthier environment to future generations.
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Speaker, the hon. member for Drummond is absolutely right in stressing the issue of tax evasion. Incidentally, the tax measures passed by the federal government often have an impact at the provincial level. Indeed, for harmonization purposes, provincial governments must often, for better or worse, adopt similar measures, which can greatly promote tax evasion.
Could my colleague comment on this issue faced by the provinces?
François Choquette NDP Drummond, QC
Mr. Speaker, I thank the hon. member for Beauport—Limoilou for his comments.
That is very important indeed. I am just going to give an example. Recently, the Conservative Prime Minister refused to attend interprovincial meetings with provincial premiers. That is not the way to act if we want to promote co-operation, or if we want to find out the needs of the provinces. By contrast, an NDP Prime Minister will attend interprovincial meetings. We will be there to co-operate with the provinces in order to have a tax system that will be beneficial to all.
Jonathan Genest-Jourdain NDP Manicouagan, QC
Mr. Speaker, I will begin the New Year by addressing some notions that are, to say the least, tiresome, since they are associated with the ins and outs of the Canadian tax system. The spirit of plurality that should inform remarks made in this House and my constant concern to highlight the ethnic diversity of this country encourage me to present these comments, which deal with Bill C-48, from a perspective of exposing white-collar crime, tax avoidance schemes and corporate tax evasion on aboriginal lands.
At the risk of repeating myself, I did teach for one semester at the Cégep in Sept-Îles. My course was on legal and administrative aspects of aboriginal organizations. I have therefore gone very deeply into the subject, which I was teaching at the time at the college level, and I have decided to bring that knowledge up to date. Within the course, one section dealt essentially with white-collar crime, and the ways organized crime has found to interfere in the management and economic operations specific to Indian reserves. I think it is timely to share this information with all Canadians.
The Conservatives must already be telling themselves that they addressed this idea in Bill C-27. However, they are on the wrong track, because the people behind this economic malfeasance and who work on the fringes of Indian reserves in Canada are most often, in fact, non-aboriginal. They are foreign elements. They are financiers, lobbyists, people with special interests who prowl around the reserves and work on the fringes because of the special schemes relating to income and other taxes, among other things.
That is why these financiers propose phoney corporate vehicles, which are mere fronts. The most common method is to exploit a few willing Indians on a reserve. The corporate vehicle is developed with a very special capital structure. From that point, the rules respecting income and other taxes come into play. We have to address this reality when we talk about tax evasion on the reserves in 2013.
If we consider this interference in the context of economic expansion in our communities, it is related to the successive announcements about such matters as the development of natural resources in remote communities, but it is also related to economic growth. I have already indicated in the past that the people who live on Indian reserves across the country have been compelled over the last 150 years to develop what is designed to be a parallel economy, not “parallel” in the pejorative sense, but because it meets special requirements, responding to a way of life and to adversity.
The aboriginal communities in Canada have long been ignored in the development of economic growth measures as proposed by the various governments, even in 2013. These communities have been left behind, and for a long time, many communities, if not nearly all the Indian reserves in Canada, have gone without.
Over the last 50 years, there has been an expansion, with the development of special schemes and alternative measures. There has been a genuine expansion. Economic conditions in some communities are very good. This is not true of most Indian reserves, but some communities are fairly well provided for with respect to their economic basis. This interference by harmful elements and criminal elements has been accentuated with this growth in the economic strength of Indian reserves.
The concerted efforts of tax authorities, combined with joint investigations carried out by specialized police units in Canada, have in fact highlighted the real mark left by embezzlement on the part of organized cells of shady operators, on the fringes of the aboriginal communities in Canada.
I said there are special tax rules for Indian reserves. Nonetheless, it took a few years for promoters from outside the communities to find compliant actors, among other things, on Indian reserves.
To set up these business vehicles, which are dubious, to say the least, it still takes a token member of the community. Often, these people are well placed and visible within the communities, but there also has to be a form of compliance on the part of both the federal and the provincial government authorities.
At one point, when I worked for my band council, I submitted this problem to the Indian affairs representative who travelled there. I was told quite brusquely that this did not fall within their mandate and I should approach some other authorities to resolve that kind of problem. In other words, they turned a deaf ear. I concluded as follows: there was compliance and blinkers had been very carefully placed on the representatives of government agencies at both the federal and provincial levels. This is a known fact.
When I taught that course, I based what I said on information compiled by information agencies here, agencies of Canada. So this was a well documented problem. When we talk about tax havens, we think of foreign destinations, but this type of scheme operates and is observed right here in Canada. We cannot ignore this.
On the subject of the compliance that existed, I would say that the various governments engaged in cherry-picking. In other words, they take a different view of operations in communities that are more docile or are relatively supportive of the policies of a particular government.
Other communities, some of whose representatives come to testify before the committee fairly regularly, support the existing government policies. In those communities, the schemes run by shady operators, organized crime or white-collar crime will be given free rein, even though that is not how it looks at first glance. These kinds of operations will be allowed to go on in certain more docile communities that toe the line promulgated by the government authorities.
The New Democrats believe this kind of tax avoidance and tax evasion has to be combatted, while at the same time preserving the integrity of our tax system. We support the changes this bill makes, and particularly those aimed at reducing tax avoidance.
