Debates of Feb. 8th, 2018

Opposition Motion—Tax Fairness in Budget 2018

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I would like to remind the hon. member to address her comments through the Chair and not directly to the member.

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, I would like to thank my colleague from Rivière-des-Mille-Îles for her question.

I am happy to explain why the NDP voted against these measures. Every time I visit my riding, I note that the median salary is $31,000. In order to benefit from the first Liberal tax cut, as modest as it was, one has to earn $45,000.

I always ask my constituents the same question. I ask them whether, in their daily, weekly and family budget, they feel the effects of the wonderful announcements the Liberal government made and their magnificent speech about supporting the middle class. Every time, they tell me that it has not made a difference in their budget. I think the answer is clear. I am not saying that there is anything wrong with the spirit of the proposed measures, but the target has clearly not been achieved. By all accounts, the New Democrats and the Liberals have a very different understanding of the middle class. If the Liberals think that being middle class means earning between $80,000 and $150,000, we are never going to agree.

[Ted Falk, Conservative, Provencher, MB]

Madam Speaker, I listened very carefully to the member's speech. I am curious why he had to clarify that the NDP members are not Communists. I find it interesting that he would need to do that.

Having said that, the member talked a lot about social justice and fairness. Could the member comment briefly on the Liberals' new values test that they have forced upon people who want to participate in the Canada summer jobs program?

Here is an opportunity for them to talk about social justice and fairness, and why not everybody is qualified to participate in that program. People are actually going to be required to compromise some of their deeply held beliefs and values, if they want to participate. If we are as concerned as we say we are about social justice, can the NDP member tell me how that is fair?

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, I would like to thank my colleague for his question. I think it is a little off topic, but I am happy to answer.

When it comes to the Canada summer jobs program for students, every member of Parliament must consider public service job offers before signing the employment forms. My first criterion before signing is whether the job provides a real opportunity for the student to acquire relevant experience in his or her field of study. That is light years away from any religious conviction. It is directly related to the job market.

In my riding, like everywhere else, religious organizations submit programs that are not really programs. We are certainly not going to ask students to spend the summer indoctrinating people on the street. However, the religious tourism jobs such as the ones offered by the Our Lady of the Cape Shrine are economic ventures. Tourism is a major industry in my riding, and it provides experience that is relevant to the workplace. That is how I look at each project.

[Kamal Khera, Liberal, Parliamentary Secretary to the Minister of National Revenue]

Madam Speaker, I want to begin by reiterating that our government is fully committed to fighting tax evasion and aggressive tax avoidance. We are fully committed to ensuring that our tax system is transparent, responsive, and fair.

Our government recognizes that Canadians work hard, and expect their government to do the same to ensure that everyone pays their fair share. I would like to inform the House that Canada has one of the highest voluntary tax compliance rates in the world, with more than 90% of Canadians paying their taxes on time each year. The vast majority of Canadians work hard and follow the law.

Thanks to the millions of Canadians who pay their taxes every year from coast to coast to coast, we have provided health care, built libraries and schools, helped advance scientific research, maintained roadways, and provided access to clean drinking water. Canadians have worked hard to create a Canada that we are proud to live in. We have reached all this because Canadians pay their fair share of taxes.

However, there are those who are not willing to do their part, and avoid paying their fair share. It is unfortunate to know there are individuals and companies who try to avoid their tax obligations, and who avoid putting their share into the programs and services that all Canadians, including them, benefit from.

That is why cracking down on aggressive tax avoidance and tax evasions continues to be a priority for our government. Not only is it against the law, it is unfair to the millions of honest Canadians who pay their fair share. Tax cheats rob the government of the revenues it needs to deliver the programs that Canadians have come to rely on and need to improve their quality of life. Middle-class Canadians and those working hard to join it, who pay their fair share of taxes, rightfully expect the government to do its part to combat tax cheating.

This is why our government is taking historic steps to combat tax evasion and aggressive tax avoidance. Funded by the investments of close to one billion dollars in budgets 2016 and 2017, we are transforming the Canada Revenue Agency into an organization that delivers results for Canadians, especially when it comes to delivering a fair tax system. This is what Canadians expect, and it is something that we will continue to deliver.

We believe Canadians deserve transparency into our efforts in fighting tax evasion and aggressive tax avoidance. I would like to thank the finance committee for its recommendations. That is why we have made good on our commitment to be more open and transparent by making more information available to taxpayers about the results of the Canada Revenue Agency's compliance activities.

We have established a new level of transparency to report results to Canadians and to show would-be tax cheats the serious consequences of taking part in tax evasion and aggressive tax planning. These efforts also help deter those who may be considering abusive tax schemes that give false and misleading promises at the risk of legal consequences.

Transparency and education are not enough. That is why our government is also working diligently to identify those taxpayers who pose a risk to the integrity of the Canadian tax system and to take action. Thanks to the investments made in the last two years, the Canada Revenue Agency has now more auditors and better tools to detect and combat tax evasion and aggressive tax avoidance.

We expanded our specialist audit teams that consider all multinational corporations for audit every year, and who focus on tax plans and status of ultra-high net-worth taxpayers. There is more. The Canada Revenue Agency's criminal investigations unit has undergone important changes to make sure serious tax evasion cases, such as those involving offshore transactions and money laundering, are referred for criminal prosecution. Such investigations are very complex. They may take several years to resolve and make their way through the courts.

