House of Commons Hansard #95 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was seniors.
Canada Pension PlanGovernment Orders
The Assistant Deputy Speaker Carol Hughes
I will remind the member that it is “he” made some good points, as opposed to “you”. That would be acceptable. It has to be through the Speaker.
Scott Duvall NDP Hamilton Mountain, ON
Madam Speaker, some good statements were made about what we are going to do now for the people and that we have to help them out going into the future.
We made some adjustments to the CPP in this bill for future generations, but what about the people now?
Prior to 2012, a person had the option to retire and collect a pension at 60, or he could collect it at 70. If he collected it early, there would be a reduction, but it was needed. We did that to help people who were either forced into retirement or who could not work for health reasons or because of the environment they were working in.
Prior to 2012, we had that. It was a 0.5% per month reduction, to a maximum of 30%. In 2012, it was increased to a 0.6% reduction to a maximum of 35% at age 60. This really hurt a lot of people. It took a lot out of their pocketbooks.
I am wondering, through you, Madam Speaker, to the member, would you go to your government and ask to have it go back to a 30% maximum to help the people who, now, or coming up in the future, have lost their jobs—
Canada Pension PlanGovernment Orders
The Assistant Deputy Speaker Carol Hughes
We have to allow for more time for other parties to have questions as well, and for answers. Again, when we are mentioning the word “you”, that is not acceptable. It should be “he” or “she” or through me.
The hon. parliamentary secretary to the government House leader.
Kevin Lamoureux Liberal Winnipeg North, MB
Madam Speaker, I will attempt to answer the question as best I can. We need to look at this. We have a bill dealing with one of Canada's top three pensionable issues, in this case the CPP. It is the working class of today who would benefit from this bill in a real and tangible way.
Within the last year we have also seen the Government of Canada reverse the Conservatives' decision to increase the age of retirement. We went in the opposite direction. The Conservatives had decided that in order to claim OAS, people had to wait until they were age 67. We, as a government, have reversed that position and brought it back to 65, because Canada can afford to do that.
If we look at the third component, the GIS, it has received a substantial increase, to the tune where many seniors who have fixed incomes or low incomes in Winnipeg North, probably a thousand plus seniors, will see huge increases. That is taking effect now. That is why I challenge the Conservatives or any member, because these are all things that the government has done within a year.
With respect to the specifics that the member referred to, I would suggest that he work with the standing committee, talk about it at committee, and see if we can get the committee to possibly take it into consideration sometime in the not too distant future.
Rodger Cuzner LiberalParliamentary Secretary to the Minister of Employment
Madam Speaker, my colleague is a veteran member of the chamber and I would like his comments on this. The former prime minister, Stephen Harper, announced the increase in the age of eligibility for OAS from 65 to 67 when he was not even in the country, but abroad at the World Economic Forum. It was not even announced in his campaign in 2011. There was no mention of it. Therefore, he just heaped this on some of the most disadvantaged in our country. In this case, it was central to our campaign. Canadians knew what this government was offering and voted to support our party in the last election because they knew what we were offering, which is transparency and openness.
Does the member not see the contrast in the way that both situations were handled? I am sure that Canadians see the contrast.
Kevin Lamoureux Liberal Winnipeg North, MB
Madam Speaker, I can recall what happened, because I was sitting on the other side with my colleague when the announcement was made. I am not 100% sure if we were in session, if it was the following day or the weekend, but the Prime Minister was somewhere overseas when we found out that he was increasing the age of retirement from 65 to 67. The response from my constituents was immediate, and I would suspect it was from Canadians as a whole. They were saying, “Where did this come from?” Then the Conservatives tried to allude to there being some sort of a crisis, but one that was just not there.
Virtually from day one, the Liberal Party indicated that if we formed government, we would decrease the age of eligibility back to 65. That is one of the things we did immediately upon taking office. That is part of this real change that the Prime Minister had promised. I am glad to say that whether it is reducing the age of eligibility from 67 to 65, the increase to the GIS, or Bill C-26, these are all changes that have a profound and positive impact on our seniors and future seniors.
Jim Eglinski Conservative Yellowhead, AB
Madam Speaker, Canada's savings rate has climbed from 7.7% back in the 1990s to 14.1% today. That is according to the C.D. Howe Institute. Just the other day, Finance Canada said that the higher CPP premiums would hurt the economy by reducing private savings by 7%. Could the member comment on that, because it sounds like we are going backwards?
Kevin Lamoureux Liberal Winnipeg North, MB
Madam Speaker, if this is of concern to the member, I respect that. However, I can tell him that in order to get this bill before the House today, we had to have the agreement of the provinces in Canada. Obviously, there are many stakeholders in other government jurisdictions that are following the lead that has been demonstrated by this Prime Minister and government. That is why we have the bill before us today. It is a good thing for Canada's middle class, and for those who are aspiring to be part of it.