I indicated that measures like the ones in Bill C-27 will make us look at our own community leaders and members as negative influences and the only ones responsible for tax avoidance and obvious financial wrongdoing, and this is a mistake. This is false in most cases, based on what has been proven. Studies and wiretaps from undercover operations and intelligence agencies in Canada indicate that these negative influences are located outside of the community. These include businesspeople as well as people involved in organized crime. Biker gangs have also expressed interest.
Furthermore, it is important to understand that most native reserves are located in isolated communities in the north. Verifications are done by financial institutions. However, based on my own experience and my own reality, other auditors and people in a position to shed some light on these kinds of economic activities and wrongdoings take very little interest in the development of and the realities facing communities above the 52nd parallel. That is why these kinds of wrongdoings can persist.
Make no mistake, in most cases, the expertise comes primarily from people who are outside of the community. Legal and judicial advisors have developed economic and financial schemes. They also develop share capital and divide this phony share capital in such a way that puts all voting shares in the hands of one individual or group. Everything is calculated very carefully. The same goes for imposing shotgun clauses.
Since I have studied corporate law at the post-graduate level, I am in a position to dissect share capital and to see it for what it really is. On the face of it, a business can call itself aboriginal, even though that technically may not be the case. A business might be owned by aboriginal interests on paper, but when we really look at how the share capital is divided up, we quickly see that the power is held by individuals outside of the community.
I submit this respectfully.
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
Mr. Speaker, when we look at this bill, we see it is really huge. It is nearly 1,000 pages long. Therefore, it is very difficult to discuss the entire bill and to see what is missing from it.
The hon. member talked about the first nations. I think it is very important to talk about them. Today we saw a demonstration on Parliament Hill because the first nations have not been consulted and have not been taken into consideration regarding certain other bills.
With respect to such a bill, does the hon. member agree that when any bill is introduced, or even before it is introduced, the government has a duty to assess the impact of a bill's measures on the first nations and ensure that there are consultations and that accommodations are made?
Jonathan Genest-Jourdain NDP Manicouagan, QC
Mr. Speaker, I would like to thank the hon. member for her question. I have briefly studied the bill before us, and the only mention of aboriginal peoples in it concerns the harmonization of taxation on reserves.
As for consultation, this is the federal government's duty because of the fiduciary relationship between the Crown and the first nations that takes precedence over any initiative, whether it deals with land, legislation or anything else that could interfere with or have a negative impact on the lifestyle of a reserve in 2013, whether traditional or modern.
If such an initiative could interfere with this lifestyle, the government must consult the communities. A pro forma consultation, if I may use a legal expression, is not enough. The communities and their members must be consulted at length. That has not been done in most cases. I do not even think this bill will be the subject of much consultation with the Canadian population in general.
I thank you.
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Speaker, I thank our colleague, the hon. member for Manicouagan, for his evocation of a world that is very rich but has unique problems.
That is why, a little earlier in our working day, I talked about Quebec City businessmen who want some recognition. Everyone aspires to a relatively normal life. But a normal life is not necessarily a life of conformity or submission to orders that do not solve problems, like the ones the government issues. It is especially sad to see aboriginal communities and band councils crushed under a burden that no other administrative body in Canada would accept.
I would like the hon. member to speak more about the lack of governance and lack of dignity that afflict first nations communities.
Jonathan Genest-Jourdain NDP Manicouagan, QC
Mr. Speaker, I thank my colleague for that question.
I am going to draw on my experience. Over the holidays—they were supposed to be holidays, but that was not the case—I was asked to develop a course on the amendments to the Indian Act and on bills C-27, C-38 and C-45.
For Bill C-27, I addressed certain concepts related to accountability, sharing and public disclosure of financial information on economic transactions and the financial information of private on-reserve businesses. The imposition of those measures is a first in Canada. It is likely that they will be fast-tracked and ultimately adopted. Well, with Bill C-27, it will be a first. Private and corporate entities will have to make their financial information available to the general public on the band councils' websites for a minimum of 10 years.
Once again, it is likely that there will be cherry-picking, that these measures will be imposed on certain communities and that the government in power will be quite accommodating and hands-off with other communities that support it more. I submit to you that there is a willingness to keep the communities at a certain level.
Jasbir Sandhu NDP Surrey North, BC
Mr. Speaker, I will be splitting my time with the hon. member for Scarborough—Rouge River.
Before I begin I want to wish everyone a happy new year. Members are back from their constituencies after a break over the holidays. Let me tell you, Mr. Speaker, I have talked to hundreds of my constituents. The priorities of the current government are not the priorities of the people of north Surrey.
People are very concerned about a number of bills that were introduced last year. Clearly Bill C-38 and Bill C-45 are not the priorities of my constituents from Surrey North. They are concerned about the degradation of our environment and the service cuts being put in place. Those are some of the things I heard. I am hoping that the government will go in the direction that Canadians want. Canadians' priorities are about getting jobs and providing services to Canadians. Clearly the government has not done that.
It is an honour to rise today on behalf of my constituents from Surrey North to speak to Bill C-48, which is an act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.