It is clear that our plan is working. From the start of our mandate in 2015 through September 30, 2017, for offshore files alone, as of December 31, 2017 the Canada Revenue Agency has been conducting audits on more than approximately 1,100 taxpayers, and is criminally investigating more than 20 cases of tax evasion.

It will continue to apply penalties to all those cases of serious tax non-compliance. We are aggressively pursuing each and every case to make it clear to tax evaders, no matter where they are that the consequences and penalties of tax avoidance are severe.

However, this is just one part of the solution. Tax evasion and aggressive tax planning are complex issues, and combatting them requires long-term concerted efforts. Furthermore, the issue of tax havens demonstrates quite clearly that tax cheating remains a significant global multi-billion dollar issue that transcends borders.

As a result, Canada is working closely with our international partners to share and receive information. We are making it far more difficult for wealthy individuals and corporations to hide money in offshore jurisdictions and avoid paying their fair share.

I am very proud to report that our efforts are paying off. We have access to more domestic and international financial account information than ever before. Already, Canada has one of the most extensive tax treaty networks in the world. We have improved our ability to link information from various sources, domestic and international, so we can better identify those taxpayers most likely to be avoiding their tax obligations.

We will close in on any wealthy individuals or corporations that try to avoid paying their fair share of taxes. While the confidentiality provisions in the Income Tax Act prevent the Canada Revenue Agency from commenting on specific cases, through our collaboration with international partners we have been identifying and taking action against those who are evading and avoiding taxes and breaking the law.

In 2017, the Canada Revenue Agency began receiving country-by-country reports from multinationals to help spot profit shifting, and more information to risk assess taxpayers who may be aggressively avoiding or evading taxes offshore. Furthermore, we will begin to receive international banking information in 2018. Canada will be able to automatically exchange information with other countries to identify taxpayers with offshore accounts, through the OECD's common reporting standard.

With focused efforts and changes to the law, Canada shut down some gifting tax shelter schemes that at one point included more than 48,000 participants. We want a tax system that is fair for all Canadians and we are taking steps needed to make this a reality.

Additionally, thanks to the investments made by our government, the Canada Revenue Agency's large file risk assessment systems were also featured globally by the OECD in 2017. They are world-class and global best practices, which is why Canadians can be proud that other international tax administrations are looking for Canada to help improve their systems.

Canada's leadership and contribution to international best practices in this area is providing Canadians with a revenue agency that is a world-class tax and benefit administration. Canadians expect no less from us, and we are delivering on our promises. As a result of system improvements, we now have the capacity to risk assess 100% of large business tax returns filed every year; therefore, improving its ability to identify high risk transactions, and to ensure that those who choose to break the law are exposed and made to face the consequences.

Our government is also focusing on promoters of abusive schemes, and wealthy taxpayers who can afford to pay for the expertise to navigate the tax laws. We have levied approximately $44 million in penalties in 2017 to tax professionals who facilitate these schemes. We are making it absolutely clear that we are not just going after tax evaders, but those who actively are involved in aggressive tax avoidance.

The government has also put in place a paid informant program, and has access to all international electronic fund transfers over $10,000, and is analyzing the data in conjunction with other business intelligence.

The CRA is using a jurisdiction and/or financial institution of concern approach to identify high-risk transactions and potential offshore aggressive tax avoidance and evasion, and has committed to reviewing all international EFTs to and from four offshore jurisdictions and financial institutions of concern per year. Canadians can be proud that, thanks to our government's actions, Canada plays a key role in international intelligence when it comes to combatting overseas tax abuse.

All of these efforts and results serve to underline why the Canada Revenue Agency does not need to depend on leaked lists, such as the paradise papers, to fight tax evasion and aggressive tax avoidance. Thanks to our government's historic investment in the Canada Revenue Agency, the agency is already well under way in carrying out its work in identifying and pursuing those who are not paying their fair share long before the leak occurs.

Furthermore, in December 2017, the Minister of National Revenue announced the tightening of the voluntary disclosures program to reflect our confidence in detecting aggressive tax planning. These tighter rules will mean that individuals who participate in sophisticated tax planning will face the full consequences of their actions and do not simply get to walk away from paying the taxes owed. This decision means that cases may take longer, but we believe that this is just one option, and the one that Canadians would expect.

The Canada Revenue Agency has also begun to review selected neighbourhoods to better compare lifestyle to income, particularly where corporations, trusts, or non-residents own residential property. This will help us to better identify the taxpayers who are most likely to be avoiding their tax obligations.

Our government has laid some extremely important groundwork. It is early, but as the Canada Revenue Agency works through an ever-growing roster of audits and investigations, the analysis of recent data leaks and international benchmarking tells us that we have made progress on detecting and taking action.

Voluntary payment of tax, which is the ultimate goal of compliance work, continues to show upward trends. Canadians work hard to support their families and pay their taxes, and the Canada Revenue Agency is working hard to ensure that nobody avoids paying their fair share. Our effort is crucial in ensuring that the Government of Canada can deliver the programs that hard-working Canadians rely on and deserve.

