Mr. Speaker, I am pleased to rise in the House to speak to this important piece of legislation, one that would help bring more fairness to the tax system and help our government continue its work to strengthen and grow the middle class. To have an economy that works for everyone, we need a tax system that is fair, and we need all Canadians to pay their fair share. After all, the taxes we pay as Canadians build the infrastructure that gets our goods to market, and help create good, well-paying jobs. They keep us healthy, support arts and culture, and help us build strong communities. However, the tax system only serves Canadians well when it is working fairly.
Canadians work hard, and they expect the government to do the same. Their hard-earned tax dollars must be used wisely and effectively to provide the services and supports that Canadians want and need. Delivering the programs and services that Canadians need while keeping taxes low for small businesses and middle-class families is important to our government, and to all Canadians.
When our government took office more than two years ago, we made a commitment to invest in growth while upholding the principle of fairness for all taxpayers. A fair tax system is key to ensuring that the benefits of a growing economy are felt by more and more people with good, well-paying jobs for the middle class and everyone working hard to join it. The government is taking action on multiple fronts to ensure that all Canadians are paying their fair share of tax.
Let me remind hon. members that one of the government's first actions was to cut taxes for the middle class and raise them on the top 1%. In total, more than nine million Canadians are benefiting from this tax cut. Then we moved to provide simpler, more generous and better targeted support to those Canadian families with children that need it most. We did that by replacing the previous child benefit system with the Canada child benefit. Compared to the old system of child benefits, the Canada child benefit, or CCB, is simpler, more generous and better targeted to those who need it most, and it is tax free. Nine out of 10 families are better off under the CCB, and the benefit has helped lift 521,000 individuals, including nearly 300,000 children, out of poverty. On average, families benefiting from the CCB are receiving $6,800 per year to help put healthy food on the table, pay for lessons and buy clothes and supplies for school. The CCB is especially helpful for those families led by single parents. These families are most often led by single mothers, who have lower total incomes on average, and so benefit more from an income-tested benefit like the CCB. In fact, close to 95% of CCB amounts paid to single parents with incomes below $30,000 are paid to single mothers.
We have also taken steps to help Canada's hard-working small businesses through a reduction of the federal small business tax rate. We reduced the small business tax rate to 10%, effective January 1, 2018, and will reduce it further, to just 9%, starting next January. For the average small business, this will mean an additional $1,600 per year. By this time next year, the combined federal-provincial-territorial average tax rate for small businesses will be just over 12%, by far the lowest in the G7, and among the lowest of all OECD countries.
Tax fairness continues to be a cornerstone of our government's promise to Canadians to grow a stronger middle class. In each of our three budgets, the government has taken steps to enhance the integrity of Canada's tax system and give greater confidence that the system is fair for everyone. An important focus of our efforts is cracking down on tax evasion and tax avoidance, which have serious financial costs for our government and all taxpayers.
Since our first budget in 2016, the government has continuously strengthened the Canada Revenue Agency's ability to successfully crack down on tax evasion and combat tax avoidance with increased funding. This funding has enabled far-reaching changes to the CRA's compliance programs, allowing them to better target those posing the highest risk of tax avoidance, including wealthy individuals with offshore accounts, and more effectively limit tax evasion and avoidance.
Those efforts are showing concrete results for Canadians. With our new systems, we are able to review all international electronic fund transfers of over $10,000 entering or leaving the country. This adds up to more than one million transactions each month.
Reviewing these transfers helps us do better risk assessments for unfair tax avoidance by individuals and businesses. Over the last two fiscal years, the government reviewed all large money transactions between Canada and eight countries of consent, with a total of 187,000 transactions worth a total of more than $177 billion.
Working closely with partners in Canada and around the world, there are now over 1,000 offshore audits and more than 40 criminal investigations with links to offshore transactions. The government is also aggressively pursuing those who promote tax avoidance schemes, and so far has imposed $44 million in penalties on these third parties.
This year, we are also gaining easier access to information on Canadians' overseas bank accounts with the implementation of the common reporting standard. With this new system, Canada and close to 100 other countries will begin exchanging financial account information. This information will help us connect the dots and identify instances where Canadians hide money in offshore accounts to avoid paying taxes.