Bill C-48 is a massive, monster bill, with over 1,000 pages to it. Members have seen this before from the government. We have seen legislation, two omnibus bills introduced by the government in the last year. We had Bill C-38 and Bill C-45.
Members all know what was in those bills. Those bills dealt with hundreds of different laws. They amended different acts that made no sense whatsoever. Those bills should have been split into various different areas, which we then could have debated in the House. The Conservatives rammed them through without the proper oversight of Parliament and the parliamentary committees. We have seen that the Conservatives did not even listen to one amendment. There were thousands of amendments introduced in committee and in the House, but the Conservatives failed to take any of those amendments into consideration. They rammed those bills through and we are seeing the consequences of ramming those bills through the House.
This morning members saw a protest outside the House, when the Idle No More demonstrations took place. In fact, they took place across this country. One of their concerns is the government's lack of consultation with first nations. It is not only with first nations. The government failed to consult Canadians on legislation it was bringing in. It failed to consult the very people who should have been consulted, the very people whom Bill C-38 and Bill C-45 were going to impact.
Again, Bill C-48 is a large omnibus bill, but there is one difference from Bill C-38 and Bill C-45. The bill actually relates to income tax issues, but to put this together in a large bill is still an issue for the opposition. Basically a huge bill creates a huge burden for those trying to understand what is included and what is not included in the bill.
On top of that, members have not seen this sort of bill for the last 11 years. We heard from the Auditor General, through one of her recommendations, about the impact that doing this legislation every 11 years could have on our economy, on the services we deliver and on tax evasion and those sorts of things, which we are trying to prevent.
I am going to look at the concern that the Auditor General raised previously about the slow pace of government in legislating the technical changes found in the Department of Finance comfort letters. Certainly the size of the bill, which again is close to 1,000 pages, and the long lapse of time between Bill C-48 and the last technical tax bill indicate that this process still needs improvement.
It took 11 years to move on some of these technical income tax issues. We need to address this on a yearly basis so we can close the loopholes that people and corporations are taking advantage of. We should not be waiting 11 years to update our tax code and legislation and to crack down on tax avoidance and tax evasion. New Democrats believe in cracking down on tax evaders and tax avoiders while ensuring the integrity of our tax system. We support the changes being made in the bill, especially those aimed at reducing tax avoidance.
The bill is so massive that trying to decipher it, to look at what is included and what is not, is difficult. In fact there are 400 recommendations that were offered by the Auditor General. However, only about 200 are covered in the bill. Therefore, not only is this a slow pace but the government has still not addressed some of the loopholes that have been pointed out by the Auditor General.
This is a good bill. We should not be waiting 11 years to bring it forward to address some of the concerns that have been pointed out by not only the Auditor General but other Canadians and organizations that deal with tax evasion and tax issues on a daily basis. The CGA is one of the associations that has strongly criticized the government about the need to have the code updated on a regular, yearly basis so that it is up to date and our businesses have clarity as to what needs to be changed and what they are dealing with from the government side.
There are many parts to the bill. I am not going to go through all of them because I know I do not have a lot of time. Part 1 of the bill deals with the offshore investment fund property and non-resident trust and includes proposals from budget 2010. Also, some of the changes in Bill C-48 are largely designed to ensure the integrity of tax system remains in place and to discourage avoidance. They incorporate feedback on proposals previously in Bill C-10.
Part 2 deals with the taxation of foreign affiliates of Canadian multinationals. Some of these changes reflect proposals from way back in 2007 and 2006. It deals with a number of different areas, but the fact is that the government is failing to update our tax code so we can catch those avoiders and can provide certainty to businesses.
Auditor General Sheila Fraser's 2009 fall report states:
No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.
The Conservatives are failing to update some of the changes that are required. They are slow. Their priorities are not right. The priorities of Canadians are not the priorities of the government. We saw that with Bill C-38 and Bill C-45, where the government brought in omnibus bills and rammed them through the House without even consulting the very people they would impact.
In its pre-budget submission in 2012, the Certified General Accountants Association of Canada stated:
CGA-Canada strongly believes that the key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction. Therefore, CGA-Canada makes the following two key recommendations: 1. Modernize Canada’s tax system--make it simple, transparent and more efficient • Introduce and pass a technical tax bill to deal with unlegislated tax proposals • Implement a “sunset provision” to prevent future legislative backlogs....
I want to summarize this. The Conservatives have been slow to get these technical changes legislated and they go as far back as 1998. Bill C-48 aims to deal with more than 200 of these changes, but there is still a large number of technical codes that need to be changed. The Conservatives have failed in that sense.
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Mr. Speaker, I thank my colleague for his informative speech.
I would like him to explain to us how having so many rules at the same time—this bill is nearly 1,000 pages long—complicates the administration of all those rules for companies. If they did not put so much energy and so many resources into understanding all the tax laws, they could be a little more competitive and create other jobs elsewhere than in tax administration.
Jasbir Sandhu NDP Surrey North, BC
Mr. Speaker, we saw this last year with Bill C-38 and Bill C-45. The government brought in these large bills without any consultation with communities and rammed them through the House. Now we have another omnibus bill which deals with similar acts. I have to give that to the Conservatives. This legislation does not deal with hundreds of acts like Bill C-38 or Bill C-45 changed, but it would change a number of acts.
