Pauline Picard

[Agriculture, September 22nd, 2003]

Mr. Speaker, this morning the Quebec agriculture minister met with her federal counterpart concerning the addition of a second phase to the financial assistance program for companies affected by the mad cow crisis.

Can the Minister of Agriculture and Agri-Food tell us whether the federal government intends to add a second phase to the existing plan, as his Quebec counterpart is demanding?

[Employment Insurance, September 22nd, 2003]

Mr. Speaker, according to a formal study by the Canadian Labour Congress, made public just a few weeks ago, employment insurance was costing claimants and the local economy in Drummondville $21.3 million per year.

Michel Dupont, FTQ regional representative commented:

It is all the more unacceptable since, of the $40 billion in the employment insurance fund, 64% came from workers earning $20,000 or less annually in 1999. This surplus will reach $45 billion at the end of 2003. These people are contributing to the fund but they will never be eligible for benefits under the current criteria.

Women are the most severely penalized. In 1990, 76% of unemployed women in Quebec were entitled to benefits; today, only 39% are.

When will a self-sustaining employment insurance fund be created, as we have been demanding for so long?

[Supply, September 18th, 2003]

Madam Speaker, I thank my colleague for his suggestion.

I think that it is a very good suggestion that should be passed on to the government so that we can have tax fairness, so that these people can no longer take advantage of such loopholes and so that all taxpayers pay taxes according to their income level.

[Supply, September 18th, 2003]

Madam Speaker, I will answer the hon. member's question as follows, using information and recommendations that came from the Auditor General of Canada between 1992 and 1999, Mr. Desautels, and from the current Auditor General, Sheila Fraser. It is not me who says this. It is the auditors general who sounded the alarm over the use of tax havens by Canadian businesses and the impact of such practices on the tax burden of Canadians.

In 1998, the Auditor General returned to the problem of tax havens, pointing out that Canada was not allocating enough resources to fight tax avoidance. He alluded, among other things, to the increasing use of tax havens and to the growing number of bilateral income tax conventions.

The Auditor General gave this warning to the government:

Failure to take urgent action on these matters will severely limit Revenue Canada's ability to manage the risks to Canada's tax base that international transactions represent.

In 2001, the Auditor General, Sheila Fraser, identified Barbados in particular as a country where numerous schemes allowed tax evasion. She said:

The Agency has identified 53 examples of this scheme that have moved over $800 million in capital gains to Barbados from Canada. It is currently examining this scheme to determine if it can be challenged successfully.

Nothing has changed. In another scheme, a company residing in a tax haven owned aCanadian company. When the shares of the Canadian company were sold,any capital gain realized would be subject to Canadian income tax. Thecompany shifted its residence from the tax haven to Barbados and claimed a Canadian tax exemption on the capital gain.

Duringthis audit, the Auditor General saw one transaction that the CCRA challenged successfully,recovering over $50 million in tax, although the total owed was $800 million.

In her report, she also stated:

Tax avoidance schemes may also take advantage of other treaties.

Anumber of years ago, the CCRA identified schemes involving other taxtreaties to which Canada was signatory. The schemes allowed capital gains toescape Canadian tax under certain conditions.

The Auditor General also makes a recommendation to the minister responsible for the CCRA, stipulating that the agency shouldcontinue to be vigilant in ensuring that tax treaties are not usedinappropriately to reduce Canadian tax and, if necessary, should seeklegislative or treaty changes to protect Canada’s tax base.

The Bloc Quebecois is not the only one saying this; the auditors general do too. They are transparent and demand the same transparency from the government in order to make major changes to tax treaties and tax havens, where the wealthiest companies do not pay tax.

There are two categories. The wealthiest, who can use tax loopholes and thereby deprive Canada of income, are in one category, and the poorest who, consequently, are victims of the government, which slashes social programs, are in the other. The former are better treated. A blind eye is turned, and people are told that Canada is doing its fair share and that this is not happening. Everyone denies that this kind of problem exists.

