Yvan Loubier

[Taxation, October 18th, 2005]

Mr. Speaker, this new interference by the federal government in areas of jurisdiction belonging to Quebec and the provinces and this notion of national interest are made possible by the very existence of the fiscal imbalance.

Is this notion of national interest not just a new pretext and a new justification being used by the federal government for its repeated infringements in areas of jurisdiction belonging to Quebec and the provinces?

[Budget Surpluses, October 17th, 2005]

Mr. Speaker, Quebec and the provinces have all been complaining about the fiscal imbalance that keeps the money in Ottawa while the needs are in Quebec and the provinces.

Does the Prime Minister, who says it is in national interest each time he interferes in the jurisdictions of Quebec and the provinces, not realize that it is in the best interest of Quebeckers and even Canadians for him to recognize and resolve the sizeable fiscal imbalance, rather than turn the huge budget surpluses in Ottawa into something normal and accepted?

[Budget Surpluses, October 17th, 2005]

Mr. Speaker, the government has just introduced a bill on the use of federal budget surpluses in the coming years.

How can the Prime Minister contradict himself so by denying the existence of any fiscal imbalance to the federal government's advantage and then confirming the anticipated existence of huge federal surpluses by introducing legislation on their allocation in the future?

[Budget Surplus, October 7th, 2005]

Mr. Speaker, Quebec and the provinces are unanimous in demanding a substantial increase in federal transfers for colleges and universities. Again yesterday, the premiers reiterated this demand. When will the federal government recognize that it can more than adequately resolve the fiscal imbalance by transferring tax fields to Quebec and the provinces?

[Budget Surplus, October 7th, 2005]

Mr. Speaker, on September 28, the Conference Board stated that the federal surplus should be around $10 billion or $12 billion this year and that it will greatly exceed this amount over the next few years. Once again, this is proof that the money is in Ottawa while Quebec and the provinces require additional resources in order to provide the public with services they need.

Will the Minister of Finance admit that it is high time to sit down with Quebec and the provinces in order to review the division of tax fields, so that they can have the resources they need to fulfill their fundamental mandate, specifically in the areas of health care, post-secondary education and support for the most vulnerable individuals in our society?

[Amendment to Income Tax Act Regulations, October 6th, 2005]

Madam Speaker, I would like to use my ten minutes to try to give a clear explanation about the rules that govern the tax agreement between Canada and Barbados and our income tax regulations. How can these regulations, which are determined by cabinet, that is the governor in council, skew the rules contained in the tax agreement with Barbados?

As a general rule, all taxpayers who receive any income generated here or in a foreign country must pay taxes. However, there are exceptions. Tax agreements between Canada and certain countries provide that income that is taxed in a signatory country can be repatriated without being taxed again in Canada. That is the principle behind these tax agreements, and we support it.

Obviously, subsidiaries of Canadian companies that operate mainly in countries that have signed a tax agreement with Canada should not have to pay taxes again in this country when they have already paid taxes in the other country. We recognize that fact, especially when the tax agreement is with a country where income or profits are taxed at a rate that is comparable to what we have in Canada. We have no problem with that. We understand that and totally support the idea.

The rub lies in the fact that the former finance minister and current Prime Minister decided to get rid of the tax treaties signed with tax havens, in 1994, after the Auditor General and the Bloc Québécois blew the whistle on them. So he decided to clean house in 1994, with the exception of the tax treaty with Barbados. Not only did he keep this treaty with Barbados, but the former finance minister and current Prime Minister also had a company called CSL International, which is still owned by his family. It is a holding company that owns shipping lines operating in international waters and that had its head office in Liberia. By cutting its ties with tax havens, of which Liberia is one, the government forced CSL International to move its head office to Barbados in 1994. So, the terms of the tax treaty with Barbados remained unchanged, and CSL International moved to Barbados.

Two other amendments had to be made to the Income Tax Act. The former finance minister had tried to make an amendment in 1996, but an election was called immediately after and the bill died. This amendment was to consider the holding company as a company truly providing international shipping services, and no longer simply a holding company. By doing so, the former finance minister was building a golden cage so as to pay lower taxes from 1996 on, and to be subject to other provisions that were to come later. However, that bill was never adopted. In 1998, he re-introduced his bill, which he managed to get passed. We condemned it both times, naturally.