John Barlow Conservative Foothills, AB
Madam Speaker, I appreciate the opportunity to speak today on bill C-26. We are seeing the frightening trend of the Liberal government's imposition of punitive taxes without consultation, with very little feedback from stakeholders, and with very little knowledge of the economic impact these decisions and policies are going to have on Canadian families, and Canadian small businesses specifically.
First, it started with the carbon tax, which is going to increase the cost of pretty much everything. The government has also changed the mortgage rules, which will make it that much more difficult for young Canadians to buy their first home. Now it is talking about a hike to the CPP, which is really going to hamper growth in the small business sector. These are all policy decisions that have been imposed by the Liberal government with absolutely no consultation or study of their ramifications for Canadian families, small businesses, and the provinces.
I am the vice-chair of the Standing Committee on Natural Resources, which has been hearing from stakeholders over the last couple of weeks since the carbon tax was announced. All of these stakeholders have said that no one spoke to them about it, that this is going to make the difference between their putting shovels in the ground in some projects, or walking away entirely. What are the ramifications and implications going to be for our energy industry, which is already struggling, if a punitive carbon tax is imposed without any data to back up the economic impacts of that decision?
Yesterday, a motion was put forward in the natural resources committee that the committee do an emergency study of the economic impacts of the carbon tax on the natural resources sector. If Liberals were that confident that the carbon tax and the CPP tax hike were going to have beneficial and positive ramifications for Canadians across the country, then, in my estimation, they would have agreed to go ahead with that study, but they did not. They unanimously voted it down, because they do not know the ramifications of policies like this for hard-working Canadian families.
They are plowing ahead with these kinds of decisions because they think these make great politics for the very vocal minority of union bosses and big companies. Those are the ones driving these decisions. They are not talking to middle-class Canadians, the ones whose pocketbooks are going to be impacted by these decisions. That is what makes these types of decisions so frustrating.
A couple of weeks ago I had an opportunity to speak at a summit in Calgary, which was titled, unfortunately, “The Employment Crisis for Canada’s Energy Professionals—A Lost Opportunity for Canada”. There were more than 200 professionals at that meeting. They were not rig workers or welders, not the people we typically associate with feeling the impact of the downturn in the energy sector. They were petroleum engineers, geophysicists, and geologists. Many of them have not had a job in more than two years.
I asked them if they or their associations were consulted about the carbon tax or the tax increase via the Canada pension plan. I asked if the Liberal government talked to their associations, which include thousands of Canadian professionals across the country. Every single one of them said no, that these things were a complete shock to them. I said there had been ups and downs and booms and busts in the energy sector for decades, and they agreed that these, absolutely, had happened many times but this was the worst they had ever seen.
We heard in question period today and many times over the last week that Alberta has been hit hard by the downturn because of low oil prices. A barrel of oil is now more than $50. A low oil price is not the only reason that Alberta is struggling right now. It is bad policy, it is inaction, it is tax increases on businesses and employers. The professionals said they do not see a light at the end of this tunnel because of the policies being put forward, like a carbon tax that is increasing indecision in the industry, driving away investment, and taking their jobs with them.
They said that intellectual capital is going to be lost because of these decisions and that they are uncompetitive globally in energy, manufacturing, and agriculture, thanks to the decision of the government to put forward a carbon tax, and now a CPP tax hike, not to mention the changes to the mortgage rules that are making it more difficult for young families to buy their first home.
My colleague from Winnipeg North was saying that when he was door-knocking in his community, he was overwhelmed by Canadians asking for these changes. I had zero. Not once did I go to a door and somebody said, “Boy, I am really looking forward to a carbon tax. I am really looking forward to a hike in my CPP taxes, and do you know what? I really hope that you make it more difficult for me to buy my first home.”
Maybe residents of southern Alberta are much more savvy, I am not sure. These issues were never raised in that campaign, so for the Liberals to say that they have this incredible mandate because of what happened a year ago, I think it is disingenuous. I think they are putting through decisions that appeal to a very vocal minority of Canadians but are not in the best interests of hard-working Canadian families.
I would like to talk about some of the things that have been said so far today about how this would help Canadians in their retirement. Having an increase in CPP is great if I have a job, but now there are more than 200,000 Canadians who do not have jobs. I have not heard any decisions or any policies brought forward by the government that would help change that.
We have vehicles in place that will help Canadians save. What I think is most important with those things, including the tax-free savings account, which the government has clawed back, is that, again, in contrast to what my hon. colleague has been saying, that is something I definitely heard at doors. Canadians liked the opportunity to save on their own terms. It is absolutely their money. They want to make the decisions on what they do and how they save with their own money.