What remains an issue is the aggression and motivation of those undertaking aggressive tax planning. The battle is now the issue of legal challenges to conducting audits, requests for information, as well as legal challenges to exploit unintended loopholes. Aided by a historic investment, the Canada Revenue Agency is working to address this through more resources, better data, and better approaches to make sure that those who choose to break the law face the consequences. The Government of Canada will not stand by and let those who choose to cheat drain resources from the services that need funding to improve the quality of life for all Canadians.

All of these efforts outline the Canada Revenue Agency's continued excellence in service, compliance, integrity, security, and innovation. The agency continues to improve its transparency and accountability to Canadians. No one is above the law. There are millions of hard-working Canadians who follow the law and pay their fair share, and they rightfully expect others to do just the same. That some individuals and companies continue to try to evade their taxes is unacceptable. This is why our government will continue to work hard to crack down on tax cheats. Canadians expect nothing less, and it is what our government will continue to deliver.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank the parliamentary secretary for her remarks, although her lofty speeches are clearly light years removed from reality.

The reality is that, since they supported our motion to review or repeal our tax treaties and our tax information exchange agreements with tax havens, which implicitly allow companies to repatriate money without paying tax, they have signed three more. That is the reality.

In their speeches, the Minister of National Revenue and her parliamentary secretary always talk about $1 billion and 78 convictions. Before the holidays, we learned that none of these 78 convictions, not even one or two, had to do with offshore tax evasion.

Some countries have already started recovering money, sometimes more than $500 million, in the wake of the Panama papers implicating the Bahamas, Mossack Fonseca and all that. Here in Canada, we have yet to act on the information in those leaked documents to recover any money. We are told that court proceedings take time and that settlements may be made out of court. It follow, then, that there will be preferential treatment. That is the reality in Canada.

Can my colleague at least tell us that that reality will change and that things will finally be different at the Canada Revenue Agency than they were when the Conservatives were in power? So far, it is business as usual.

[Kamal Khera, Liberal, Brampton West, ON]

Mr. Speaker, when it comes to tax evasion, no other government has invested as much into the Canada Revenue Agency as we have in the past two years to crack down on tax evasion and combat tax avoidance. Tax fairness, including issues of tax evasion and avoidance, is the central pillar of our commitment to middle-class Canadians. Our government has taken significant action to date, and we are delivering on our tax fairness commitments.

I will be happy to point out to my colleague that the agency now has a full-time unit dedicated to offshore non-compliance and another focused on the wealthiest Canadians. We have implemented the common reporting standard, which allows for the automated sharing of information held by non-residents with OECD partners. With the unprecedented investment of close to $1 billion to combat tax evasion and aggressive tax avoidance, the CRA is now able to risk assess 100% of large multinational corporations annually, and is better able to identify those taxpayers who participate in aggressive tax avoidance schemes.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, I do not know whether my colleagues listen to classical music, but upon hearing a piece for the first time, it is not unusual to think, “This must be Mozart, or Vivaldi”. While my colleague was speaking, I could have been blindfolded and still told you it was a Liberal speech. It appears thoughtful and flows nicely, but it never answers the question. Where I come from, people like calling a spade a spade and getting a clear answer to a clear question.

During the election, the Liberals committed to closing the stock options loophole. This has yet to happen. When we moved our first motion, they voted in favour of it, although it contained exactly the same thing. Today, we are making the same request.

My question is clear: does she believe that the Liberal government will commit to adding a single line to budget 2018 that would close the loophole?

[Kamal Khera, Liberal, Brampton West, ON]

Mr. Speaker, let me be absolutely clear. Tax evasion has been a priority for our government ever since we took office. As I mentioned before, we have made historic investments in the CRA to combat tax evasion and aggressive tax avoidance.

The CRA is focusing resources in areas of highest risk domestically and internationally. As I pointed out in my speech, we are proud of our results. We have improved our ability to link information from various sources domestically and internationally so that we can better identify those taxpayers most likely to be avoiding their tax obligations. From the start of our mandate in 2015 through September 30, 2017, for offshore-related files alone, as of December 31, 2017, the Canada Revenue Agency has been conducting audits of more than 1,100 taxpayers, and is criminally investigating more than 20 cases of tax evasion.

We will continue to apply penalties to all those cases of serious tax non-compliance. We are aggressively pursuing each and every case to make it absolutely clear to tax evaders that no matter where they are, the consequences or penalties of tax avoidance are extremely severe.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, one union leader told me that for every dollar invested in a tax audit that focuses on the average taxpayer, the return is eight dollars. However, for every dollar invested in an audit that focuses on corporations that use aggressive tax avoidance schemes, the return is about $40 in tax revenues. Obviously, the investment our government is making in creating special groups focusing on offshore non-compliance corporations is good. In fact, the cuts made by the previous administration led to the dismantling of these specialized groups within the CRA. It is good that these groups are back in action.

At the same time, we should continue to invest in CRA call centres, which are used by average Canadian taxpayers to ask for legal clarification and information. With the investments we are making in these specialized groups within the CRA, when can we expect to start seeing the results in terms of tax revenue?

[Kamal Khera, Liberal, Brampton West, ON]

Mr. Speaker, my hon. colleague talked about call centres. Service is at the centre of the minister's mandate letter. We have been clear that providing the best service possible to Canadians is extremely important to us. The previous Conservative government made ridiculous cuts when it came to phone technology. CRA has been working with technology that is 20 years to 30 years old. We understand more needs to be done. We need to make sure that we give especially the employees at the CRA the right tools and resources.

