Sue Barnes

[Supply, September 30th, 1996]

If I may, I will continue with my 20 minute speech.

I was talking about the British Columbia family bonus program in which Revenue Canada is applying the programs on behalf of the provincial government. This program is entirely funded by the province of British Columbia but is being administered on a full cost recovery basis by Revenue Canada using information that the department maintains for the child tax benefit program as well as information from personal tax returns.

The Revenue Canada tax centre at Surrey, British Columbia has been equipped and is ready to respond to inquiries generated by this program. This example of co-operation, a word I think we all need to understand, reminds us that while we may have provinces and a federal government with different agendas and different programs, there is only one taxpayer who must pay for these programs, who expects to be served by them and served by them well and also by their representatives.

Any form of co-operation that decreases costs and improves services is welcome. I am sure all members of this House can at least agree on this point.

What is the future? Revenue Canada has accomplished a great deal through its partnerships with businesses and the provinces and a lot more can be done. For example, the new national revenue agency, which was supported by the western premiers during their June 1996 conference, is something we can talk about. The B.C. government has expressed support for the federal government's desire to reduce overlap, duplication and compliance costs for businesses and to increase efficiency in revenue collection.

As I said earlier, the prosperity of one part of the country is of benefit to all of us. Revenue Canada is proud to be a partner in the development of British Columbia with programs that facilitate its economic development.

In the last century Canada built its industrial base mainly in connection with the Atlantic world, the industrialized countries of Europe and the United States. Now the Pacific world is rapidly being added to the equation. This is a challenge of the future and it has to be faced not only by Revenue Canada but by every department of government, by the federal and provincial governments and by Canadians from coast to coast. I am sure that those parties representing the province of B.C. will be there to help us in developing these programs that are good not only for British Columbians but for all Canadians.

[Supply, September 30th, 1996]

Madam Speaker, I rise to speak on this motion concerning a province that I consider one of the cornerstones of Canada's future prosperity and economic development. I refer of course to British Columbia, a province which in the past few years has been a leader in economic growth and expansion in the all important area of the Pacific rim.

In the Liberal red book there was a commitment to focus on the Pacific. Other hon. members today have dealt with various accomplishments such as Team Canada missions to Asia which have brought home new business deals and jobs for British Columbians. Nationally, Canadian businesses announced business deals worth $20 billion. These trade missions show how much can be accomplished when governments and businesses work together.

Revenue Canada has also played a key role in partnership with the private sector and other government departments to make Vancouver the gateway to Asia and the Pacific. We are proud of

this role because in doing so we are participating not only in the creation of jobs and the enhancement of the economy of British Columbia, but for Canada as a whole.

We have to talk about Canada as a whole. Let us make no mistake about it. The prosperity of one part of the country is something in which all parts of our country should rejoice, not bellyache, rejoice.

In a modern, integrated economy where goods travel across a continent in the space of hours and information in a fraction of a second, the prosperity and the economic activity of one part of the country cannot but help be beneficial to Canada as a whole. That is what being a country is all about, not pitting one region against another. Whether it is any of our provinces, we are a united country and we want to stay that way.

Canada is not only an Atlantic nation but a Pacific nation. Across this vast ocean which occupies half of the world's surface are some of the most interesting and promising trading partners we could imagine.

We have Japan, a nation which in the space of a century went from being a very closed and medieval society to one of the world's leading economic engines. We have countries like China, a nation old in years but whose economy has been growing at an incredible double digit rate. We have resource rich countries like Australia. And let us not forget the growing economies that we have to the south, Mexico and countries in western South America, which are also Pacific rim countries.

What role can Revenue Canada play? What role can our government play in such a scenario? The proper role for any government in a free enterprise system, which is to facilitate the creation of wealth, to regulate only as much as is necessary for the common good and to act as the partner of business so that we have a strong economy.

I will now explain how Revenue Canada has translated this philosophy into concrete programs and initiatives, such as the accord on our shared border, and programs such as ACROSS, CANPASS and a host of other initiatives, all which are beneficial across this country, particularly in B.C.

Revenue Canada has played the key role in developing a new terminal at Vancouver International Airport. This airport is strategically placed to become North America's premier gateway between Asia-Pacific and the United States. From 1992 to 1996 the Vancouver International Airport Authority undertook a $400 million four-year development program to add a new international terminal building.