It is definitely a step backward to look at government as being the answer to everything. If people do not know how to save, the government will take care of that for them. Canadians are much more savvy than the Liberals are giving them credit for.
We also heard, when the Liberals made the decision to claw back the tax-free savings account, that this is just a vehicle for the wealthy. Only wealthy Canadians have the opportunity to invest in the tax-free savings account. Of those Canadians who have maxed out their tax-free savings account, 60% were making $60,000 or less. Those are not wealthy Canadians. Those are hard-working Canadian families who are making very tough choices for their future.
They are putting money aside to buy their first home, which now, unfortunately, is even more difficult to buy. I would ask where the government got the information that this was a good decision. Maybe it is for Vancouver or Toronto, but it certainly is not for Calgary or rural Alberta. I certainly have not had anybody come to me and say that this is a good decision. I have had the exact opposite. Realtors, mortgagers, credit unions, young families, come to me and say that this is devastating. Now it will take them another decade to save up for that first home, which we know is one of the largest investments they will have in their lifetimes.
When I was going door to door last October, I had so many Canadians, so many residents in my riding of Foothills, talk to me about the importance of the tax-free savings account and how welcoming they were that they would have an opportunity to invest further in a tax-free savings account. As I said, these were Canadians who were making very difficult choices for their families, whether it was a first home, their child's education, or saving for their own retirement.
The key to that is that Canadians had the opportunity to make their own decisions on what they felt was best for them and best for their families and their children's futures. This is a decision, once again, where government is imposing its will on Canadians, and Canadians have not said in any way, shape, or form that this is what they want, whether it is a carbon tax, mortgage rule changes, tax-free savings accounts, or electoral reform.
I do not understand why the government feels that it should be governing with an iron fist, a sledgehammer, and imposing its will on the provinces and Canadians. This is certainly not what I heard from hard-working Canadian families or certainly folks in my riding throughout the election campaign, and even before that.
But what has really been overlooked here is the impact this would have on small businesses. It is ironic that we are having this discussion during Small Business Week here in Canada. I am hearing daily from small business owners in my riding in southern Alberta and across the province that they are struggling. I do not think it is any mystery. The Liberal government will not do anything about it except to say that it has compassion and sympathy for what is going on in Alberta. I say in response, well, do something about it and give us a hand.
Imposing a carbon tax, and now a CPP hike on small business owners, is certainly not the way to do it. We have a very fragile economy right now in Alberta, and to impose these types of decisions when we are struggling does not make any sense. Alberta was the economic engine of this country for decades and, unfortunately, that engine has stalled. Rather than giving us a lifeline, the Liberals are throwing us an anchor. This would push those small business owners off the edge.
Right now in Calgary the unemployment rate is in the double digits. The vacancy rate in downtown Calgary is at 30%. It is unbelievable to me that in a province I have raised my family in and have worked in, I can go to downtown Calgary and see 8th Avenue deserted and entire floors of business buildings and office towers deserted. There is nothing but empty desks and empty offices. Yet our top priority is to impose a Canada pension plan tax hike, which would cost business owners more than $1,000 a year per employee.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business notes that “Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike.”
When we are already struggling with an unemployment rate in Alberta close to double digits, and in some communities well over double digits, and 200,000 direct and indirect energy jobs that have been lost, we would further stress the employment numbers with these decisions. It will be more difficult for a small business owner to hire because of the increased costs from this CPP tax hike, which I do not think anyone was really asking for.
Indeed, Hendrik Brakel, a senior director at the Canadian Chamber of Commerce, has said:
...we’re worried a big tax increase is headed for the middle class like an elbow to the chest....
This comes at the worst possible time—an economy reeling from weak commodity prices and slower consumer spending will be lucky to eke out growth of 1.5% next year. It’s difficult to stimulate the economy while pulling money out of the pockets of Canadians.
The Chamber of Commerce represents businesses across the country, as does the Canadian Federation of Independent Business. These people are raising the alarm about the impact of the CPP tax hike on small businesses at the worst possible time.
I know we talk a lot about Alberta, but the energy downturn has impacted Canadians across the country. I was in Nova Scotia a couple of weeks ago, and it was amazing how many people came up to me to say, “I was working in Alberta in the oil sands, but I had to come home, obviously, because there are no jobs. But there are no jobs for me here either”. We need energy east. We need policies in place that will kick-start our energy industry. But instead, when it is down, we kick it with a carbon tax and now a CPP tax hike. Where does this make sense?
I am going to conclude with this. This has been my question all along: if the Liberals are so confident that these types of policies will bring a great positive change to our economy, with all these great jobs for Canadians they talk about, can they prove it? Can they show me the data? Can they show me an economic impact study they did before they announced the carbon tax and the CPP tax hike? I have not seen it. If they are so confident this is the best thing for Canadians, I ask them to show it to me.