We have expanded our specialist audit teams who focus on high-net-worth taxpayers. These teams are comprised of approximately 250 auditors responsible for scrutinizing more than 500 high-net-worth individuals and their webs of corporate structures.
In addition, in December 2017, the Minister of Finance and his provincial and territorial counterparts committed to ensuring that the appropriate Canadian authorities know who owns which corporations in Canada and to better harmonizing corporate ownership record requirements between jurisdictions. This information will help Canadian authorities take appropriate action against those engaging in international tax avoidance and criminal activities such as tax evasion, money laundering and other criminal activities perpetrated through the misuse of corporate vehicles.
While the actions the government has taken to date represent real progress, tax fairness is a complex goal requiring ongoing engagement and progress on many fronts. With this bill, the government is going even further to fight aggressive international tax avoidance. We are proposing rules to prevent taxpayers from inappropriately reducing or avoiding Canadian income tax through treaty shopping and other transactions or arrangements.
Canada is active in the efforts by the OECD and G20 to address tax planning strategies that exploit gaps or mismatches in existing tax rules to shift profits to locations where they are subject to little or no taxation. These groups are also working to counter strategies that shift profits away from jurisdictions where the underlying economic activity has taken place. This multilateral effort is known as the “base erosion and profit shifting” project.
The OECD's work on the base erosion and profit shifting project identified a number of instances in which the terms of current tax treaties could be modified to prevent potential abuse. However, given the large number of treaties in existence and the extended period of time the bilateral renegotiation of each of those agreements would entail, a new approach was developed to implement these modifications on an expedited basis. The result is the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, also known as the multilateral instrument or MLI.
The MLI is the central focus of today's legislation. It will enable those jurisdictions that sign on to it to swiftly modify their bilateral tax treaties to incorporate the tax treaty related measures developed through the base erosion and profit shifting project.
The MLI was developed and negotiated by more than 100 countries and jurisdictions, including Canada. It is the first multilateral treaty of its kind allowing jurisdictions to incorporate the results of the BEPS project into their bilateral tax treaties and to work together more effectively in the fight against aggressive international tax avoidance.
At the same time, the MLI will provide greater certainty for taxpayers by including measures designed to improve dispute resolution under Canada's tax treaties.
Canada signed the MLI on June 7, 2017, and as we committed in budget 2018, we have tabled the legislation in the House to enact the MLI into Canadian law. The MLI will build on actions that the government has already taken to enhance the integrity of Canada's tax system at home and abroad, giving Canadians greater confidence that the system is fair for everyone.
Adoption of this legislation would modify the application of many of Canada's bilateral tax treaties, including the base erosion and profit shifting standards on treaty abuse, improving dispute resolution and certain other more specific anti-avoidance rules as well as mandatory binding arbitration in relation to tax treaty disputes.
With this legislation, the Government of Canada is taking the next step in the fight against aggressive international tax avoidance and safeguarding the government's ability to invest in the programs and services that help Canadians across this country.
From wherever we look today, there is no shortage of challenges facing the world economy and that means challenges for Canada as well. The good news is that we have strong economic fundamentals that allow us to seize opportunities in the global economy.
Our strong fiscal position is the envy of every G7 nation and gives us the flexibility to make strategic investments today that will help grow our economy tomorrow and for years to come.
The federal debt-to-GDP ratio remains firmly on a downward track. Canada's net debt-to-GDP ratio is the lowest among the G7 countries and our deficit-to-GDP ratio is projected to reach 0.5%.
Over the last three years, Canadians' hard work has expanded our economy, creating about 540,000 full-time jobs and driving down the unemployment rate to one of the lowest levels in nearly 40 years.
By cracking down on tax evasion at home and abroad, we are building on these tremendous advantages that Canada enjoys. We are ensuring that our government has the money needed to deliver programs that help Canadians and that Canada remains positioned as an excellent place to work, invest and do business.
As I have made it clear today, we have already made tremendous progress towards this stronger Canada, but as I have also noted, tax fairness is a complex goal requiring action on many fronts.
The government will therefore continue to identify and address tax evasion and aggressive tax avoidance schemes to ensure that the tax system operates as fairly and effectively as possible.
The legislation we are considering today is an important step towards this goal. I have every confidence that this will become increasingly evident as we proceed with our debate.