Revenue Canada tripled its customs terminal area. The largest one we now have in any province of Canada is in B.C. The department added more inspection lines and doubled the baggage carousels. It added 30 new customs staff which means it can process 40 per cent more passengers per hour than it did before, all in B.C. I might add.

Revenue Canada is working to facilitate the flow of more tourists, more travellers and more trade through its open skies agreement and its shared border accord with the United States. Through the smart border concept the department is taking advantage of its new agreements with the United States and helping to position British Columbia to take advantage of these agreements.

Revenue Canada is discussing with the Americans a one stop, in transit preclearance process at the Vancouver International Airport to make travel through Vancouver more attractive and to promote Vancouver as Canada's gateway to the growing world of the Pacific rim.

If British Columbia is strategically located on the Pacific, it is also strategically located north of one of the most populated and dynamic rapidly growing areas of the United States, namely California and the great Pacific northwest. California has become America's most populous state, while the states of Washington and Oregon are also two of the most rapidly growing areas of our neighbour to the south. That is why Revenue Canada's initiatives have also been of immense benefit to improving service at the land border crossings between British Columbia and the United States.

Revenue Canada's initiatives are of importance to B.C. both in terms of facilitating the movement of travellers but also in the facilitation of the movement of commercial goods.

The importance of facilitating the movement of travellers can hardly be underestimated. We know that tourism is B.C.'s second largest industry, contributing over $4 billion to the provincial economy and providing 80,000 jobs. We do not want to harass people at the border. We want them into Canada. We will target high risk travellers, but we will facilitate low risk travellers to Canada. A cornerstone of facilitating the movement of travellers is the CANPASS program.

This program, which exists in the form of CANPASS airport, CANPASS highway, CANPASS private boats and CANPASS private aircraft, is designed to streamline customs and immigration clearance of low risk travellers at select border crossings. I am proud to inform members that all these forms of CANPASS, except for the initiative relating to private aircraft, were initiated and pilot tested in British Columbia.

The precise operation of CANPASS varies from one part of the program to the other. For example, at an airport, a traveller uses a smart card and a hand print to identify themselves at a machine that is very similar to an automated bank teller machine. At highway crossings CANPASS participants are identified through a decal on their windshields. Other procedures are used in the case of private boats and private aircraft, but whatever type of CANPASS is used the principle remains the same. The vast majority of travellers can

be trusted to self-declare, making their travel easier and freeing up our valuable resources for concentration on high risk areas.

CANPASS is a refinement and an enhancement of an earlier customs clearance program known as the Peace Arch crossing entry program, called PACE, which was successfully piloted at the customs border point at Douglas, British Columbia. Now under the name CANPASS Highway, this program is available at Douglas, Boundary Bay, Pacific Highway and Huntingdon.

Concentration on high risk areas and preventing the illegal importation of drugs, weapons and other contraband is indeed important for all Canadians, but especially for British Columbians. We all know that along with the increase in population and prosperity urban areas of British Columbia are suffering hard times because of the social plague of illegal drugs, a plague which affects all Canadians. It is hard to over estimate the individual suffering and cost to society of drug addiction which certainly exists in all parts of Canada but which has been particularly acute in areas of western Canada.

That is why Revenue Canada is proud of new contraband technology which has been installed at Pacific region border services at airports and land crossings. In this connection I would mention the vivid x-ray unit which was installed at Vancouver international airport in 1994. This equipment has the unique capability of specifically targeting organic materials, various types of drugs and explosives.

There are also the ion mobility spectrometer units which detect minute particle residues of cocaine and heroin on surfaces of documents, currency, boxes, luggage and clothing. This equipment has been installed at the Pacific Highway border crossing and at the Vancouver marine terminal.

These are but two technological advances that also include contraband detection kits and narrow beam laser range finders that help to detect the presence of false walls in marine or truck containers without the requirement of unloading the contents.

These are important measures which Canadians now have at their disposal for the protection of our economy and the protection of Canadian citizens.