Greg Fergus LiberalParliamentary Secretary to the Minister of Innovation
Madam Speaker, I would like to thank the hon. member for his interesting speech. I am certain that it was heartfelt and he represents his constituents well.
However, he raised so many questions that I could not resist the opportunity to ask some questions back to him, or at least share some of the observations I made back in my own riding during the election. One is that he mocked the idea that Canadians are supportive of putting a price on carbon pollution.
I did not have a safe riding. I had to work very hard to win the riding. We spent many months, my team and I, knocking on 35,000 doors. I heard over and over again from people that they wanted two things. They wanted Canada to take a leadership role again on the international stage, which meant re-engaging with the commitments we made to deal with respect to the environment. Many times, people brought up the notion of carbon pricing. The idea is very simple, at least in the case of British Columbia: “Keep your taxes, keep your profits, but if you cause pollution, you pay for it.”
I just want to reassure the member that certainly was the case in my riding of Hull—Aylmer.
John Barlow Conservative Foothills, AB
Madam Speaker, I have a lot of respect for my colleague. I just want to say that I think all of us worked very hard in our ridings during the election. I hope he is not insinuating that some of us have safe ridings and are not in contact with the feelings of our constituents.
I am sure some of the constituents in his riding were talking about a price on carbon. I wish they would just say what it is. It is a carbon tax. This “price on carbon” I find ridiculous. For anybody who says the famous last words of any government are revenue neutral, I think we all know that is not going to be the case.
When he was going around to his constituents, did he tell them that it was going to be $50 a tonne? Did he tell those people at the door it was going to be 11¢ a litre on gas and another 14¢ a litre on diesel? Did he tell them that? Did he tell them, “Actually, it's not going to be the businesses that cause the pollution that are going to be paying for that carbon tax. It is going to be you paying for that carbon tax”?
Did he talk to the farmers and ranchers in my riding who are seeing their fuel prices double because of the carbon tax? This is not an area where I have public transit and my residents could take a bus. The carbon tax is going to be extremely painful for rural Canadians.
Karen Vecchio Conservative Elgin—Middlesex—London, ON
Madam Speaker, I can totally empathize with him, because during the 2008 global recession, in my own community, there were huge job losses. We saw over 6,500 jobs lost in the St. Thomas area and region. I completely understand the member's concern for his constituents.
When I listened to the government speakers, I recognized that they are really confusing the Canada pension plan with what they are doing for seniors on old age security and GIS. I want to make sure that we separate those two things. They are two different pillars of retirement, so I do not want Canadians to get confused with GIS and the CPP. I just wanted to make that statement..
We talk about the CPP investment, as they are calling it, and one of my greatest concerns is that, if we are going to see job losses, we are not going to see our youth who are just graduating from colleges and universities and our young families having jobs. They will not be able to pay into the CPP anyway because to pay tax they need to have a job.
I am just wondering what his thoughts are on how we are going to help those young families and those young students get on a path so that they can have economic independence.
John Barlow Conservative Foothills, AB
Madam Speaker, I want to thank my colleague, the member for Elgin—Middlesex—London, for a great question and for all the advocacy she has done for her riding, and especially, for young Canadians.
My answer would be that this is absolutely backwards. Not only will these young people have a tough time finding jobs, but because they are paying into this, they will have a very difficult time repaying their student loans or saving for a first home. Youth unemployment now is at more than 16%. It will be much worse and they are going to have a much more difficult start to their professional lives.
Canada Pension PlanGovernment Orders
The Assistant Deputy Speaker Carol Hughes
The member will have a little over five minutes left in questions and comments the next time this matter is before the House.
It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's Order Paper.
The House resumed from April 14 consideration of the motion.
David Graham Liberal Laurentides—Labelle, QC
Madam Speaker, I am pleased to provide an update on what Canada has been doing with respect to tax fairness. This is certainly one of our government's most significant responsibilities, and Canadians legitimately expect us to take effective action on this file.
The government did not wait long to act. In December 2015, it introduced a tax cut to benefit the middle class by reducing the tax rate for the second personal income tax bracket. On average, for a single person, that amounts to $330 per year, and for a couple, $540. Close to nine million Canadians have already begun to benefit from that tax cut.
Canadians have every right to expect everyone to pay their fair share of tax. That is why the tax rate for the wealthiest Canadians, those earning more than $200,000 in taxable income per year, went up. People are worried about sneaky individuals who know how to work the system slipping through the cracks. The Canadian government began tackling this problem head-on well before the Panama papers revelations by including measures to combat tax evasion and tax avoidance in its 2016 budget.