The Auditor General has asked for technical changes on a yearly basis so businesses can get to know them on a regular basis. Certainty would be provided to businesses, accountants and Canadians so they could deal with these on an ongoing basis. The Conservatives have basically waited 11 years to bring in this bill, 7 and a half years of their government and 6 and a half of another. We are happy with that, but the issue still remains. They have only dealt with half of the technical amendments that need to be changed and businesses need certainty. The Conservatives are clearly not providing that.
Sadia Groguhé NDP Saint-Lambert, QC
Mr. Speaker, I would like to congratulate my colleague on his speech.
He said this bill was massive. That also proves that much remains to be done to convert the various technical changes into legislation. In fact, those conversion difficulties penalize the business community. What does my colleague think about that?
Jasbir Sandhu NDP Surrey North, BC
Mr. Speaker, my colleague is absolutely right. The Certified General Accountants Association of Canada strongly believes that the key to sustained recovery and enhanced economic growth lies in the government's commitment to tax reform and red tape reduction. The government has not brought in this sort of technical tax bill that deals with taxes for the last 11 years. It has failed to provide leadership and it has failed to provide certainty for our businesses. Any Canadian would tell us that uncertainty in the business environment is not good. The Conservatives have failed to see that.
The Conservatives have certainly failed to address some of the loopholes that need to be closed so businesses and individuals do not take advantage of these loopholes and hard-working Canadians who pay taxes into our system to have the available services are not cheated. Everybody has to pay their share.
The Conservatives have their priorities wrong. I clearly heard that from my constituents in Surrey North over the holidays. They wonder what the government's priorities are.
Rathika Sitsabaiesan NDP Scarborough—Rouge River, ON
Mr. Speaker, I wish you and all my colleagues and everyone on the Hill a very happy new year. I am very happy to be back after a good few weeks in my community and my constituency of Scarborough--Rouge River.
I am happy to rise today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. Let us be straight. Bill C-48 is massive legislation that contains numerous technical changes. It is close to 1,000 pages long. This is definitely an omnibus bill, yet another omnibus from the government.
However, it is in stark contrast to the Conservatives' Trojan horse budget bills they presented as Bill C-38 and Bill C-45, which made sweeping changes to everything from environmental protection and government accountability to immigration and employment insurance, everything but the kitchen sink or everything and the kitchen sink.
Bill C-48 at least makes technical changes to a few closely related pieces of legislation. That is the big difference. The changes in Bill C-48 are largely designed to ensure the integrity of the tax system and discourage tax avoidance. The New Democrats believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being made in this bill, especially those that aim to reduce tax avoidance.
Moreover, the majority of measures in Bill C-48 have been in practice for several years, since it is the standard practice for tax measures to take effect upon their proposal. Once they have been announced, people accept them as adopted. It is for these reasons that we are supporting the bill. However, as I will reiterate later, the government needs to be more diligent in legislating these technical changes in a more timely manner rather than once every decade or so to avoid these massive pieces of legislation.
Bill C-48 includes outstanding legislative proposals dating as far back as 1998. Consultations with tax specialists and lawyers have indicated that the measures in Bill C-48 are overwhelmingly positive and that the changes in the bill are necessary technical changes. We believe these changes will in total be revenue positive and they generally move toward discouraging tax avoidance. Given the size of the bill, it certainly covers a great deal and many of these changes make sense.
Bill C-48 deals with offshore investment fund property and non-resident trusts and includes proposals from budget 2010 and August 2010 that are aimed at taxing the worldwide income of Canadian residents. It also deals with the taxation of foreign affiliates of Canadian multinational corporations.
The proposed amendments also ensure that provisions that use certain private law concepts, for example real and personal property, joint and several liability, reflect both the common law and civil law in both linguistic versions. Industry feedback that we received since July 2010 is entirely in favour of these changes.
The bill also includes: anti-avoidance measures for specific leasing property; ensures income trusts and partnerships are subject to the same loss utilization restrictions between corporations; limits the use of foreign tax credit generators for international tax avoidance; clarifies rules on taxable Canadian property for non-residents and migrants; and it provides an information regime for tax avoidance. All avoidance transactions, for example, any transaction where the purpose is to get a tax benefit must now be reported, even if the transaction is not abusive. Additional reporting will be required in cases where the transaction raises red flags for abuse of course.
The proposed bill clarifies the minister's authority to amend schedules and annexes to tax administration agreements if doing so does not fundamentally change the terms of the agreement which is already the practice.
The proposed bill also now allows tax administration agreements for the first nations goods and services tax between the federal government and aboriginal governments to be administered through a provincial administration system if the province also administers the federal GST. This will have the effect of simplifying the administration of the First Nations Goods and Services Tax Act.
However, these are all good things but I do have a few concerns that I would like to point out.
First and foremost is the timeliness and predictability. Given the complexities of this bill and its vast and massive scale, we believe the government needs to be more diligent and responsible when handling tax code. This bill seems way overdue. The government must ensure that tax proposals are legislated on a regular basis as failure to do so can create uncertainty in the business community, as well as among tax practitioners.
The chair of the tax and fiscal policy advisory group, in a prebudget consultation meeting on October 15, argued that implementing a sunset provision would ensure that tax amendments would be legislated and eliminate the growing backlog of unlegislated tax measures.