In addition to making things easier for travellers, on the commercial side Revenue Canada has initiated the ACROSS system countrywide to speed up the release of commercial goods. The department has taken part in designating an international commercial centre in Vancouver. This is a bonded warehouse where value added operations are permitted by Revenue Canada to level the playing field for small and medium size companies.

Border protection and facilitation is not the only area in which Revenue Canada has been working to better serve British Columbians. Another important initiative, designed to facilitate and simplify our dealings with business, is the business number, which the department has piloted and introduced on behalf of the federal government. The business number is designed to replace the multiple account numbers which businesses have needed to deal with the federal government. British Columbia has expressed an interest in using the business number for provincial business programs.

On April 18, 1996 British Columbia began a one year pilot of six one-stop business registration work stations. This allows businesses to register for a series of federal and provincial programs by visiting one office and using the self-help work stations to complete the forms necessary for their programs, both federal and provincial.

Another way Revenue Canada has been able to benefit British Columbia has been by administering the British Columbia family bonus program, something which is very important to the families of British Columbia.

[Revenue Canada, September 27th, 1996]

Mr. Speaker, we are going to continue these smuggling initiatives. In fact, it will be done department-wide. The assistant deputies are monitoring the situation and working together. Not only that, it involves other jurisdictions. It involves the police forces and the RCMP.

We are doing very well. This is a criminal element in our society and we are going after that money. It is important work in our department and we will continue to do it well, so that instead of a $1 billion decrease we look forward to getting rid of the extra $500 million. We are working on that and we have the plan of action to complete.

[Revenue Canada, September 27th, 1996]

Mr. Speaker, I thank the member for his question.

I also want to thank the auditor general for bringing these issues to our attention.

I would first point out that in the year after the government took office, lost revenues due to smuggling decreased by two-thirds. That is a result of government initiatives. It is a big $1 billion decrease.

During the time that the audit resources were reallocated into the anti-smuggling situation, all of the large industries were monitored. The department has recently completed several large oil company audits and the results confirm our risk assessments. The rate of compliance was excellent. It was in excess of 95 per cent.

[Supply, September 26th, 1996]

Mr. Speaker, I rise to speak on the motion brought forward today by the official opposition. This motion asks the House to denounce the government for refusing to shed light on certain transactions. However, I would like to suggest that it is actually the opposition members themselves who are refusing to see the light in this matter.

The motion also contends that the government has attacked the credibility of the auditor general while allowing millions of dollars to leave the country.

It would appear once again that the opposition is more content with promoting unfounded allegations and wild accusations than it is with a substantive review of the real issue and the true facts.

The issues to which the motion vaguely refers were first raised by the auditor general in his May 7 report that focused on legislative policies and advance ruling procedures governing taxable Canadian property, not family trusts.

Members will recall that immediately following the release of the auditor general's report, the government acted quickly by referring the issues raised in the report to the House of Commons Standing Committee on Finance for review. That is where tax policy is made and then followed up by the decisions of government through its cabinet.

That review has now been completed and the finance committee on September 18 issued a report and it is now tabled in the House. It is a public document. The finance committee's report represents a well documented and very thorough review of the important issues identified by the auditor general. We thank him for pointing out those policy areas. Its findings and recommendations directly contradict the exaggerations and confused contents of the motion before us today. However, it is a Bloc official opposition motion today and we are obliged to debate the motion put before us.

The finance committee began its review on May 28. In the course of the examination it heard from the auditor general and members of his staff. It heard from senior officials of Revenue Canada, the Department of Justice and the Department of Finance. The committee also consulted eight of Canada's leading private sector and academic tax experts whose views, the committee noted in its report, greatly facilitated the committee's understanding of some of the technicalities of the tax law in the area.

The finance committee is to be commended for acting quickly, consulting broadly and producing a thorough and, I must say, long report, including recommendations on so complex a topic in such a short time. We realize this is an important issue to be dealt with. Not surprisingly perhaps the committee determined that the law regarding taxable Canadian property is complex. It noted that the government has not reviewed the policy on taxpayer migration in any substantial way for at least 25 years. Now we have done this.

However, rather than make cheap political points by trying to confuse the issue even further, like today from the opposition member, the committee has sought to clarify the issues by recommending changes to the law. The report's five recommendations for changes in the law aim at clarifying policy regarding Canada's taxation of individuals who become or cease to be residents of Canada. The report provides substantive advice to the government on strengthening tax law.