With time, we see that, in 1994, the first thing the former finance minister did was clean up the tax treaties in order to give the appearance of a government that cared about its tax base, after a number of years of whistleblowing.

On the other hand, he had the cabinet adopt, after he himself presented it as Minister of Finance, a section of the Income Tax regulations, namely 5907(11.2) c . And what is its purpose? A return to the tax convention signed with Barbados. And what does section 30 of that tax convention say? That there are two types of taxation in Barbados. There is the standard rate on corporate income— 40%—which is acceptable. But there are special provisions for foreign companies whose principal activities are not in Barbados, and who decide to establish a head office there. Such companies pay a tax of between 1% and 2.5%, as my colleague from Portneuf—Jacques-Cartier has suggested.

What is the intent of article 30 of the tax convention between Canada and Barbados? It states that, for subsidiaries of foreign companies subject to that low tax rate of between 1% and 2.5%, profits returning to the country of origin are not tax exempt.

If they pay between 1% and 2.5% to Barbados, profits such as those of CSL International, when they come back to this country, are subject to federal and provincial tax. In the case of CSL, Quebec tax, since their head office is in Montreal.

In 1994, the Minister of Finance got this change via regulation. He announced that an exception would be made to section 5907(11.2) c of the taxation regulations.

This is an exception to article 30 of the Canada-Barbados tax convention, meaning that even if CSL's profits are taxed at 1% to 2.5% in Barbados, under the conditions set out in 1998 by another bill tabled by the Minister of Finance, when they come back here, they escape the provisions of article 30 of the convention. Thus, these profits are exempt from Canadian taxes.

That is the only exception and it was submitted by the then finance minister, who is now the Prime Minister. That is what this allowed him to do, in conjunction with Bill C-28 in 1998, which was retroactive to 1994. It is quite the coincidence that in 1994 provisions of the tax treaty were changed. A regulation was passed to make an exception to the operation of section 30 of this treaty. As for the bill in 1998, it became retroactive to 1994. What a coincidence. Everything fits. Looking back over the specific criticisms we, the Bloc Québécois, have been making since 1994, all the pieces of the puzzle fall into place.

In 1994, tax treaties are tidied up with the exception of the one with Barbados. CSL International moves to Barbados. Tax regulations are passed that exempt CSL International from the provisions of the perfectly acceptable treaty between Barbados and Canada. An exception is made, even though CSL International is paying a maximum of 2.5% in tax. Despite the treaty with Barbados, when profits are repatriated here, CSL does not pay a penny in tax. That is the only exception that currently exists.

From the beginning, the parliamentary secretary has not understood a thing in this entire debate. When he says that we are asking for the tax treaty with Barbados to be torn up, that is not true. He is grandstanding. What we are asking him with this motion is to abolish the section of the Canadian income tax regulations, subsection 5907112( c ), which makes an exception for the Prime Minister's family business, CSL International in Barbados. Because of this exception, CSL International in Barbados does not have to pay normal taxes like you and me. It should pay taxes just like every other taxpayer does.

It is all well and good to ask business corporations, as we saw with the bill this week, to demonstrate rigour, to be accountable and to be good corporate citizens. But when the Prime Minister has worked out a way, since 1994, since those provisions were implemented, to save his family business $100 million in taxes on the backs of taxpayers, things are bad.

This morning, I likened Canada to a democratic public corporation whose shareholders are the citizens of Quebec and Canada. If one shareholder does something fishy, as the Prime Minister did when he was finance minister—and his family owned corporation continues to profit by it—this means that the other shareholders of the corporation have to live with poorer returns. As a result, we end up paying too much federal income tax because of people like the Prime Minister and his family who, under the provisions of section 5907 of the Income Tax Regulations, unfairly benefit and distort an otherwise perfectly acceptable tax treaty between Canada and Barbados with decisions made here.