I did a tour of the CRA centre in the greater Toronto area. Our public servants work extremely hard. They are committed to making sure they provide the best services to Canadians. With the new phone technology we have invested in, we will see the results really soon.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, at my constituency office, I receive letters, emails, and calls from Canadians who tell me how offended they are that Canada still has agreements with so many tax havens.

Despite everything my colleague said, it has been shown that, as a country, we are letting $8 billion slip through our fingers because we are not taking the strong measures that other countries are taking. That is $8 billion that never makes it into our coffers.

My colleague mentioned how proud she was of the agreements we have with other countries. I would like her to explain how she can be proud of the fact that, in the past year, we signed agreements with the Cook Islands, Antigua and Barbuda, and Grenada. What is there to be proud of in signing agreements with new tax havens, adding still more to the already long list? Canada even created some of the tax havens. Lawyers here made sure that those countries became tax havens.

How can my colleague justify that we are not doing everything possible to do away with the system?

[Kamal Khera, Liberal, Brampton West, ON]

Mr. Speaker, as my hon. colleague said, more needs to be done. However, as I mentioned before, no other government has invested more in the CRA when it comes to tax evasion and aggressive tax avoidance that our government has. Tax fairness, including issues of tax evasion and avoidance, is the central pillar of our commitment to middle-class Canadians.

Because of the investments we have made, the agency now has a full-time unit dedicated to offshore non-compliance focused on the wealthiest Canadians. We have implemented the common reporting standard, which allows the automatic sharing of information held by non-residents with OECD countries. With the unprecedented investment of close to $1 billion to combat tax evasion and aggressive tax avoidance, the CRA is now able to risk assess 100% of large multinational corporations annually, and is better able to identify those taxpayers who participate in aggressive tax avoidance schemes.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I would first like to inform you that I will be sharing my time with my colleague, the esteemed member for Victoria.

Tax evasion deprives families of hundreds of millions of dollars that could be invested in good social programs. It is time to put an end to this strategy that benefits only the wealthiest Canadians. The Liberals promised to tackle this problem. On November 6, the Prime Minister himself even said that the government is working every day to make sure that all Canadians pay their income tax. I have my doubts.

When we talk about tax avoidance, we are talking about several billion dollars out of our coffers. Statistics Canada, an extremely credible source, estimates that tax avoidance costs Canada $8 billion a year. That is $8 billion a year lost in uncollected taxes because we have agreements with the Cayman Islands, Barbados, the Cook Islands, and so on. The list is a long one.

Imagine all the problems we could solve with an additional $8 billion a year. Here are a few examples. We could help 10,000 families upgrade their homes to improve energy efficiency. Those 10,000 families would see their energy bills drop, and there would be a reduction in greenhouse gas emissions. We could help the most vulnerable members of our society by maintaining 800,000 social housing buildings for 25 years. We could take stronger measures to lower the price of prescription drugs for Canadians and increase health transfers to the provinces. We could implement a guaranteed minimum income. These are concrete measures that would help reduce inequalities. We would be helping the middle class and all those who are working so hard to join it. That is progressive.

I just cannot get over it: $8 billion. That is $8 billion in 2015, $8 billion in 2016, $8 billion in 2017, $8 billion in 2018, and $8 billion in 2019. That is $40 billion lost this term alone. That is $40 billion out of the public purse, and, most importantly, massive amounts that we cannot invest in health transfers, social housing, the fight against homelessness, infrastructure, and more.

I was recently appointed infrastructure and communities critic. I am proud of this role and the trust placed in me. As a former municipal councillor, I am intimately familiar with infrastructure needs, which are huge. During the election campaign, the Liberals built up great expectations in the 25 municipalities I represent. They informed us that there was an infrastructure deficit, as if we did not already know, and said we have to invest in our water and sewer infrastructure, our bridges, and our roads. When I was a municipal councillor, some of the sewers in the ward I represented were 100 years old and were made of brick.

People were hoping to see billions in infrastructure investments in Quebec, Ontario, or British Columbia. The revenue we are missing out on year after year because of aggressive tax avoidance and tax havens would cover the cost of two Champlain bridges or thousands of community centres in communities that really need them, such as Saint-Pie, which has been waiting for many years, and other places in my riding.

Public concern about tax evasion and tax havens is growing. My colleague from Sherbrooke and I got together on this. I invited my constituents in Saint-Hyacinthe and Acton Vale to come talk about tax havens and tax evasion. My invitation was very clear. I invited them to come watch a documentary called The Price We Pay. Those who looked it up learned that it was a one-and-a-half-hour documentary set mostly in London and elsewhere around the world, and our presentation was mainly in English with French subtitles.

I represent a largely francophone riding, and yet nearly 100 people showed up on a wintry Thursday evening to watch this documentary. We had quite a long discussion about it. I thought they would never leave my office because they were so concerned. They are outraged that the government is not doing anything about this situation.

I quite often hear from constituents about tax havens, inequalities, and tax evasion. People tell me how unfair it is that companies manage to avoid paying taxes, while these people work so hard and pay their fair share. They are so right.