In total, $444.4 million will be allocated to the Canada Revenue Agency over the next five years to operate more effectively. In other words, CRA is hiring 100 specialized auditors who will oversee large, high-risk multinationals. CRA will have the financial means to conduct its investigations and we think it will be able to recover $500 million in five years from multinationals alone.
What is more, within five years there will be five times as many audits of Canadian taxpayers considered to be high risk. Nearly 3,000 audits will be done, potentially putting $432 million back into government coffers.
Tax fairness is also about going further and dealing with those who abuse the system. A team of 24 auditors will be specifically assigned to go after those who come up with tax schemes and promote them to taxpayers to help them get out of paying the taxes they legitimately owe.
Every year, 200 files will be reviewed, which is 10 times the number currently being reviewed. This team will be able to conduct audits, charge fines, and request criminal investigations if deemed necessary. With the help of its legal team, it will ensure that these types of cases go before the courts quickly.
Canada has taken serious action to ensure greater tax fairness, because it is important that all Canadians contribute equitably. That is why budget 2016 invests an additional $351.6 million over five years to recover unpaid taxes.
Making sure that all Canadians pay their fair share of taxes will give the government the tax base it needs to implement initiatives like the Canada child benefit, the most significant family policy innovation in a generation.
A family could receive up to $6,400 per child under the age of six, and up to $5,400 per child aged six through 17. Canadian families will see an average increase in benefits of about $2,300 in 2016-17. Nine out of ten families with children will receive more money than before.
These families, like all Canadians, are working hard to improve their standard of living. They need to know that the government will not let people trying to dodge their tax obligations get away with it.
Canada is going even further and fighting against tax evasion by working with its partners abroad to improve international fiscal transparency. In fact, Canada is one of over 100 jurisdictions that have committed to implementing the common reporting standard for automatic exchange of information on financial accounts held by non-residents.
Budget 2016 confirmed the Government of Canada's intention to implement the common reporting standard starting on July 1, 2017, which means the exchange of information can begin as early as 2018.
To this end, on April 15, 2016, our government released legislative proposals regarding the implementation of that standard for consultation purposes. The information received will help improve Canada's ability to detect and address cases of tax evasion, ensure tax compliance, and protect the integrity of Canada's tax system.
This is a clear and firm commitment by Canada to fight tax evasion, and it sends a clear message to Canadians that the government is determined to ensure that we have a fair and equitable tax system.
Canada is also working with its partners at the Organisation for Economic Co-operation and Development, the OECD, and the G20, on the base erosion and profit shifting project simply known as the BEPS project. BEPS refers to the tax planning arrangements undertaken by multinational enterprises that, though often legal, exploit the interaction between domestic and international tax rules to reduce their taxes.
Members of the OECD and the G20 have developed regulations to ensure that the profits of these companies are taxed where the economic activities take place and where the value is created.
As part of its efforts to protect the integrity of Canada's tax base, the government announced in budget 2016 that it would implement certain recommendations of the BEPS project. For instance we are going to introduce country-by-country reporting for large multinational corporations. This tool will allow the Canada Revenue Agency to have a global view of the activities of these corporations in each jurisdiction where they operate.
For example, in the country-by-country report, the large multinationals will have to indicate the global allocation, by country, of certain key variables such as consolidated revenue, tax paid or due, the number of employees, and tangible assets.
By providing a high-level overview of the global operations of large multinationals, the country-by-country report will increase transparency and help the Canada Revenue Agency conduct effective risk assessments.
In short, we have put in place a plan to fight tax evasion and tax avoidance that goes far beyond the objectives of the motion being debated today. It is a detailed and ambitious plan.
I can assure the House that the government is determined to continue down this road.
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, the motion calls on the government to amend subsection 95(1) of the Income Tax Act and section 5907 of the income tax regulations to specify that no business that is entitled to a special tax benefit conferred by Barbados under the Canada-Barbados Income Tax Agreement Act, 1980, shall be exempt from taxation because of a tax treaty.
In essence, it asks the government to override the Canada-Barbados Income Tax Agreement Act. I appreciate the sentiments of the member who sponsored this legislation. It is refreshing to hear members of the Bloc Québécois, with ideas for the benefit of Canada, proposing legislation that would increase revenue for the Government of Canada. That being said, I do not feel that this motion should be supported.
The underlying premise would seem to be to score some political points and condemn Canadians who use foreign shell companies for tax avoidance purposes. Given recent publicity regarding the Canada Revenue Agency and offshore tax havens, that is bound to be a popular topic, but popularity and good legislation are not always the same thing, just as tax avoidance and tax evasion are not the same thing.
Canadians all want to do what they can to avoid paying tax that they do not owe. It is when they cross the line of the law into tax evasion that governments need to take notice and act. I think this motion confuses the two and seeks to condemn those individuals and companies who are doing something perfectly legal.