Today, we are once again speaking out against it; we want those opposite to realize that these are serious problems, that it is a serious threat, that there is no transparency and that the future Prime Minister will not be the one to change things, because he has greatly profited and continues to profit from interest that should go to the Canadian taxpayers.

[Supply, September 18th, 2003]

It is incredible. Besides “Paul the boatman” in Barbados, Canadian transfers to other tax havens such as the Netherlands, Bahamas, Bermuda and Ireland have also increased significantly since 1990, by leaps of 295 to 627%, according to figures from Ms. Fraser, the Auditor General.

Consequently, the tax convention between Canada and Barbados enables a number of businesses to avoid paying huge amounts of income tax. Barbados is a tax haven, according to the original definition by the OECD, the Organization for Economic Cooperation and Development. We are not inventing this: the OECD said it.

In my riding, I have heard people from the anglophone community say, when referring to the hon. member for LaSalle—Émard, “His mouth is in Ottawa but his cash is in Barbados.” That says a lot about what people think of him.

Some businesses avoid their tax obligations and do not even hide the fact. Each year in their annual reports, the banks boldly state the cumulative amount of tax they have saved.

In October 2001, the seven most industrialized countries—Germany, Canada, the U.S., France, Italy, Japan and the United Kingdom—decided to take on the networks that were financing terrorist organizations. As a result, the campaign against money laundering has become the leading edge of the efforts by member states of the OECD.

In the wake of the tragic events of September 11, 2001, the U.S. President changed his tune. Initially hostile to international cooperation against tax havens, he now is singing the praises of cooperation on all fronts.

Canada must also do its part. It must terminate its own tax convention with Barbados. It must strengthen the international component of Revenue Canada in order to discourage tax evasion through the use of tax havens. It must carry out a blanket reform of Canada's tax system in order to eliminate all tax loopholes that enable companies to get out of paying their fair share of taxes, while the average taxpayer bears the brunt of this. Finally, it must deal forcefully with both tax havens and money laundering.

At the international level, Canada is not playing a leadership role or even behaving properly, far from it. In fact, some of its fiscal practices were singled out by the OECD as being unacceptable. We want a change in attitude. Canada must make amends, admit to its mistakes and do everything it can to eliminate tax havens. Instead of having the definition of tax havens revisited, Canada must condemn harmful fiscal practices. Canada must fight against dirty money and grey money. To this end, it must know the clients of the banks in order to know what is shady. Here, unfortunately, it runs into the problem of bank secrecy, the main obstacle in the fight against the circuitous movement of dirty money and grey money.

The European Union is preparing to impose greater flexibility with respect to bank secrecy, an impenetrable secret that ensures the survival of tax havens. Would Canada be prepared to take the same route? I hope so. We are giving the House the opportunity to change its attitude. So I would urge the members to vote in favour of the motion put forward by the Bloc Quebecois.

Globalization of trade and, consequently, competition among countries have led governments to make their tax systems more attractive to investors.

Quite apart from the lowering of global tax rates, a competitive environment can promote more effective public spending programs.

However, some fiscal practices and practices in related fields impede competition and can lower any gains generated by tax competition. This is the case of tax havens.

In February 2001, the Auditor General declared that the international activities of Canadian taxpayers, in particular the use of tax havens, constituted one of the most serious threats to Canada's tax base.

This statement contrasts with the fact that Canada is a signatory to a tax convention with Barbados, quite the paradise to begin with, and a tax haven too. It is strange that this convention encourages Canadians to use tax havens. In 1999, Canadian investors understood the government's message, put Barbados on their list to such an extent that it became the third most popular destination for Canadian investment abroad, after the United States and Great Britain.

In the same year, direct Canadian investments abroad totalled $257 billion, with $27.9 billion invested, so to speak, in Barbados, the Bahamas and Bermuda. This accounted for over 10% of the total of all investments Canada made abroad in 1999.