I want to share a quote from an email I received from one of my constituents a few weeks ago:

We need to get rid of tax havens and make companies pay their fair share. These companies earn billions of dollars and pay less tax than ordinary taxpayers. They send their profits to tax havens, when this money could be put towards major projects in our country.

So many sectors are in need of reform, and the government will not do it. The past 28 months have shown that the Prime Minister has forgotten his election promises.

My constituent took the time to write that, and it is so true.

In a few months, it will be time for us to do our taxes. Many will have to tighten their belts, while the wealthiest Canadians can afford tax accountants and big law firms to avoid paying taxes. I quote Brigitte Alepin, a leading Quebec tax expert:

When ordinary citizens pay on average 60% of their income in income and consumption taxes while the wealthiest have a full range of tax shelters at their disposal to get around, if not cancel out, billions of dollars in income tax, we have every reason to call this a scandal of society.

It really is a scandal.

I invite everyone in Saint-Hyacinthe to my third annual tax credit information session, which this year will be at the Centre communautaire Rosalie-Papineau, 5250 Rue Gérard Côté in Saint-Hyacinthe.

Year after year, this event is a big hit and is attended by over 200 people, often close to 300. Last year, after attending this session, one of my constituents got back a $15,000 tax refund. I therefore invite all of my constituents to come out to this event so they can hear what tax credits they are entitled to.

In March 2017, the New Democrats moved a motion to eliminate tax havens, loopholes, and favourable treatment for the wealthiest Canadians, and it passed. Instead of taking action, the Liberals signed new agreements with other tax havens such as the Cook Islands, Antigua and Barbuda, and Grenada.

Now that we are approaching budget time, it is time for the Liberals to keep their promises. Almost one year later, we are realizing that the people in our ridings, the middle class, are the biggest losers when it comes to tax havens. The Liberals keep saying that they are working for the middle class and those who are working hard to join it. The reality is that the middle class is paying more income tax, while the wealthiest Canadians are laughing all the way to the bank thanks to loopholes and tax havens, compliments of the government.

All of this is increasing inequality in our society. Our leader, Jagmeet Singh, recently said that, even though the government keeps repeating that it is working hard for the middle class and those working hard to join it, the truth is that it is building an economy that works for the privileged and leaves everyone else behind. Because multinationals and the wealthiest individuals are finding ways of avoiding paying income tax, the middle class must shoulder most of the burden to compensate for the shortfall caused by the government.

Once again the wealthiest Canadians are getting richer more and more quickly to the detriment of the middle class, who must suffer the consequences. Instead of taking real action against this social scourge, the government is not doing anything about tax havens. That is the problem. Our tax system allows the wealthiest Canadians to legally send their money to tax havens.

It is urgent that we change the laws to remedy the situation. The government must present concrete strategies in the next budget to eliminate tax havens.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I appreciate the comments from the member opposite, but I do not necessarily agree with her entire speech.

We have seen a Prime Minister, in fact a government as a whole in budgetary motions that have been brought forward in this House, deal with the issue of tax evasion. The Minister of National Revenue has gone to great lengths. We have seen close to $1 billion invested in going after those who are trying to avoid paying their fair share of taxes. It is a substantial amount of money. It is literally hundreds of millions of dollars, going into the billions of dollars, and this government is aggressively pursuing it.

I wonder why, when it came time to vote on that measure, the NDP did not vote to support it. We very rarely hear the NDP talk positively about the fine work the Minister of National Revenue has done in going after the hundreds of millions of dollars owed to Canadian coffers.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am very happy to hear that he agrees with everything I said. The problem is that it is not enough to agree, we must take action.

Societies work well when everyone, individuals and companies alike, pay their fair share of tax. There is still work to be done. Yes, some things have been done. The Liberals tell us that they are doing things, but we see that in Europe some countries are doing much more. If we put all our money together, individuals and companies, in a fair manner, we can pay for quality public services such as education, health, infrastructure, and support for the elderly and people with disabilities. Unfortunately, tax evasion and the use of tax havens prevent us from investing large amounts in these essential services because the wealthiest of the wealthy have access to tax havens and strategies that cost us billions and billions of dollars. We must do more. Statistics Canada has shown that tax havens are costing us $8 billion. That means that the Minister of National Revenue must redouble her efforts to get that money back.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I want to congratulate my hon. colleague from Saint-Hyacinthe—Bagot on her excellent work in the fight against tax havens and the push for tax fairness. She has worked really hard, and has also consulted her constituents, as I recently did in Drummond. A few weeks ago, I suddenly had about 50 people at my door to talk about the changes regarding tax havens.

It has been reported that Canadians are missing out on $8 billion a year in tax revenues. The Liberals voted in favour of our motion, and we asked them to actively fight tax havens. What they did instead was secretly sign two more agreements with tax havens.

How are we to interpret the fact that they appear to support our requests and listen to Canadians, but then they turn around and do the exact opposite? What does that mean? Why do they say one thing and do another?

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I thank my colleague for his efforts.

We simply do not understand. We hear from our constituents about this, and they are the source of my indignation, but there are many other sources.