This year, we celebrate the 50th anniversary of diplomatic relations between Canada and Barbados, which were established on November 30, 1966, the day that Barbados became an independent country. However, our relationship goes back much further than that. The Canadian Trade Commissioner Service first established an office in Barbados in 1907. This long-standing connection explains in part why many Canadian financial institutions have long had a prominent presence in Barbados.
Barbados and Canada have several bilateral financial agreements, including a 1986 social security agreement, a 1997 foreign investment protection agreement, and a 1980 double taxation agreement, which we are discussing today. Barbados is part of Canada's constituency at the International Monetary Fund and the World Bank. We have ties through the Commonwealth, sharing a heritage as former British colonies.
I think that behind this current motion is the belief that its implementation would somehow magically result in more money in the hands of the Government of Canada. This is not necessarily the case. There are plenty of other tax havens globally. I cannot see that should Canada decide to unilaterally alter this agreement there would be any net benefit for our country. Those who are law-abiding people would not be paying more. Those who are hiding money from the Canada Revenue Agency would, I suspect, find somewhere else to hide their funds. The matter is more multifaceted than is accounted for under the motion.
The Canada-Barbados Income Tax Agreement Act was designed to limit double taxation and prevent fiscal evasion with respect to taxes on income and capital. It applies to residents of both Canada and Barbados. It was first signed in 1980, with an amendment in 2011. Amendments were made at that time primarily to follow in the framework of OECD treaty models, and to ensure that holding corporations, trusts, or partnerships that hold Canadian investments in real property and resource properties will be subject to Canadian taxation on sales of the shares of the holding corporation or the interests in the partnerships or trusts.
There is a general international tax principle that the country in which immovable property is located should have the right to tax the gains from the disposition of such property. The Canada-Barbados Income Tax Agreement Act is flexible, with the intention to limit unfair and inefficient double taxation practices.
I support the act. The Conservative Party supports the act. This motion to override the act's provisions should be regarded skeptically. To suggest that Canada should unilaterally decide not to live up to an agreement we have signed is, in my opinion, irresponsible.
To support the Canada-Barbados Income Tax Agreement Act, 1980, is not to suggest support for tax evasion. In 2013, the Conservative government, in order to enhance the integrity of the tax system, created the stop international tax evasion program, aimed at reducing international tax evasion and avoidance. That the Canada Revenue Agency gained three times as much new revenue as was expected from the measures introduced in the 2013 budget is a tribute to Conservative management. The Conservative Party has a strong, successful record of standing up to international tax avoidance.
Canadians believe in a fair tax system. All of us want to know that we are being treated fairly and equally under the law. While the Conservative Party frowns upon tax evasion, it also upholds the view that this practice may be a response to unfavourable tax regimes within Canada. We believe that with fair taxation, there will be less desire on the part of some Canadians to look to other jurisdictions and to search for ways to avoid and evade Canadian taxation.
The Conservatives understand that when we make tax rates fair, when we make the system easier to navigate, it encourages businesses to invest in Canada. However, when we increase taxes, such as has been done with the recent payroll tax increases in the Canada pension plan, we discourage investment and kill Canadian jobs.
Investors, both domestic and foreign, are looking for a stable business climate where government understands the importance of allowing the private sector to lead job creation efforts. Creating an unstable business climate by, for example, unilaterally changing a long-standing international agreement is guaranteed to convince entrepreneurs that Canada is not worth the risk.
I can see that the actions of the current government, which has deferred the tax cut for small business to some mythical future date, would cause many businesses to investigate opportunities in other jurisdictions that might provide more consistent tax policies. That Canadian corporations legally transferred a record amount to tax havens in 2015 can be seen as a resounding vote of non-confidence in the Liberal government.
This, indeed, is a problem that should be addressed, but this motion is not the way to address it.
Gord Johns NDP Courtenay—Alberni, BC
Madam Speaker, I am pleased and honoured to have the opportunity to rise today to speak to Motion No. 42, regarding the Canada-Barbados income tax agreement. I want to thank the member for Joliette for bringing forward the motion.
Millions of hard-working Canadians pay their taxes in full every year, year after year. Meanwhile, some of the wealthiest people in this country are able to avoid paying their fair share by stashing billions of dollars in offshore tax havens. This unfair, sweetheart deal for millionaire tax evaders is leaving less money for health care, infrastructure, transit, and the other crucial public services all Canadians rely on.
Motion No. 42 seeks to ensure that all Canadians from billionaire corporations to single-income families would pay by the same fair tax rules. Instead of executives from Petro-Canada enjoying a new yacht or a luxury vacation thanks to the savings they benefited from due to filtering their money into tax havens, I would prefer to see middle-class Canadians benefit. People in my riding of Courtenay—Alberni could certainly benefit, as could people across the country.