He stated that a sunset provision:
—would bring greater clarity and certainty to tax legislation, reduce the compliance and paperwork burden, and, perhaps most importantly, prevent any future legislative backlogs.
He also added that these:
—steps that would go some distance in improving and strengthening Canada's tax system. Canada needs a 21st century tax system that is simple, fair, efficient, and transparent with low, internationally competitive tax rates.
We agree. Efficiency, transparency and predictability in our tax code are important for Canadian businesses, fiscal planning and a healthy economy.
The Auditor General also agrees, and raised concerns a few years ago about the slow pace of the government in legislating these technical changes found in the Department of Finance comfort letters.
In 2009 it was raised at that time that there were at least 400 outstanding technical amendments that had not yet been put into legislation. Now, going on four years later, 200 of these outstanding amendments are finally being addressed in Bill C-48.
In the 2009 fall report, the Auditor General wrote:
No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.
While Bill C-48 aims to deal with more than 200 of these changes, it still leaves a good deal remaining. One has to wonder how long we, the business community and tax practitioners, will have to wait for the next update.
The second concern is with respect to transparency. Certainly the size of this bill, close to 1,000 pages, and the long lapse of time between Bill C-48 and the last technical tax bill indicate that this process clearly still needs improvement.
The government must work harder to ensure the integrity of our tax system. The size of this bill also says something about the government's concern for transparency. I hope this bill of approximately 1,000 pages receives thorough scrutiny by parliamentarians and full debate in the House and proper examination and consideration at all stages.
The large nature of the bill due to the infrequency of technical income tax bills has negative impacts on the business community and certainly makes it difficult for proper evaluation by Parliament.
As the Auditor General wrote:
If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.
We need to do better and ensure that we are doing the necessary due diligence when we are responsible for the affairs of Canadians.
Finally, the third concern is compliance. While the measures in the bill are much needed and important, we also need to focus on compliance. While the vast majority of these measures in Bill C-48 have already been in practice for several years, as it is standard practice for tax measures to take effect upon their proposal, the aspects that have not yet taken effect typically involve direct reporting or compliance.
Compliance is extremely important to ensure the integrity of our tax system, as well as the need to close unexpected loopholes in a timely manner. While we agree that these changes are necessary, I wonder what efforts the government is going to take to ensure that people are complying with the ongoing technical changes?
Finally, ensuring the integrity of our tax system is essential. The last technical bill was passed in 2001 and the long lapse of time between Bill C-48 and the last technical bill indicates that this process still needs improvement.
The responsible management of tax code means that changes must be made on a regular and ongoing basis so those impacted are not left in a state of uncertainty. The Conservatives must ensure to further improve the process for getting these technical changes into legislation on a regular basis to create greater certainty, predictability and transparency in our tax system.
Sadia Groguhé NDP Saint-Lambert, QC
Mr. Speaker, I congratulate my colleague on her speech.
She talked about the need to process technical changes every year in order to avoid a backlog. The size of this bill quite obviously shows us that we will have to have smaller, more human-scale bills in order to simplify the regulations of the Income Tax Act.
Can she comment on that?
Rathika Sitsabaiesan NDP Scarborough—Rouge River, ON
Mr. Speaker, I agree with my colleague from Saint-Lambert when she says it makes it a much more palpable and easy process for everybody, whether they be parliamentarians, clerks and our people who work in Parliament, business professionals, tax practitioners or whoever they may be. It makes it much easier when these practices are brought into law on a regular basis in small, bite-size bills rather than big telephone-book-size bills.
When the former senior chief of the sales tax division, tax policy branch of the Department of Finance, Marlene Legare, appeared before the Senate banking committee in September 2000, she said:
—I think that the main problem that has resulted in an especially long delay in this case is a timing decision. Once a particular set of measures has gone through that process and is ready to be put forward, should it then be put into a smaller bill, meaning Parliament would deal with more bills in a particular session, or should it be held aside to be included in a larger bill? We are developing a technical bill on an ongoing basis. Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis.
So even the former senior chief of the Department of Finance's sales tax division, tax policy branch, agrees that it should be brought forward in smaller bills in a more timely manner so that our laws and legislations are actually, in effect, reflecting the practices in this country.
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
Mr. Speaker, I greatly appreciate all of the feedback we are getting on this side of the House with respect to this particular bill.
In particular I would like to touch on part 7, which talks about the first nations goods and services tax between the federal government and aboriginal governments to be administered through a provincial administration system if the province also administers the federal GST. If we think back to how that issue was bungled when the HST was rolled out in Ontario, it will help us avoid a similar scenario in the future.
On that note, I have been speaking with some first nations youth from Whitefish River First Nation this weekend, and they still wonder why the government does not meaningfully consult with and accommodate first nations when it comes to legislation, such as this one as well. As members know, it was a big issue with respect to the GST and the HST discussions and even of the bill itself, and we would not have seen ourselves in that situation.
Can my colleague comment on the importance of having the government meaningfully consult, accommodate and get free and prior informed consent before tabling legislation that affects first nations?