On April 9, 2016, at the NDP national convention in Edmonton, I had the opportunity to facilitate a round table discussion called “Tax Havens: The Price We Pay”. It was truly inspiring. Alain Deneault, a distinguished author who wrote Canada: A New Tax Haven, was there. I read his book on the plane. We were also joined by Harold Crooks, a filmmaker who made an excellent documentary entitled The Price We Pay. We also heard from Angella MacEwen, senior economist with the Canadian Labour Congress, who clearly demonstrated that if we could recover all the tax revenue we are missing out on, we could eliminate poverty in Canada. In a country as rich as ours, it is just wrong that there are children going to school without breakfast.

I attended a luncheon with these three individuals and they inspired me immensely. They fuelled my indignation at tax havens, and since then people have been talking to me about it at every event I have attended. We are still indignant. Today we are moving this motion on behalf of the people we represent, and I am sure that many of my Liberal colleagues also represent people who are upset about tax havens.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, it is indeed an honour to rise in support of the opposition day motion today, which asks the government to keep its promise to cap the stock options deduction loophole and to take aggressive action to combat tax havens and take concrete steps in the next budget to do so.

This is a very important motion for a number of reasons. During the course of my remarks, I want to talk about tax havens in particular. I also want to talk about the use of tax havens by companies that are in the burgeoning cannabis business, something that came up in the Senate a couple of days ago that I would link into this debate. Finally, I would like to talk about a private member's bill I have before Parliament that would make some contribution to this problem.

What is this problem? We have heard it often already. Other speakers have pointed the finger at the enormous and growing gap in our society, the growing inequality, where Canada's top CEOs earn 200 times the average person's salary. These statistics are quite extraordinary when Canadians hear them, and they cannot be said too often.

Oxfam reported last month that eight super-wealthy men own as much wealth as half the world's population. That is staggering. It is hard to get our heads around figures like that. Of course, the top 20% also own 67% of all the wealth in our country. This is not the kind of society I grew up in, but it is the kind of society we are leaving to our children and our grandchildren. I frequently hear, on the doorsteps in my riding of Victoria, the recognition that Canada is changing before our very eyes. One of the reasons it is changing is that we are allowing tax havens to flourish.

The government will tell us that it is doing all it can to deal with aggressive tax avoidance schemes, that it has hired all these people. However, as the old ad used to say, “Show me the money.”

I cannot remember how many times in the last Parliament I asked the member from Delta, who was a Conservative member and the minister of national revenue, just how much money they had recovered, because they kept bragging about how the CRA was on the front lines in doing all it could to recover this money. I kept asking how much money they had actually recovered. Here is how they put it: “We have identified billions of dollars.” I would ask the next time, “How much have you actually recovered?” I never got an answer. It was alway “identified”. We need to watch the bouncing ball. We need to watch the rhetoric, because this government uses it as well.

About $500 million was recovered after the Panama papers were first exposed by countries that took seriously their need to tackle tax evasion and aggressive tax avoidance. The line between those two concepts is murky at best. How much did Canada recover? We do not know. They will not tell us. Maybe they identified a lot of money. I suspect that they did.

I do not for a second wish to make light of this. The government hiring more people is a good first step. Of course, when the Liberals were in opposition, they used to remind the House frequently that for every dollar invested in going after international aggressive tax avoidance, we would recover five or ten or some multiple. I absolutely believed them. It is an excellent investment.

Second, I support and applaud our government's work at the OECD, the G7, and other international places to make sure that we are part of the solution to tax avoidance and trying to deal with what they call BEPS, and a number of other things. I support Canada's leadership in those place. However, it is not as much as the British have or as the French have. I fear that Canada is there but perhaps does not have much to show for it yet.

Third, I noticed that Canada has entered into a number of these agreements called TIEAs, tax information exchange agreements. Sometimes it looks to a person reading them that all they do is regularize tax avoidance and that the use of tax havens seems to be just fine.

At the macro level, stepping back from this, our Income Tax Act has for a long time been criticized by accountants, the organized tax industry, and the person on the street who has enormous difficulty understanding how the scheme works. It is such a simple thing for a politician to stand up and say, “We have to simplify our tax system.” How long have we heard that? Sometimes we get simplistic arguments. Sometimes I hear in Alberta how we need to have a flat tax and all of a sudden everything will be better, no matter how regressive that in practice turns out to be.

We have a big problem at the international level and at the domestic level. If one talks about the effect of tax havens on Canada, it is nothing compared to what is happening in the developing world, where resources are siphoned off and find their way into bank accounts in Switzerland and Liechtenstein and places like that. The money that is so desperately needed for development is not happening. Sadly, some of that is in the mining sector, and sadly, the mining sector seems to be a significant part of Canada's economy. We see in Vancouver that half or more of mining corporations are incorporated, sometimes using tax havens.

I am trying to set out the enormity of the problem and some of the solutions that may be at hand.

One idea I think is worth discussing, at least, is my private member's bill, which is Bill C-362. It would attempt to close some of these loopholes. This is a very simple two- or three-line bill, which I would urge hon. members to consider. It is inspired by the late Dr. Robert McMechan, who, sadly, passed away last year. He was a tax litigator for most of his career right here in Ottawa in the Department of Justice. He went on to do graduate work at Osgoode Hall. He wrote a very important book on international tax avoidance. He came into my office and asked to work with me in trying to get our hands around this enormous problem. Of course, I welcomed him with open arms.