The OECD is critical of tax havens. It is recommending that its member countries terminate all tax conventions with tax havens. What is Canada's reaction? It seems reluctant to follow the OECD's recommendations.

Some may argue that in 2002 Barbados was removed from the OECD list of tax havens. It was indeed removed from the list, but that does not mean that it has changed its fiscal practices. They have remained unchanged, and Canada is encouraging these practices.

The Bloc Quebecois continues to consider Barbados as a tax haven. It will take more than a change in criteria to convince us otherwise. Try as we may to change the definition of poverty to make the figures drop, there are just as many homeless sleeping on park benches.

Since 2000, the Financial Action Task Force on Money Laundering has been publishing a black list of countries deemed uncooperative in the fight against dirty money, while calling upon them to comply with international fiscal legislation or face sanctions.

This list includes 19 countries or territories, including the Bahamas and Bermuda, two of Canadian investors' favourites.

In June 2000, the OECD published a list of 35 jurisdictions that meet the tax haven criteria, and Barbados was included. Is it fair to consider Barbados as a financial subsidiary of Canada? After signing the 1980 tax convention, Canada suggested that amendments would be made to the existing treaty. This is 2003, and nothing has been done yet.

Since 1994, we in the Bloc Quebecois have been putting forward several motions every year and asking questions to have this situation change. It will be 10 years in the fall, and nothing has changed.

Members can imagine how astonished we were when we visited the website for the Department of Foreign Affairs and International Trade and found out that it was possible to order a brochure entitled Barbados: A Guide for Canadian Exporters .

According to the brochure, the offshore sector is continuing to expand and playing an increasing role in the economy as a source of currency and employment.

This same Department of Foreign Affairs and International Trade did not hesitate to promote tax havens in 1999. In fact, in CanadExport, it published its calendar of events, which included a “Tax Havens Conference“. This conference discussed tax havens and Canadian tax laws and information on how to use them properly.

The OECD is asking member countries to terminate tax treaties signed with tax havens. This request mirrors the one formulated by my colleague, the member for Joliette. Neither the Bloc Quebecois nor the OECD have been able to influence the former Minister of Finance of Canada. Although the type of response that the current minister gave us yesterday hardly bodes well either.

The use of tax havens has been criticized by the Auditor General of Canada on numerous occasions. In 1998, he—it was a he at the time—criticized the fact that Canada was not allocating enough resources to fight tax avoidance. He alluded, among other things, to the increasing use of tax havens and to the growing number of bilateral income tax conventions. The Auditor General went even further by giving this serious warning to the government, and I quote:

Failure to take urgent action on these matters will severely limit Revenue Canada's ability to manage the risks to Canada's tax base that international transactions represent.

Canada, and particularly the Liberal government in office, are speaking from both sides of the mouth. In this issue, as in many others, the Canadian government does not hesitate to be heard on the international scene by supporting, for example, the OECD report asking that the treaties signed with tax havens be terminated. But in reality the Canadian government continues to promote and encourage the use of tax havens such as Barbados.

This debate is very timely. In a few days the Liberals will choose a new leader. By all accounts they are going to choose the former fiance minister and member for LaSalle—Émard. How can he be trusted when, until the end of August 2003, he was the owner of many companies that have been transferred to his sons and have their head office in Barbados? His companies benefit from tax havens that provide benefits such as: no tax on capital gains, no deductions at the source and no surveillance or control over exchange transactions.

Such a tax system is regressive and totally contrary to Quebec and Canadian values.

The whole picture makes one wonder, to say the least. As an individual and investor, the Prime Minister in waiting benefits from tax havens even though he knows that such practices are harmful to the tax base in Canada and Quebec. While this may not be a conflict of interest, it can at least be said that he will have conflicting interests when he has to take action and discuss abuse of the financial system.

Finally, these organizations ask people to invest in companies or corporations whose names are strangely similar to those of well-known and well-established businesses, and they urge them to invest their money in faraway countries.

Shares are exchanged through a bogus stock market set up on the Internet. As new investors join in, the market fluctuates until it crashes.