Rathika Sitsabaiesan NDP Scarborough—Rouge River, ON
Mr. Speaker, I thank my hon. colleague for the extremely hard work she does. I have learned that the terrain of her constituency is vast, and how she is able to meet with constituents of all parts of her terrain is absolutely mind-blowing, and the work she does is laudable.
The member is correct that it is imperative that the government consult with the people who would be affected and impacted by the legislation that the government is proposing, especially the first nations communities that have the right to know what is coming up the pipe. I agree 100% with my colleague that the Conservatives have the fiduciary responsibility to consult with the people who are going to be affected by the changes they are proposing.
Irene Mathyssen NDP London—Fanshawe, ON
Mr. Speaker, I will be sharing my time this afternoon.
I am most pleased to join the debate on Bill C-48, a bill to amend the Income Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Act and related legislation.
The bill makes important and long-overdue changes to the tax laws, and this is the issue. While New Democrats support the bill, we do take issue with the omnibus nature of it. At close to 1,000 pages, it leaves little opportunity for study and debate.
The very point of Parliament and our democratic system is not only to introduce laws but to scrutinize those laws and ensure they are accurate and they work in the best interests of the country. That is the very reason we are all here, to work toward the betterment of this great country.
We put at risk our very democracy and we shun the very core of Parliament by introducing huge pieces of legislation that leave little time for such scrutiny.
I notice the members across have chosen to put up only one speaker on the bill, leaving the official opposition with the task of carrying out that important scrutiny of Bill C-48. That should be the role of all parliamentarians, but it seems that upholding the functions, checks and balances that Parliament is supposed to provide is not a priority with the government.
Conservatives take partisan rhetoric to the extreme and continue to introduce mammoth bills with as little debate as possible, and in fact with closure motions, so that there is as little debate as possible.
I want to add that it is not the changes that Bill C-48 undertakes that New Democrats are concerned about; it is the fact that the bill is so very large that the ability to scrutinize it is almost impossible. The changes outlined in Bill C-48 should have been introduced over the years, not grouped into one unwieldy bill.
There is no need for this massive piece of legislation. It should have been introduced in smaller pieces as routine housekeeping bills over the years. In fact, Bill C-48 includes outstanding legislative proposals dating back as far as 1998. Many of us in this chamber were children then. Good heavens, what a long time to postpone and procrastinate.
Even if the Prime Minister was not aware of these much needed updates to taxes, in 2009, the Auditor General raised concerns about the fact that there were at least 400 outstanding technical amendments that had not yet been put into legislation. There is no excuse. There were several years and plenty of time after this report was released to introduce the smaller bills that would have addressed the backlog of tax changes that needed to be addressed.
Of the outstanding changes outlined by the Auditor General, more than 200 are now in Bill C-48. Most tax practitioners have been relatively happy with the practice of the comfort letter process. However, as I have indicated already, the Auditor General's 2009 report noted “an expressed need for the legislative changes that the comfort letters identified and should be enacted”.
I want to quote a little further from the Auditor General's fall report of 2009:
No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998.
The Auditor General is very clear. The need for updates to the legislation is important, perhaps even critical, and we had plenty of opportunities to pass bills related to tax legislation long before now.
Sadly, this is not the first time the Auditor General has complained about this issue. She expressed concerns over and over again, and in response the Department of Finance Canada stated:
—the government intends to release a package of income tax technical amendments on an annual basis, so that taxpayers will not be subject to more lengthy waiting periods as in the past before amendments are released to the public.
While comfort letters have since been regularly released to the public, very few technical bills have been introduced or passed in recent years. In the last 18 years, only four such income tax bills have been enacted. Annual income tax technical amendments were promised, but neither Liberals nor Conservatives bothered to do this basic annual housekeeping. How on earth can they continue to misrepresent themselves as good managers when their ability to manage is so obviously bad?
I would like to reiterate that there is absolutely no need to create massive bills such as this. At close to 1,000 pages, this is most definitely an omnibus bill. However, in contrast to the government's Trojan Horse budget bills, Bill C-48 does make some technical changes and does have a purpose as opposed to the callous lumping together of Conservative legislation into two omnibus bills in the spring and fall sessions. In those bills we saw the dismantling of environmental reviews, the rewriting of the Fisheries Act, the elimination of wildlife habitat protection, the repeal of the Kyoto Protocol Implementation Act, the reduction of the powers of the Auditor General and the dissolving of the Public Appointments Commission meant to fight patronage.
We also saw the gutting of food safety inspection. It was a one-stop shop of Conservative slicing and dicing through services Canadians rely on, while making changes to a slew of laws that they never once mentioned in their budget. By forcing omnibus bills such as the Trojan Horse bills through, the Conservatives demonstrated a mastery of the art of circumventing the democratic process and ignoring the concerns of Canadians and the concerns of first nations.
We now see another massive bill in Bill C-48 and that tells me that there is still work to be done among Conservatives if we are to see important changes legislated in a timely fashion. Failing to do so would hurt the business community and make it difficult for proper evaluation by Parliament.
It is not just difficult for parliamentarians. The government claims that its goal is to boost the economy, but by introducing overly complex bills, it does not allow small business people to invest the time and resources they need in order to understand them. They are in the business of business. They are not in the business of circumventing all of this red tape.
The Auditor General was clear about this and said, “If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers [and] tax practitioners...”.