The bill that is at issue would make what the Canadians for Tax Fairness have characterized as a significant impact. I confess that I do not know how they got this figure, but they claim that it would yield $400 million to Canada every year if this bill were implemented.

What would the bill do? Members will recall, back when Prime Minister Mulroney was in power and Michael Wilson was our finance minister, that Canada did what a number of countries did. The government incorporated into our Income Tax Act the general anti-avoidance rule, GAAR, as it is called. GAAR would be amended by my bill to require that there be “economic substance” considered as a relevant factor in determining whether transactions were “avoidance transactions”. If the judge had the ability to eyeball a set of transactions, he or she could say that they seemed to be only for tax purposes. Putting that money in Liechtenstein or the Cayman Islands has only one purpose, and that is to avoid paying taxes, and there is no economic substance, in the jargon, for that to occur.

That was how we started, but with great respect to our courts, they took a different path in the application of that principle, and “economic substance” seems to have been lost in the fog. Cases such as Canada Trustco and Copthorne took us to a place where courts were no longer able to do what they had initially been instructed to do. This simple amendment would put us on track with what the British and the Americans are doing: being able to ensure that there is a reason to put the money in the Cayman Islands, aside from simply saving tax. It is simple, but it is an ethically important thing to do.

Speaking of ethics, it is time we took tax avoidance much more seriously rather than saluting and applauding the wizards of Bay Street, be they in a law firm or an accounting firm, who know how to play the angles. The best and the brightest, when I taught law, often went there, because the ability to make money is astounding in this field. As Canadians, we should look at that the same way we look at smoking or other social vices. This should be seen as an immoral activity. Yes, it can be done, but no, it should not be. We should, as Canadians, be applying an ethical lens to this field of the use of tax havens and aggressive tax avoidance.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, there is the idea that more than just the provincial or federal governments are involved in dealing with this issue. This is very much a global issue. I would be interested in hearing my colleague's thoughts with respect to this.

The other comment I would make is with respect to something I referred to earlier. The Minister of National Revenue has been fairly aggressive in getting the necessary investments in order to go after the people who are avoiding paying taxes. It is estimated that billions of dollars are owed to the Canadian coffers. For the first time in many years, we have a minister who has made this a priority, to the degree where we have invested close to $1 billion in an effort to recoup billions.

Could the member comment on that as well?

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, is this the first time this is being considered a priority? I do not think so. The member said that $1 billion had been invested. Maybe, but I do not know. How do we count that? What does it mean? It is like we are getting perilously close to identifying the money, we have invested money, but show me the money. Why can we not get the money back?

Also in talking about this as being a priority, I can find out about tax cheating by, for example, a hairdresser in Trois-Rivières or in Saskatoon by looking at the CRA website. I defy any Canadian to look at the CRA website and see how many people with trust funds in the Cayman Islands have been identified, let alone prosecuted for tax evasion.

When we look at the government's record with respect to the KPMG scandal, which I would love to talk about more, we will see how seriously the government does not take this issue.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Mr. Speaker, I want to be clear in my question for my colleague from Victoria. We are not talking about the finance minister's bungled consultation this summer when he accused small business owners and doctors of being tax cheats and closing their loopholes. That was completely discredited and completely unfair.

Our motion today is aimed at closing the CEO stock option loophole, a campaign promise that the Liberals made in 2011 and 2015, but failed to keep. They also promised to go after offshore tax havens. If the government had kept its promises, these together would have brought $11 billion in revenue back to Canada every year.

I am interested in my colleague's view on what we could spend that $11 billion windfall on if we had better priorities? We have heard about pharmacare, affordable child care, treating veterans equitably, honouring the Canadian Human Rights Tribunal for compliance orders on funding indigenous kids, welfare and education fairly.

What is my colleague from Victoria hearing from his constituents about their spending priorities?

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I appreciate my colleague from Nanaimo—Ladysmith bringing to our attention the fact that there are two sides to the same coin. If we could get the $11 billion into the Canadian fist every year, we could do so much more. We could deal with the debt and deficit. We could invest in indigenous programming. We could take climate change seriously. We could have a pharmacare program. The list goes on and on.

The member will forgive me if I also point out something I promised to point out. In the Senate on Tuesday, the Hon. Serge Joyal brought to the attention of Canadians the presence of organized crime in the cannabis market. He pointed out that of 86 companies authorized by Health Canada to produce and sell cannabis, 35 of them were financed through tax havens.

This is a huge problem with organized crime coming into this world through the back door and using tax havens. Thankfully, the RCMP appears to be aware of this. I do not know what we are doing about it. That is another part of the puzzle that needs to be addressed.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Mr. Speaker, it is always an honour and a pleasure to have the opportunity to rise in the House, and this is no exception. I will be splitting my time with the hon. member for Hull—Aylmer, and I appreciate the opportunity to do so.

First, I completely share the commitment to fairness that is at the heart of today's motion for debate. I also believe our government has illustrated, in the clearest possible terms, through its actions, that it is committed to a fair system. Shortly after coming to office in 2015, the government took decisive, immediate action to begin the process of restoring fairness.

We raised taxes on the wealthiest 1% in order to cut taxes for the middle class, benefiting nine million Canadians. We did this, because over the past 30 years, the median real wage income of Canadians had barely risen, leaving many concerned about their future. At the same time, the after-tax incomes of the wealthiest .01% of Canadians had risen dramatically. Individuals earning more than $1.8 million per year had seen, on average, their income rise by nearly 156%, or 3.1% per year on average, after inflation..

