Madam Speaker, I will be splitting my time with the member for North Island—Powell River.
I am pleased to speak in support of today's opposition day motion, brought forward by my colleague, the hon. member for Rosemont—La Petite-Patrie. He is also the New Democrats' newly minted finance critic, and I congratulate him on the appointment. Based on the debate he has brought forward today, I know he will do a terrific job as our finance critic.
The motion we are debating today is very straightforward, and I would hope that the Liberal government would support it. It is a two-part motion. It calls on the government to address tax loopholes and to crack down on the use of tax havens. It is about enforcing the basic principle that every Canadian should pay his or her fair share of taxes. It is about tax fairness.
I am not suggesting that the current tax system is the model of fairness, but we know that far too many of the wealthiest Canadians are shirking their responsibility to pay their taxes, and in some cases, are going to extraordinary and even criminal lengths to avoid paying them at all.
A few years ago, Warren Buffett famously claimed that he was paying a lower tax rate in the U.S. than his secretary. It goes to show how many loopholes exist for the wealthiest in society. In Canada, the stats are staggering. Canada's top CEOs earn 193 times the average person's salary. Two Canadian billionaires possess the same amount of wealth as nearly a third of Canadians, $33.1 billion U.S. Canada's richest CEOs earn the same in half a day as the average Canadian worker earns in a year.
What New Democrats are suggesting here today is not radical. All we are saying is that the government needs to tighten up the rules and crack down on these tax loopholes and tax havens that are allowing the super-rich to avoid paying their fair share.
According to the Canadian Centre for Policy Alternatives, there are about 59 tax measures that mostly benefit people above the average income level, which costs the government more than $100 billion in foregone tax revenues. These loopholes significantly undermine the government's ability to provide funding for key priorities, such as improving health care and seniors care, investing in affordable housing and public transit, and even launching an affordable child care system and national pharmacare plan, two ideas that would go far in building a stronger, healthier Canada. I think about what these programs would mean in my riding of Essex. They would improve the quality of life and the affordability of life for so many families and individuals.
In the last election we talked a lot about the stock option deduction loophole. In most of Canada, profit from stock options is considered to be a capital gain and therefore is taxed at half the rate for regular income. Many companies offer stock options to their employees as an incentive in their compensation packages. This tool was initially designed to help raise money for start-ups and expansion, but now it is being primarily used by Canada's wealthiest.
Stock options now make up about 25% of CEO compensation at Canada's top 60 publicly traded companies. This costs federal and provincial governments close to $1 billion every year in foregone revenue. The Liberals know this to be true. In 2011 and in 2015, their platforms acknowledged these very facts. Both the New Democrats and the Liberals campaigned on closing the stock option deduction loophole, but here we go again, another promise made by the Liberals that apparently they never meant to keep.
The other week, at the international trade committee, we had the pleasure of hearing from the Minister of Small Business and Tourism, who discussed what her government is doing to support more small businesses in accessing international markets. I asked her about the Liberals' campaign promise to reduce the small business tax. She referred to it as a great sound bite but said that it was not a good idea anymore. Her comments struck me as very cynical and certainly is not what I am hearing from those in my riding of Essex.
When parties make election promises, such as reforming the electoral system, lowering the small business tax rate, or closing the stock option deduction loophole, Canadians expect the government to deliver, not to turn its back and later scoff at the very premise of these commitments. The Liberals are breaking campaign promises left and right. It is shameful. I am worried that after four years of the Liberal government, Canadians will be even more cynical about politics than they were after 10 years of the Conservative government.
After promising to fully tax individual stock options exceeding $100,000 during the last election campaign, after forming government the Liberals announced that they will leave it untouched. We have now learned of intense lobbying by Bay Street CEOs, who benefit greatly from this measure, to keep this loophole open.
Both the Liberals and the Conservatives have now claimed that closing the stock option loophole would hurt small businesses and start-ups, arguing that they would not be able to give employees stock options as an incentive to help companies grow. However, closing the stock option loophole does not mean that companies would not grant stock options as compensation. Start-ups could still offer stock options to attract and retain employees. Those employees would just have to pay fair tax on the income, the same rate normal Canadians pay on their income, rather than receiving a 50% discount.
When we talk about loopholes and tax evasion, we are not talking about Canadians putting their money into RRSPs or TFSAs. We are talking about off-the-book illegal schemes, like the one cooked up by KPMG to hide Canadians' money in offshore accounts.
The second part of today's motion calls on the government to “take aggressive action to tackle tax havens”. The key word here is “aggressive”. It means “tightening rules for shell companies”. It means “renegotiating tax treaties that let companies repatriate profits from tax havens to Canada tax-free”, and it means “ending penalty-free amnesty deals for individuals suspected of tax evasion”.
This is not just a tax issue. It is about cracking down on white-collar criminals. The government members talk about the size of CRA's budget for going after tax evaders, but we still have not seen any criminal charges. It is clear that the government must do more to tackle tax cheats, who are robbing Canadians of billions of dollars of revenue that is sorely needed to improve our communities.
Canada is lagging behind other G7 countries in tackling tax havens. The previous Conservative government eliminated 3,000 jobs at CRA in the unit responsible for detecting tax evaders, including the jobs of hundreds of auditors and 50 highly trained managers. This is a perfect example of why ideologically driven budget cuts can be so shortsighted. The finance department's own numbers show a $10 return for every dollar invested in combatting international tax evasion and aggressive tax avoidance. The Liberal government has made new investments in CRA, which are welcome, but this is not a silver-bullet solution. Instead, it is a starting point in a larger conversation about how we tackle this complex problem.
I have already talked about many elements of an aggressive, effective strategy to combat tax loopholes and tax havens. Another policy I would like to draw my colleagues' attention to is the impact of drastic cuts to the corporate income tax. The Conservatives cut the rate by one-third, from 22% to 15%, over six years, and the Liberals have kept it at this very low level, which is even lower than the U.S. rate. The parliamentary budget officer has said that these corporate tax giveaways cost the government $12 billion annually. Evidence shows that the Conservatives' drastic cuts have not boosted investment or led to the promised job creation. Again, we have another ideologically driven decision that has not led to economic growth and job creation. It has just been a massive tax giveaway. Its only real impact has been to deplete the government of tax revenues that could be used to build better health care, community infrastructure, and other urgent priorities in Canada.
The Liberals promised change for everyday people. They promised policies that would build a fair economy that lifts everyone up, not just those at the top. Canadians are increasingly frustrated that the Liberals are failing to deliver. Instead, we are seeing business as usual. Instead of listening to the voices of everyday Canadians, the Liberals are listening to the loudest voices in the room, the ones of the lobbyists and well-connected insiders who look out for the interests of the wealthiest CEOs and corporations.
As a New Democrat and as the member of Parliament proudly representing Essex, I want to be a voice for the hard-working people who have been left behind by an economy that excludes too many. I want to fight for a Canada that works for everyone, not just the wealthy and the well-connected. Today, New Democrats are calling on the Liberal government to ensure that CEOs and big corporations pay their fair share. I hope all hon. colleagues will join me in voting yes to this motion.