We can look at the needs in our country. There are people living on the streets. We need money for homeless shelters. We have talked about a national child care program to help tackle inequality. This is billions of dollars that could pay for this important infrastructure and the needs we have in our communities, such as a pharmacare program. We know aboriginal education is heavily underfunded, yet we are giving tax breaks to the rich.
The amount of money that these big corporations and CEOs are saving could be huge if invested in clean energy and tackling climate change. We have opportunities to move forward if we do the right thing, and that is to make sure that these big corporations are paying their fair share.
The NDP has always fought for the rights of hard-working Canadians. As a party, we wholeheartedly support the idea of fighting tax havens that cost Canadian taxpayers. We believe that Motion No. 42, by the member for Joliette, is a good initiative for restoring Canadians' trust in our tax system and closing a multi-billion tax loophole.
In 2014, an NDP MP tabled a private member's bill, Bill C-621, that sought amendments to make it easier for the government and the courts to identify, prosecute, and convict tax cheats who hide their money in tax havens.
In 2013, Peggy Nash said that over the past 10 years, Canadians have invested over $390 billion in Barbados, which has a population of 284,000 people. They invested $175 billion in the Cayman Islands, which has a population of 55,000 people. Obviously, some of the money is absolutely above board and legitimate, but the money that is not legitimate means that the average middle-class family gets hammered and ends up paying more in taxes while getting less in government programs and services than they would have if the money were adequately reported and taxed.
Barbados has become the tax haven of choice for Canadian corporations and billionaires, ahead of other countries such as Luxembourg and the Cayman Islands. In 2007, there was a reported $33.4 billion parked in Barbados tax havens. Moving forward to 2008, it was $53.2 billion. Over the last five years, since 2011, it has gone from $45 billion to $108 billion, being parked offshore.
Simultaneously, Canada has been lowering income tax rates for Canada's largest corporations. In the last 25 years, we have seen taxes reduced from 28% to 15%. Corporations are getting a great tax break here at home, yet they are moving money offshore.
When I think about my riding, I think about a third of the children living in poverty in the Alberni Valley. A fifth of the children, 20% of the children in the Comox Valley are living in poverty. Seniors in Oceanside are living in poverty. The average income in my riding is $26,000 a year.
The government has brought forward a tax break for the middle class, while anyone earning $23 an hour, working full time or less, gets nothing. That is two-thirds of Canadians. It is more like three-quarters of the people living in Courtenay—Alberni.
When we see tax breaks for CEOs that cost Canadian taxpayers $750 million a year, when we see corporations pushing money offshore and not paying their fair taxes, when we see so-called tax breaks for the middle class that benefit the most those who earn between $50 and $100 an hour, we know there is a problem.
Tax havens are not only unfair but are also helping to fuel growing inequality in Canada. We are seeing huge inequality. Inequality is one of the biggest economic crises in our country today. This tax loophole is the biggest economic leakage in Canada right now.
The government has an opportunity to take concrete action to prevent Canadian companies and taxpayers from using these loopholes to avoid paying their fair share of taxes. According to 2015 Statistics Canada data compiled by Canadians for Tax Fairness, the Caribbean island of Barbados is now Canada's third-biggest destination for foreign investment, after the United States and the United Kingdom.
I want to thank the government member across the floor for bringing forward the actions the government is going to take to deal with these tax loopholes, through which companies can avoid paying tax. It is one thing to invest money in the CRA to chase people who are avoiding paying tax, but it is another to actually change the law so that we can make sure that it is illegal for those who move money into tax havens. We have an opportunity to change these agreements with other countries and close these tax loopholes. There is a big difference between that and breaking the law when right now it is legal to move money offshore.
Again, I want to thank the member for Joliette for bringing the motion forward, because this would be an important solution. The government needs to look at legislation to do that, and this is the right legislation to get it started. We have many deals with other countries that also need to be looked at, but this is an excellent start.
Former Prime Minister Paul Martin registered companies in Barbados to avoid paying Canadian taxes. No wonder the current Liberal government is so unclear regarding its policy on tax havens.
I will talk about another former Liberal, who at the time was a New Democrat. I am speaking of Bob Rae. To the CBC in 1980, Bob Rae said, “the government is entering into these tax treaties without being fully aware of the impact they will have on domestic taxation in Canada.” Income that is not taxed at the corporate level and from which the government receives no revenue has the unfortunate effect of increasing the tax load on the average citizen. Is that not true?
In an era when we have skyrocketing health care costs and infrastructure costs that are soaring through the roof, and when we need to address our greenhouse gas emissions, this is a really important time for us to plug this economic leakage.