Canadians want a country where hard work is rewarded with greater opportunities and a real chance at success. We have been taking action to make this a reality.

I do not disagree. In fact, I would submit that no member in the House disagrees with the sentiment that every Canadian deserves a fair chance at success, with the sentiment that there should be a level playing field, that Canadians from coast to coast to coast should have the same opportunities, regardless of their lot in life, regardless of what their parents did before them, regardless of where in the country they live, and regardless of where they came from.

The sense of inclusion is so important to the essence of what it means to be Canadian. I think we all share this fair and level playing field commitment. No young Canadian should feel that they do not have the same chances, that they do not have the same opportunities as their neighbours.

This is how Canadians thrive, how Canadians see themselves, proud of our country, proud of its people, and proud of the opportunities we offer to everybody. The sense of inclusion is not a sense monopolizing Canada or only in Canadians, but it is the sense of how do we get there, how do we get there fairly, and how do we include everyone in our society.

This notion of inclusion has been around as a human notion perhaps from time immemorial. In the 1960s and 1970s, that notion of inclusion had more to do with ensuring everyone had equality and everyone had the same rights. As our economy is modernizing and as the global economy is changing, this notion of inclusion has become an economic notion.

GDP growth, of course, is laudable. GDP growth is something every nation wants. However, if that growth does not include everybody, if that growth is not distributed fairly, if that growth leaves large parts of the population behind, then we have let society down. We cannot have a society where a smaller and smaller percentage of the population gets more and more of the benefits of the economy. That is not fair, that is not right, and that is unjust.

That is the essence that underlies this motion, and it is a laudable motion.

As a federal government, we need to ensure we create a fair system. This is all about fairness of opportunity, and of course the tax system. The tax system is one tool that our federal government has at its disposal. There are others, but today we are focusing on that system. Building a tax system that supports fairness and opportunity has been fundamental to everything this government has done.

In our 2016 budget, this government replaced the previous child benefit system with the Canada child benefit. That CCB is simpler, more generous, and better targeted to those who need it the most.

During the first year, over 3.3 million families received more than $23 billion in CCB payments. Nine out of 10 families are better off under the CCB than they were under the previous system. In my riding of Newmarket—Aurora alone, over 13,000 families are receiving nearly $5,500 for a combined investment, because that is what it is, in our families and our people of $70 million.

This is one tool that helps create fairness. It is lifting children out of poverty. It is allowing families to let their children participate in extracurricular activities that perhaps they could not afford. It is helping offset the high costs of day care in my part of the world.

This is what a federal government should do. This is how the tax system can work fairly. I am proud to be part of a government that implemented this fundamental change.

In October, we also announced a reduction in the small business tax rate to 10% effective January 1 of this year, and to 9% next year. For the average small business, this will leave an additional $1,600 a year for it to reinvest in its business. Small businesses in many ridings, including my own, are the engine of growth. Any extra tax room they have is reinvested in their business, which of course helps grow the business, which then creates the middle-class jobs.

Those are two examples of the ways the tax system is being used to benefit Canadians and to help ensure that level playing field, that equal chance at opportunity that every Canadian deserves.

This is an economic reality. The global market is changing. The world economy is changing. There will be a premium on innovation. There will be a premium on skilled labour. We need to create a society that puts a premium and important value on innovation and skilled labour. This is how our economy will grow. We cannot be lackadaisical in these efforts. We must always remain vigilant that the growth Canada has been blessed with is shared equally by all.

This economic reality can quickly become a social issue if growth is not inclusive. If chunks of the population feel left behind, if they feel there is no chance or opportunity for them, if they feel the economy does not work for them, they will conclude that society does not work for them. We cannot leave chunks of our population behind. As the economy changes, we have to ensure we lever the opportunity as a nation. However, we have to ensure the rewards of those opportunities are shared by all. I do not think any member in the House would disagree with that sentiment.

It is clear that our government is delivering a fair tax system. I can assure hon. members that our work will continue. Going forward, we must remain vigilant and address inconsistencies and unfairness in the tax system. This is so important because fairness is at the heart of our government's plan for long-term sustainable economic growth.

[Sheri Benson, NDP, Saskatoon West, SK]

Mr. Speaker, I want to thank my colleague for his very passionate speech about fairness in the tax system and making sure everyone in our communities have access to the things they need to thrive and grow.

My earlier comments talked about the backlog of indigenous students. There are over 10,000 that are unable to access their treaty right to post-secondary education, because there is a backlog of funding for those students.

One of the reasons we are talking about tax avoidance and tax evasion today is that there is an opportunity here for this federal government to, first of all, follow through on not only a commitment here in the House but during the election campaign to find the revenue to make a difference in people's lives. That is part of the equation. The other part is that during the election the government promised to invest an additional $50 million into education so that those students could access their treaty right to post-secondary education.

I would like my hon. colleague to comment about the need to follow through, not just to talk about or indicate but to follow through, on the issues we have raised today, in order for those students to be able to access their education because the funding is available, because the government is actively, and with all seriousness, going after tax avoidance schemes and tax evasion.