Mr. Speaker, I apologize. I sometimes have trouble controlling my emotions, especially when deeply hurt by the comments made by some of our colleagues.
I am happy to rise today to speak to a matter I care deeply about, namely the scandal condemned by the auditor general on May 7, whereby a rich Canadian family managed, in December 1991, to transfer a $2 billion family trust fund to the U.S. without paying a penny in tax on the capital gains from these assets.
This rich family was able to transfer its assets tax free because of a so-called advance ruling by Revenue Canada. It is important to understand what an advance ruling is. Wealthy taxpayers-and it is essentially they who are involved financial operations of this nature and this magnitude-can ask Revenue Canada for an advance ruling on an interpretation of the Income Tax Act in order to protect secure a financial transaction or their own interpretation of the Income Tax Act.
This advance ruling, which was made on December 23, 1991, when everyone was busy partying, was based on a distorted analysis out of touch with the realities of tax laws by senior officials from the revenue and finance departments.
Several unusual facts relating to this issue lead us to believe that the government has some things to hide, that it does not want to shed light on this episode. Indeed, even though the decision was made under the previous Conservative government, it may be that friends of the Liberal Party of Canada, major contributors to the Liberals' election fund, very rich and influential people who gravitate around the centres of power, such as the offices of the Prime Minister and the Minister of Finance, have had some influence, with the result that, today, the government wants to hide things.
The first unusual fact is that senior officials from the revenue and finance departments had several meetings before issuing this ruling. During those meetings, they leaned on one side or the other. First, they said that the family could not transfer to the United States these assets of $2 billion tax free. However, in the end, on December 23, after numerous representations had been made by the tax experts representing the rich family involved, Revenue Canada issued an advance ruling allowing this scandal to take place.
Oddly enough, there are no minutes of these meetings, no report, no written account of the arguments put forth by the two sides before such a distorted interpretation of the tax provisions was made.
The second unusual fact is that, to this day, the ruling, which may have cost hundreds of millions of dollars to Quebec and Canadian taxpayers, is not supported by any technical analysis. There is no technical document.
When it wants $50 from middle and low income taxpayers, Revenue Canada does not beat around the bush. It issues a notice and sends a long letter explaining that an amount of $50 is due and payable. However, when hundreds of millions of dollars are at stake, no technical document is to be found.
The third unusual fact is that, for almost a week, meetings took place from morning until evening. On December 23, during the holiday season, while everyone was at home relaxing and celebrating Christmas and the New Year, some public servants were at work. The result was that, on that day, Canadian taxpayers' goose was cooked. Quebec and Canadian taxpayers are the ones who, through their taxes, must pay the hundreds of millions that were not paid by the family that transferred $2 billion to the United States.
Two days before Christmas, a family in Canada had additional reasons to celebrate, following Revenue Canada's ruling. However, all the other Canadian families would, had they known about this-because the government kept it a secret-have been saddened by the shameless attitude of senior public servants, who probably acted with the complicity of those in office at the time.
Another strange thing: while all advance rulings by Revenue Canada are normally made public, available to everyone, it took until last March 21, five whole years, for this advance ruling delivered in December 1991 to be made public and for the auditor general, on the basis of this very information, to bring to the public's attention this two billion dollar scandal. Five years.
Do you know what this means? It means that Revenue Canada had things to hide, because it is truly incredible that all these advance rulings were made public over the last five years with one exception. Oddly enough, it was the most important one. Oddly enough, it was the one that is costing Canadian taxpayers hundreds of millions of dollars. It is definitely rather strange.
This implies as well that for five years a small group of people knew, but that the bulk of the public did not. What is the word for this? In the United States, they would be described as insiders, people who were able to profit from their knowledge of the existence of the December 1991 advance ruling, of the existence of an erroneous interpretation, but one given by Revenue Canada regarding certain tax provisions from which others in their limited little group could have profited.
It means that the tax experts representing the very rich Canadian family that transferred its two billion dollars to the United States had a secret, a golden piece of information that they could sell all over the place to other rich Canadian families, because let us not forget that this 1991 ruling served as a precedent.
It means that, for five years, other rich families in Canada were able to profit from this advance ruling, in order to do exactly the same thing as in the case that concerns us, which is to not pay a cent of tax, and have the rest of Canadian taxpayers compensate for the fact that they were able to transfer billions out of the country.
Another strange thing in all this is the attitude of government representatives. When the auditor general made this case public last May, he did so in connection with the work of the House of Commons public accounts committee.
The public accounts committee is the committee that looks at all the recommendations, as it will today with the auditor general's new recommendations, and the public accounts committee examines all the chapters in the auditor general's report, analyzes each of the recommendations, and calls witnesses, as well as looking into the various scandals uncovered by the auditor general, involving spending or the numerous examples of waste in the departments, for instance, or situations such as those that concern us today-a misinterpretation of the tax act. This is the mandate of the auditor general.
As for the information made public by the auditor general, you have seen the performance before the public accounts committee by the Liberal representatives, including the hon. member for Brome-Missisquoi. You have seen them tearing out their hair in front of the cameras, sending out press releases about how they were going to get to the bottom of the circumstances surrounding this advance ruling, the circumstances which made it possible to avoid taxes because of a loophole in the Income Tax Act.
Two days later, the hon. member was nowhere to be found. The story was that he had been called back to his riding on a very urgent matter, and could not get back until the next week. Finally, he was absent for two weeks. He could not be reached. And why? Because he had received an order from higher up. He had been given orders from higher up to button his lip, because some people linked to the Liberal Party, perhaps even to the PMO or the office of the finance minister, had, or might have, profited directly or indirectly from this ruling. So he was told to keep quiet.