Dennis Howlett, executive director of Canadians for Tax Fairness, sums this up perfectly when he says, “It isn’t just Donald Trump who likes to brag that it is 'smart’ to avoid paying taxes. Some Canadian multinationals and wealthy individuals are unapologetic about setting up shell companies or foundations in tax havens for no other reason than to avoid paying their share at home. In some—but not all—cases it is technically legal. But it contravenes the spirit of the law and is simply not fair.”
We have to talk about fairness, because when I talk about everyday Canadians, I think about my friends at home; my friends Jennifer and John, who run a whale watching company; my friend Mike Madison, who went to work this morning at the mill, and his wife Michelle. I think about my friend Cory, who is working on the golf course today, and law-abiding Canadians from Qualicum Beach to Tofino, who are doing everything they can to make sure they pay their fair share of taxes to build a healthy Canada while these corporations are taking the money out of the country.
Motion No. 42 tabled by the member for Joliette is a step in the right direction for restoring Canadians' trust in our tax system and closing this multi-billion dollar tax loophole. While Barbados appears to be the tax haven of choice for Canadians, there are several other countries, including Panama and the Turks and Caicos and Bermuda, with similar sneaky taxation agreements with Canada. Motion No. 42 is a good start, but it is just the tip of the iceberg when it comes to tax fairness for all Canadians.
Gabriel Ste-Marie Bloc Joliette, QC
Madam Speaker, I am proud to have raised the matter of tax havens in the House of Commons.
Motion No. 42 is the Bloc Québécois's first motion in this Parliament, and there is a reason for that. I am a separatist because I want Quebec to handle matters within the purview of sovereign nations itself. International taxation is one of those matters.
Tax treaties are the cornerstone of international taxation, which means that Quebec cannot get involved. Unless the federal government closes the loopholes that enable sharks to use tax havens, Quebec will continue to lose income too. Quebec's National Assembly knows that. On April 14, it adopted more or less the same resolution we are talking about today, pointing a finger squarely at Ottawa. The National Assembly recognized that the solution I have proposed could help fix the problem. Members of all parties in the National Assembly unanimously asked the House to support my motion. Until something changes, taxpayers, citizens, will have to make up for the shortfall by paying higher taxes and fees and settling for reduced services. As a social democrat, I cannot accept that.
There is no social justice without tax justice. There is no justice at all when the financial sector hides its money in the Caribbean and ordinary people are left paying the bill. As a result of this shortfall, Quebec is cutting funding for homework clubs and increasing the cost of child care. Ottawa is cutting transfers. In the meantime, bankers are keeping their billions under the sun in the Caribbean and it is totally above board. That is the problem.
Canada represents only 2% of global GDP. That is not a lot. However, the IMF said last summer that three major Canadian banks, the Royal Bank of Canada, Scotia Bank, and CIBC represented 80% of the banking assets in Barbados, Grenada, and the Bahamas. Furthermore, Canadian banks represent 60% of the assets of the eight other tax havens that make up the Eastern Caribbean Currency Union.
Canada is not an economic superpower, but it is a superpower in these tax havens, which is no accident. The regulatory framework was written purposely to allow banks and multinationals to avoid paying taxes here. I say “regulatory framework” because the problem is indeed regulatory in nature.
No tax treaty allows for the use of tax havens, no matter what my Conservative colleague says. He clearly did not read the note that I sent him. Even the treaty with Barbados does not cover the shell companies that enjoy tax breaks in Barbados. With regard to the other tax havens, Canada has not signed tax treaties with them. No treaty allows for the use of tax havens, no matter what my Liberal colleague says, and neither does the Income Tax Act.
Parliament has never allowed the use of tax havens because parliamentarians did their job when passing laws and treaties. They prohibited tax havens. The government is the one that did not do its job. It is the government that violated a decision of Parliament. The government declared, by regulation, that the laws and treaties that parliamentarians had passed did not apply and that the banks could be exempt from paying tax on profits by transferring that money to the Caribbean. I repeat: parliamentarians have never authorized the use of tax havens. If my motion is rejected, it will be the very first time that parliamentarians do so. I trust that they will not authorize tax havens now, particularly since international pressure to put an end to this scourge is rising.
By adopting my motion, Parliament will send the strong message that we will not accept tax avoidance and the use of tax havens. The government must take action by repealing section 5907, which it ordered in secret. This vote will be the first time that members are being clearly asked whether they are for or against tax havens. That makes this a historic vote. I trust that this Parliament will stand on the right side of history. I sincerely hope that it will.
Tax AvoidancePrivate Members' Business
The Assistant Deputy Speaker Carol Hughes
The question is on the motion.
Is it the pleasure of the House to adopt the motion?
Tax AvoidancePrivate Members' Business
Tax AvoidancePrivate Members' Business