While the policy and legislative recommendations are welcomed and will be closely examined by the Ministers of Finance and National Revenue, I want to focus my remarks today to the report's procedural findings and recommendations.

I am very pleased to say that based on its expert assisted, independent review of the facts, the finance committee has found that Revenue Canada applied the law correctly and was justified in issuing its 1985 and 1991 advance tax rulings. The committee's report firmly supports the department's decisions in those cases.

I believe the findings of the committee clearly confirm the fairness and the integrity of the Canadian tax system and the department's decisions in the cases and the administration by Revenue Canada. I am especially pleased to note that the independent experts consulted by the committee were almost unanimous in stating that the rulings then correctly applied existing law without evidence of any revenue loss resulting from the rulings.

Of the eight prominent tax experts, six testified that Revenue Canada's interpretation was a correct reading of the law. The report quotes Mr. Wolfe Goodman, an expert in the field of international tax law, as an example of the majority opinion. Mr. Goodman states: "The auditor general considers that this ruling circumvented the intent of the law and, with respect, Mr. Chairman and members, I think the ruling properly applied the policy of the legislation".

Based on this and similar testimony, the finance committee saw no reason to prefer the auditor general's view on this question to the views of both its government tax experts and a strong majority of tax professionals from the private sector. Also, contrary to the auditor general's suggestion in his May 7 report, the committee concluded that under its existing policies, Revenue Canada had no basis for refusing to issue the 1985 and 1991 rulings and was justified in doing so.

It is evident that in these cases the process worked as it should have. Any other decision or action would have circumvented the law and infringed on the legitimate rights of the taxpayer involved to fair and equitable treatment under our laws.

Further, the committee found no indication of political or other interference with respect to the rulings. I must underline this. While it should be noted that the auditor general never questioned the integrity and professionalism of Revenue Canada officials, the report confirmed there was no impropriety on the part of any official. On this point the Minister of National Revenue has already stated that she has met with the auditor general and asked him directly if he thought there had been any political interference in this file and he assured her there was none.

The finance committee heard a range of witnesses from all departments concerned on this issue and they found no evidence of impropriety. Therefore, we must be satisfied that there was no impropriety involved here.

Also, importantly, the report concluded that the rulings did not or are not likely to cost Canada any significant tax revenue. The committee noted that the auditor general and his officials were unable to identify any significant new tax avoidance opportunity created for other taxpayers by these rulings. That is what the auditor general tells us.

The issues raised by the auditor general have to be kept in perspective. The auditor general said that Revenue Canada's 1991 ruling may have cost significant tax revenue, not that it did, but that it might have. This was obviously a concern. The finance committee looked at it carefully and concluded that there was no evidence that the ruling cost Canada anything. Nor was there evidence-and we are talking evidence, not speculation-that the ruling opened up any new avoidance opportunities. There has been no flight of capital, as opposition members seem to think. This should not be surprising. Canada's tax rules for people who leave the country are stricter than the rules of almost every other country in the world.

In addition to this, the Minister of National Revenue placed a moratorium on any further rulings on taxable Canadian property while the finance committee was doing its very important review of this area of the Income Tax Act. The minister has extended this moratorium until the Minister of Finance has the opportunity to consider the policy recommendations of the committee and to make decisions concerning appropriate changes if they are necessary. We heard earlier today that many people think we can make improvements and I would agree with that. Is this not assurance enough for the opposition that the door is not wide open to the transfer of capital without paying appropriate taxes?

With respect to the question of the decision making process, the finance committee observed in its findings that immediately on publication of the auditor general's report the minister directed Revenue Canada to take immediate steps to improve documentation of its tax policy interpretations. In this context, the department has revised its procedures to ensure that a proper record is prepared of the considerations that play an important part of the decision making process to issue an advanced income tax ruling or an opinion.

When Revenue Canada issues a written request to the departments of finance or justice it will continue to provide a level of background information, explanation and analysis appropriate to conveying a full appreciation of the issue and its potential impact. Revenue Canada will also retain in the permanent advanced rulings file the complete documentation and analysis required in support of any interpretations.