After that, everything went haywire. The Minister of Finance announced he was transferring the case of the two billion dollar trust to the finance committee, so that such an ambiguous situation-as he referred to it- would not be repeated in future. He called it an ambiguity in the tax law, whereas it is not; it is clear that government employees were not entitled to make the interpretation they did.
By transferring the matter to the finance committee, the Minister of Finance was merely clouding the issue. And why? Because the finance committee is not mandated to cast light on a specific case, whereas the mandate of the public accounts committee is to carry out a thorough investigation, to virtually convert itself into a royal commission of inquiry. As for the finance committee, it is not concerned with the day to day administration of tax policy, as the public accounts committee is. Nor does it investigate cases raised by the auditor general. Its focus is on the changes in taxation policy.
By transferring the case to the finance committee, the finance minister certainly was aware-having been an MP and the Minister of Finance long enough-that it would not examine the specific case from 1991, but would make recommendations on future changes to policy.
When it did get to the finance committee, the Liberals' attitude was really scandalous. First, the chairman of the finance committee. When the auditor general appeared before the committee, for more than an hour and a half he scolded the auditor general, was derisive and tried to undermine his credibility by taking the floor. This is unheard of in a committee of the House of Commons: a chairman who decides to take the floor for an hour and a half and tell off the auditor general.
The auditor general, and it is important for taxpayers to realize this, is one of the most venerable institutions of this Parliament. The auditor general is the watchdog of the public purse. He is accountable to Parliament, not to the Liberal Party of Canada.
He judges the performance of managers, their good and, especially, their bad decisions, and reports to Parliament. In other words, he is accountable to the people. He monitors public finances and the interpretation of tax laws in the best interests of the
taxpayers of this country. And the only thing the government side did was undermine the credibility of the auditor general.
Recently, this happened again. The report of the Liberal majority on the finance committee, the very report ordered by the Minister of Finance, said, more or less: "The auditor general had no mandate to do what he did". However, he did have a mandate to do what he did and he had done so many times. He has examined the interpretation of tax laws at least seven times in ten years.
When the Liberals were in the opposition, they used the cases of erroneous interpretation of the Income Tax Act by senior officials that were raised by the auditor general. Today, they condemn him. They say the auditor general has no mandate.
Second, they said he had no credibility. That is a serious charge. The auditor general watches over the interests of all taxpayers. He is accountable to Parliament and makes departments, ministers and senior officials give an account of themselves, but they say his analysis is not credible. What is their basis for saying so? They rely on the opinion of six experts who appeared this summer before the finance committee. I was there, and six out of eight experts spoke out against the auditor general.
Do you know why? Because the six of them, all of them, were tax experts representing wealthy canadian families and helping those families to take millions if not billions of dollars out of Canada in order to avoid paying a cent of income tax on these amounts. Now, has anyone ever seen people who are judge and jury shoot themselves in the foot? Of course not, it would make no sense. But the Liberals, pursuing their saga and their objective, which is to hide the inside information in this matter, relied on these experts.
There is more. Instead of closing the gates and saying that this sort of wrong interpretation would no longer be tolerated, they said that this distorted, wrong and cynical interpretation made by Revenue Canada would become the rule. The borders will be opened. Once the government accepts the report of the Liberal majority, wealthy Canadian families will be able to do as they please. They will be able to transfer millions and billions of dollars without being bothered in any way by Revenue Canada. Mr. Speaker, just try to take $ 2,000 out of Canada and open an account in a foreign country to see if Revenue Canada will allow you to do it. Just try.
The attitude of the Liberals in this matter is bewildering but suggests that the government probably has many things to hide.
As I said earlier this week in this House, if we scratch the blue of the decision taken by the Conservatives in 1991, we will soon find some red underneath. In other words, some influential people in the Liberal Party benefited from this decision. Furthermore, the fact that the standing committee on public accounts cannot go into this matter as thoroughly as it would like to and call witnesses, namely senior officials and even politicians who were involved in this decision in 1991, and even tax experts who were around at the time, suggests that the government is trying to cloud the issue and hide things.
The government has something to hide. There might be people in the Prime Minister's office or in the finance minister's office who do not want this thing to become public knowledge, but it is the Canadian taxpayer who is paying for it, and probably for other cases since, as I mentioned before, and this is very significant, the 1991 case has set a precedent for others. As soon as this kind of advance ruling is handed down, and insiders get wind of it, and we are dealing with insiders here and, by the way, insider trading is an indictable offence in the United States, they may use it to other people's advantage. They might have used it to benefit their clients if they worked for tax consultants, for example.
As a result of this ruling, astronomical sums of money are being transferred abroad without any interference from Revenue Canada. In this case as in others that might have occurred, the government must come to its senses and protect the interests of all taxpayers, not only those who are millionaires or billionaires.
I would like to take this opportunity to announce to the House that the official opposition is currently working to create a vast coalition coast to coast. This coalition will be constituted of unions, elderly people organizations, student organizations, groups devoted to the well-being of underprivileged people, and Canadian citizens who are fed up with the attitude of the federal government on this issue. We hope this vast coalition will bring some sense to the government.
In the meantime, let us hope that it will see the light, it is in the best interest of all Quebecers and Canadians. It is outrageous for the government to attempt to cover up this scandal, hiding behind false arguments, instead of getting to the bottom of it.
It is kicking a big fuss, trying all kinds of tricks in the public accounts committee or the finance committee to make sure that the truth will never be known.
I would like to take this opportunity to reiterate, on behalf of Quebecers and Canadians, our trust in the institution of the auditor general and the work Mr. Desautels did on this issue and many others.
If there is an auditor who deserves the highest respect for his work and his integrity, and who has in fact been supported by a former auditor general, Mr. Kenneth Dye, it is Mr. Desautels,
whom, I believe deserves to be applauded for his work instead of having his reputation systematically tarnished by an unscrupulous government.