It is not just the Auditor General who has noted this issue. We heard from the Certified General Accountants Association of Canada. In its pre-budget submission, it said that, “CGA-Canada strongly believes that the key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction”.
There is a need to modernize the system and smaller bills would do that.
Finally, I would like to address the very important issue of tax avoidance, parts of which have been addressed in Bill C-48. It is very important for the government. New Democrats absolutely believe in cracking down on both tax avoidance and tax evasion while ensuring the integrity of the tax system.
As members know, there are many honest and hard-working Canadians out there who believe in the systems that our taxes support such as health care, social assistance and various environmental policies, even though they have been dismantled and disrupted. Those Canadians need to know that everyone is paying his or her fair share and that every business and every person is making the contribution to this country that we need. Therefore, it is important to focus on compliance in order to ensure the integrity of our tax system. It is important to get rid of the loopholes in a timely manner. In an ever-growing complexity of tax codes, we now need simplification, clarity and changes that will make it progressive and effective.
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Speaker, I thank my colleague for her speech.
We have continually challenged the government on its primary responsibility to respect Canadians by being predictable, fair, clear and disciplined in being accountable and in adopting tax measures, in order to help the public cope with economic difficulties. I am thinking about the business owners I spoke to when I came back after the holidays, just a few days ago. They are demanding recognition and respect from the government.
My colleague is facing many challenges, as am I in Beauport—Limoilou. Big businesses have made massive cuts, and this affects small businesses that subcontract or that draw some type of benefit. I would like my colleague to talk about the lack of trust business owners in her riding have in the government because of its negligence and inaction.
Irene Mathyssen NDP London—Fanshawe, ON
Mr. Speaker, my colleague is absolutely right about the difficulties facing people not only in all of Canada but particularly in ridings where multinational corporations have taken and taken and taken, whether tax benefits, resources, consuming infrastructure, or utilizing the expertise of the workers who made them wealthy and competitive industries and simply walked away, leaving the country high and dry, as we saw with the community of London—Fanshawe when the offshoot of Caterpillar left.
The future of this country is very clearly with small- and medium-size businesses. They are part of the community. In fact, last week I had the profound pleasure of speaking to members of the Rotary Club, made up of members of the small- and medium-size businesses that employ people, that are contributors to the community. They are not just there to take, take, take; they are there to give back and make for strong neighbourhoods. Therefore, we need a tax system that suits their needs. We need to stop these huge and ridiculous tax breaks for multinational corporations, the polluters, the banks, which are giving back very little, if anything at all, and we need to look very closely at small- and medium-size business and in that process make it as easy and expedient as possible for them to do their jobs as we would like.
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Mr. Speaker, I would like to know whether my colleague can tell us if there would be a way for the government to make these tax measures much easier for the average person to understand—for me, for all MPs here, as well as for all businesses—instead of presenting a massive one-time reform of tax laws with 1,000 pages every 10 or 11 years. How could it be simpler?
Irene Mathyssen NDP London—Fanshawe, ON
Mr. Speaker, I think it is really quite clear to us on this side of the House that smaller, more manageable bills would be the way to go. The promise to have an annual legislative process in place, I think, is the intelligent way to go. In that way, people could digest the small chunks at a time instead of this 10-year process where a thousand pages come at us and we try to sift and sort and understand them.
This is not exactly in regard to taxation, but very recently I received a number of complaints from concerned seniors who are being told that their income tax returns will now have to be done over the Internet. They are absolutely apoplectic. This is just another example of a government that is not looking at the needs of Canadians and is steamrolling over those Canadians.
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
Mr. Speaker, as this is my first time rising in the House in 2013, I would like to take a minute to wish my constituents a happy and prosperous New Year.
I am glad to speak to Bill C-48 today, a bill that has been a long time coming. I hope it will not be another decade before we undergo this exercise again.
As we have heard, this is a huge bill. It addresses the changes to the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. It is almost a thousand pages.
What sets this large piece of legislation apart from the omnibus budget implementation acts that we debated last year is that it makes changes to a few closely related pieces of legislation. Therefore, I am perplexed as to why the government did not just throw it all in with the other stuff.
As we heard today, these changes are mostly old news and have been in practice for a number of years. That said, the bill is needed, as it has been more than 10 years since we have updated tax code legislation.
It is not that there have not been changes. The bill will include hundreds of tax measures that are already in place and have been enacted by comfort letters. In that respect, a lot of Bill C-48 amounts to technical housekeeping.
As the House is aware, the New Democrats are supporting the bill, but that does not amount to the acceptance of the government's direction on taxation or the belief that this entire process should not be improved. Certainly, the long period between updates to the tax code lead us to the situation that we have now where the legislation becomes so large. If we were to go through this process a little more regularly, we could avoid the scenario where MPs are forced to vote on bills that defy thorough study.
Tax lawyer Thomas McDonnell stated as much in a blog that touches on Bill C-48 as he discussed the legislative process with respect to taxation in both the United States and Canada. He wrote:
This Bill will also be passed without much in the way of informed debate in the House. Most parliamentarians voting on it will admit that they have not read it, let alone tried to fully understand the consequences of voting for (or against) it. This is not how Parliament is supposed to deal with one of its essential functions–the raising of revenue.