I am waiting for the day when I will be proven wrong. Over the coming weeks, at the Standing Committee on Finance, we will be holding a special session with outside tax experts, the Auditor General, and officials from the finance department. The latter told us tales about the provisions of section 5907 in June. Their explanations did not square with the facts. If ever we are proven wrong, that is, that no one benefited unfairly, that the Prime Minister, then finance minister, did not take advantage of his position to derive benefits for himself and his family, then we will shut up and apologize. But so far, for all the whistleblowing we have done, including with respect to the gilded cage built since 1994, there has never been a solid argument against us.

[Gasoline Prices, October 6th, 2005]

Mr. Speaker, the minister has put a plan in place and is making all taxpayers pay for it, but not the ones primarily responsible, namely the oil companies. As if that were not enough, he is giving them a gift of $250 million a year.

How can the ones primarily responsible for the current crisis not have to pay a single cent of the $2.5 billion in measures announced by the government, while all taxpayers, who are already penalized by this crisis caused by the oil companies, are once again footing the bill?

[Gasoline Prices, October 6th, 2005]

Mr. Speaker, in addition to the increase in the price of crude oil, the sharp rise in profit margins for refining instigated at the same time by oil companies has been largely responsible for the current oil crisis that the government has to counter through support measures.

How can the government allow the oil companies, which are largely responsible for this crisis, not to pay the consequences and, moreover, to continue to benefit from $250 million a year in tax relief, as a gift of largesse from the government?

[Bank Act, October 6th, 2005]

Madam Speaker, I want to thank my colleague for whom I have a great deal of respect. I also want to commend him on his work in Parliament. He is on top of every debate and topic discussed in Parliament. I share his opinion on all the financial scandals in the United States and here. It is becoming increasingly rare for an experienced director to want to run a public company, and with good reason. There are millions of shareholders who have lost exorbitant amounts of money in these numerous scandals. Just recently in the Norbourg affair in Quebec, let us say the news is not good.

Nonetheless, as I was saying earlier, the bill is an improvement in terms of transparency and diligence. However, there are no specific provisions in terms of auditing and that is what we want to work on at the Standing Committee on Finance. There are no specific provisions on auditing or the authenticity of information on the activities of a publicly traded company. As for the directors' responsibility, there is some grey area in the definition of the new concept called “due diligence”, which supposedly could, according to discussions held with senior officials, improve the level of security of directors in terms of legal proceedings, while ensuring that rules are clearer on their responsibilities. This is being called “due diligence”.

This is what we heard:

With a due diligence defence, the directors may act reasonably prudently by relying on financial statements represented to them by an officer of the corporation or by relying on their own assessment of the financial health of the corporation. However, the due diligence defence also recognizes that the nature and extent of the expected precautions will vary under each circumstance.

Admittedly, this is quite vague. This is supposed to improve the situation and directors and shareholders will feel more secure. However, we do not yet know how. These are issues we are going to delve into at the Standing Committee on Finance.

[Bank Act, October 6th, 2005]

Madam Speaker, I thank my colleague for her comments and questions.

She has put her finger on one fact about this government. If it is so urgent to enact certain of these provisions, why the four-year delay in proposing them? I agree with her totally. What is more, when we did enact some new provisions back in 2001, thanks to Bill S-11, we were already years behind the times as far as business corporations are concerned. This was also the case when the Bank Act was reviewed. Normally, this is done every five years. Financial realities, the market, configurations and the industrial structure of this sector change, but this government let seven and one-half years go by before reviewing the Bank Act.

The main cause of the urgent need to enhance efficiency to which the government's speakers have referred lies in the numerous scandals the government has been confronted with, particularly the lack of responsibility and transparency in handling public funds. Now the government is trying to clean up its reputation. Under the pretext of wanting to avoid financial scandals, by tabling a bill on responsibility and accountability, it is trying to pass itself off as the defender of these virtues, while it is up to its elbows in corruption, up to its neck, even.

This is a positive bill, but the actions of this government make it obvious that it is trying to clean up its tarnished reputation. Unfortunately for the government, however, people have pretty long memories. They have not been able to clean up public finances, so they are trying to show that they are capable of cleaning up elsewhere. The only impression that leaves is that they lack credibility.