It is evidence that through these steps the Minister of National Revenue has acted quickly to improve the openness and the transparency of the process. The finance committee also expressed its full support for the decision of the minister to publicize all advanced tax rulings as of January 1996 with appropriate editing to ensure taxpayer confidentiality. I wish to point out once again that decision was made even before this documentation, this report of the auditor general, came out.

Revenue Canada electronically publishes and distributes all advance tax rulings to various tax publishing houses in Canada and provides them to the public at Revenue Canada's tax services offices within 90 days of their issuance.

As for the report's second administrative recommendation, Revenue Canada has already taken steps to ensure consistency between its rulings and opinions dealing with similar areas of the law. Since the 1985 ruling, the department has implemented an electronic research database. This provides easy access to all previous opinions and rulings for research and comparison purposes. I think that is an important improvement.

I would like to emphasize that Revenue Canada is a world class organization that enjoys an enviable international reputation and record of success. It has worked very hard to establish this record through its successful administration of over 185 acts and regulations, incentives, credits and international agreements and treaties.

The department employees over 40,000 professional and dedicated public servants. In order to support their dealings with their millions of clients, each employee requires the confidence and deserves the respect of Canadians to do their job well. Fairness, equity and integrity are the basic principles on which they must earn the confidence and respect of Canadians.

The credibility of the department depends on its adherence to these principles in everything it does and in every decision it makes. That is why concerns raised in the auditor general's May 7 report have been fully addressed by the finance committee in order to prevent any undermining of public confidence that is so crucial to the successful operation of any tax system.

Since this system relies heavily on self-assessment and voluntary compliance for its efficient operation, anything that erodes confidence in the revenue administration weakens the system as a whole. Therefore it is important to everyone in Canada and to the day to day working of the department that there is both actual and perceived fairness and integrity in the administration of the Canadian tax system.

In conclusion, I would like to state that in my view Canadians have been well served by the finance committee report on taxable Canadian property. We have five practical recommendations for change and improvement. We will be waiting to see the new policy that those recommendations come up with.

[Supply, September 26th, 1996]

Mr. Speaker, I think it is necessary to comment again on some of the matters that have been raised in the hon. member's speech.

First, the finance committee's report as tabled in the House, a public document, found that there was no loophole or tax evasion involved here. Revenue Canada applied the law correctly.

Second, I must restate that Canada has one of the tightest systems for taxing people who move abroad. The fact that Canada does not tax some gains until they are actually realized is not a loophole. Nor is it a loophole that our tax treaties give us the right to tax some gains and our treaty partners have the right to tax other gains. That is the important main element, the migration of people outside the country. This is what we are talking about here, the tax treatment of these people when they leave the country. There are very definite rules in the Income Tax act.

As a lawyer I have never been told that one subsection has a priority over another subsection unless it states that explicitly. So to say that there is just a little subsection here, so do not bother with it, is ridiculous. The experts backed that up in a very public, open round table meeting that went on for over six hours last spring, and members of the opposition were there.

Again we have a minority report from the opposition members who have brought this motion today which is just politics. It does not state reality. Reality of the Canadian tax law today in Canada is a very complex situation. What any government should do is constantly improve.

The report came up with very definite recommendations for the finance minister to consider. The report has been tabled. Those recommendations are on the table and they will be considered in due course. Canadians deserve the best tax law that we can come up with, but it has to be fair. The process has to be open. We have certainly had an open process.

I find it unbelievable that he thinks a policy decision concerning tax should not be debated in the finance committee. He may not even be aware that after tabling his report, the auditor general himself sent a letter off to the chair of the finance committee which stated that these sections of his report were under the purview of the finance committee and that it might want to look at them. That is the reality.

What we have here is politics. I understand that the opposition's job is to play politics. Unfortunately for it, the job of government is to govern and when we govern we govern with the real facts.

[Supply, September 26th, 1996]

Mr. Speaker, I would like to make a brief comment and then to ask the hon. member a question.

My comment stems from the fact that I have listened to a rambling dissertation. At times I had a problem finding the relevance to today's motion. Nevertheless the hon. member said something that interested me and which I think is very reflective of his party's position on many different topics.