With that in mind it seems fairly straightforward to suggest that the government would do well to set a more regular schedule for this type of legislation going forward. I cannot imagine that such a move would be anything but positive, especially for those people whose business it is to work with the tax code.
We know there is broad support to do the work set out in the bill to get these measures into the tax code proper. The Auditor General has told us that it is long overdue. She told Parliament in 2009 that there were at least 400 outstanding technical amendments that had not yet been put into legislation. Over 200 of those outstanding changes are addressed in Bill C-48. While the Auditor General acknowledged that most tax practitioners were relatively happy with the comfort letter process, she noted the need to enact the legislative changes the comfort letters identified. Why it took four years to act on that advice is a question the government will have to answer. With the support it is receiving for Bill C-48 today, it is obvious that this could have been done some time ago.
When we are speaking about taxes, especially in the technical manner that we are today, most Canadians will not be sitting on the edge of their seats. This is not a bill that is likely to be newsworthy, since most of it is old news. What the bill does a lot of is to bring existing measures into the tax code that are designed to curb tax avoidance, which is actually good news for the vast majority of Canadians.
While the political discourse on taxation is often stuck in one gear, namely how to cut taxes, what is usually lost in the debate is the role that taxes play. Despite the universal desire to pay less, most people recognize the necessity of taxes. They allow us to operate as a country and can help us do a lot of good. Let us not forget about all the infrastructure dollars that go into our communities; they come from part of our taxes.
It is also a simple fact that countries require revenue and that revenue largely comes from taxation. What people absolutely want to see is a tax system that is fair, a system that guards against tax avoidance and a system that does not reward those people who are in a position to hide their money from their country. People do not want to feel that they are paying to subsidize others who have managed to use loopholes to minimize their contribution. That will not sit well with hard-working Canadians, and it should not sit well with parliamentarians either.
New Democrats understand this. We believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being proposed in the bill, especially those that aim to reduce tax avoidance.
The work being proposed in Bill C-48 is long overdue. Among the beneficiaries of the bill will be small businesses. These are the cornerstone of our communities, and it is important for us to do everything we can to create an environment that would make it easier to do business. These business people have enough to worry about without having to consider things like comfort letters. In that respect, what we are debating here is good. We would be streamlining the workload that businesses will have to comply with. Based on what I hear from businesses in my constituency of Algoma—Manitoulin—Kapuskasing, that would be a good and welcome thing.
As we have heard today, it would be impossible for any one of us to give a detailed account of such a large bill in the limited time we have to speak to the bill, so I will touch on one last item that I believe is timely.
What I am talking about is part 7 of Bill C-48. Part 7 clarifies the minister's authority to amend schedules and annexes to tax administration agreements if doing so does not fundamentally change the terms of the agreement. It would also allow tax administration agreements for the first nations goods and services tax between the federal government and aboriginal governments to be administered through a provincial administration system if the province also administers the federal GST. If we think back to how that issue was bungled when the HST was rolled out in Ontario, it would certainly help us avoid a similar scenario in the future.
I am sure members remember the discussion on the HST in Ontario. When the HST was brought in, how it would affect first nations was an afterthought by the Conservative government. Only some eleventh-hour negotiating at the insistence of Ontario chiefs like Chief Shining Turtle of Whitefish River First Nation, who is also the chair of the United Chiefs and Councils of Mnidoo Mnising First Nations on Manitoulin Island and Anishinabek Nation Grand Council Chief Patrick Madahbee. They avoided a showdown over the issue. In the end the solution was there all along. The Conservative government and the Government of Ontario chose to ignore it until they had no choice.
It is fitting that the Idle No More national day of protest was held in front of Parliament today. This is a similar issue. Some of us, along with the leader of the NDP, took the opportunity to meet with these people who have travelled a long way to bring their message of dissatisfaction to Parliament. Much of the frustration they are expressing comes from exactly the type of oversight that was on display when the HST turned first nations' tax exempt status into an exercise in red tape. What was forgotten at that time was the constitutional obligation of the federal government to meaningfully consult and accommodate first nations in decisions that directly affect them. I would like members to think about that because it seems that people have forgotten those words. I will repeat them: meaningfully consulting, meaningfully accommodating first nations in decisions that directly affect them.
This has been a sticking point for the Conservative government and I hope it has now recognized that first nations are not going to merely roll over and accept top-down directives. Had the government consulted, it would have heard that messing with tax exempt status was a non-starter and it could have moved immediately to the solution. Had the government remembered about the HST fiasco, it would not have gone ahead with the type of legislation that it threw into Bill C-45.
I met with some young people from the Whitefish River first nation. They do not understand why the government is not respecting their treaty rights, the accords and other agreements that have been signed. They are beyond themselves when it comes to the fact that the government often does not respect doing meaningful consultation. They have a right to that. New Democrats are hopeful the government will now show signs of understanding this and will proceed accordingly.
In closing, I reiterate that although New Democrats are supporting this bill, it is by no means an endorsement of the government's tax policies which put too much of the burden on the little guy while allowing an increasingly freer ride for the top earners in this country. We remain unconvinced that such a model is the best way to create wealth or jobs, but that is not the goal of this legislation either.