He talked about Canadians wanting the government and country they used to have. I find this a major problem. They are always looking backward. Unfortunately the real responsibility of a government is to look forward. This Liberal government is dealing in business, in tax and in every issue. It is not looking backward but looking forward to the future, forward for a better situation for

Canadians. That includes very deliberate, well thought out, practical management of a tax system, a system that is very complex.

We in Canada are getting more and more of our jobs from international trade. When the Liberals took office one in five jobs in this country depended upon international trade. It is now much closer to one in three jobs in Canada depending on international trade. One of the things that has enabled us to do this, among many others because Canadians are very productive people, is the fact that we have a very sophisticated, advanced and by definition therefore complex tax treatment. I know that simple is the way the Reform Party likes things but some things are complex. Part of the complexity of our tax treatment is the fact that we have to deal internationally.

Many corporations today are international corporations. They do not just do business in one country, they are multinational. This applies also to the people in Canada. Our Canadians are gathered from around the world. We get income and enhancement to our economy from investment from outside of this country. People are also leaving at different stages of their lives. Many people come to this country, work for many years and then retire and leave it. They do not want to dispose of all their property and pay tax at that point in time. Some of them may want to keep property here and have the income flowing from that property. There are very serious complications to the broad range of the Canadian public on these issues.

International tax agreements modify Canadian tax law. That is at the basic concept of what happened here in the report of the finance committee. It was a 60-page document. It dealt with process, it dealt with policy, but at the heart of the document what we have is an understanding that Canada has over 60 bilateral trade agreements. That helps Canadians to do international transactions. In fact, the Canadian tax act is modified by law by the international tax agreements. For instance, with the United States we have 10 years after the migration to collect the tax.

My question for the hon. member is: Does the member of the Reform Party believe in honouring our international tax agreements for the benefit of Canadian citizens?

[Supply, September 26th, 1996]

Mr. Speaker, I am very pleased to make a brief comment at this time. We have just heard the opening speech on this daylong debate.

I want to make it known to Canadians that during this debate they will hear more than the speculations and the fearmongering that we have just heard. I hope they understand that this is an extremely complex area of tax law.

An open public hearing was made at which time unfortunately no evidence was put forward by the members opposite to prove any of their speculations. So what we have today is a debate on the one side where people are looking to find a problem that they could not find when the hearings transpired. We have a tabled report and what we are doing is open to debate today.

I ask Canadians to listen to members from all sides of this House who will give their opinions. I believe the government, acting responsibly and in a balanced manner, will be able to shed some reality in this discussion.

[Genetic Diseases, June 20th, 1996]

Mr. Speaker, last fall all sides of the House rose together to give a standing ovation to John and Jesse Davidson on the completion of their long summer journey.

With the more than $1 million they raised, the Foundation for Gene and Cell Therapy has been established to promote research into genetic disease.

I am pleased to report that on May 20, 1996 at the first annual family day to celebrate Jesse's journey in Springbank Park in London, an agreement was signed by the foundation and the Medical Research Council of Canada.

Nine post-doctoral Jesse Davidson research fellowships will be established. The Medical Research Council will provide some matching funds to the foundation and will contribute its expertise in the selection and awarding of the fellowships.

Most important, this could not have been accomplished without the thousands of Canadians who gave their heartfelt support to a courageous young man.

To Jesse and John Davidson and to all those who gave so generously to this cause, our heartfelt thanks and gratitude.

[Bread And Roses March, June 14th, 1996]

Mr. Speaker, today the women's Bread and Roses March is arriving in Ottawa. Two streams of marchers began their journey on May 14 from Vancouver and from Newfoundland and passed through many Canadian communities on their way including my own of London, Ontario.

Our government views this as a very important event bringing Canadians together in a heightened awareness of the many issues that concern women. Their priorities are the same as those of the government and we have acted to address those concerns.

I would only point to the legislation we have brought forward to deal with violence: our anti-stalking, anti-harassment and drunkenness defence laws; our gun control legislation; our recent initiatives concerning female genital mutilation and prostitution. Women's economic progress and concerns are also at the forefront. The government has created nearly 700,000 jobs and fully 45 per cent of these, a number equal to the proportion of women in the workforce, have gone to women.

The government is concerned and is listening to women. It will continue to do so.