The North American Securities Administrators Association, the oldest investor protection organization, issued a warning to investors to be especially wary of anyone encouraging them to shelter their money in tax havens.

I will conclude by reiterating the demands of the Bloc Quebecois. They have not changed. On many occasions we have demanded that Canada do as the OECD requests and terminate its tax convention with Barbados immediately.

We have demanded and are still demanding that Revenue Canada beef up its international unit in order to discourage tax avoidance through tax havens.

Since 1996, we have been calling for a comprehensive reform of Canadian taxation and we are doing so again today. This reform should eliminate all the tax loopholes which allow certain companies to avoid paying their fair share of taxes, to the detriment of the average taxpayer.

[Supply, September 18th, 2003]

Madam Speaker, it is a pleasure to rise to speak to the Bloc Quebecois motion moved by my colleague from Joliette. This motion states:

That, in the opinion of this House, in order to ensure tax equity, the government should terminate Canada’s tax convention with Barbados, a tax haven, which enables wealthy Canadian taxpayers and companies to avoid their tax obligations, and should play a leadership role at the international level in activities to eliminate tax havens.

The timing is good because, only yesterday, we raised the problem of these tax havens and of tax evasion during oral question period and we did not get any meaningful answer from the Minister of Finance.

The use of tax havens is mentioned in what the media called “horror stories by the Auditor General” last year. The Liberal government is losing millions of dollars by allowing large businesses to transfer their profits to tax havens. This is what the Auditor General, Sheila Fraser, is denouncing. This is why the Bloc Quebecois has decided to give parliamentarians an opportunity to express their concerns over a situation that is threatening the tax base. This is a significant issue, both ethically and economically.

Everybody pays taxes. It is not fair that the richest among us can get away with paying so little. There must be tax equity because all taxpayers have to bear the cost of tax evasion by some businesses, some banks and even some individuals.

The use of tax havens is an important phenomenon. Last year, the Canada Customs and Revenue Agency instigated an investigation on a scheme that allegedly enabled a dozen multinationals to hide $1.1 billion from the taxman. Today, I had the impression that the minister responsible for the Canada Customs and Revenue Agency, who spoke on behalf of the government, did not remember that investigation; we heard that $1.1 billion was sheltered from the tax system.

How did it work? It was brilliant. Large corporations simply put the Canadian subsidiaries into debt. The beauty of all this it that, on top of that, they obtained tax deductions from the federal government for their interest charges. The money that was borrowed was then invested in tax havens, depriving our economy of considerable revenues.

It is sad to think that 1.5 million children live in poverty in Canada, that we have no program to help them and that we allow large corporations to pocket $1.1 billion.

The money that was borrowed was immediately invested in tax havens. These corporations did not have to pay taxes. It is unbelievable. This is not an isolated case. The Auditor General is concerned about the proliferation of these types of schemes, which are very lucrative for a handful of investors at the expense of the rest of taxpayers.

What are the consequences of this little game? They are higher taxes for the rest of taxpayers or reduced public spending, which means cuts in social programs. The fact is that tax evasion is very costly for the majority of taxpayers.

I point to the findings of the Auditor General. Ottawa loses hundreds of millions of dollars in revenues because of tax evasion through tax havens. And it is not I or the Bloc Quebecois that says so, but the Auditor General.

Therefore, our fellow citizens need to know that this problem, this threat to our economy, is growing.

Canadian investments in Barbados, a tax haven that the former finance minister and would-be prime minister knows well, have jumped by 3,600% since 1988, from $628 million to $23.3 billion.

[Supply, September 18th, 2003]

Madam Speaker, I would like to thank my colleague from the Progressive Conservative Party for his remarks, and I would like to ask him the following question. Does he not find the role played by Canada on the international stage with regard to tax practices somewhat troubling? For example, on the Department of Foreign Affairs and International Trade web site one can read the following:

Canadian banks have long had a successful presence in Barbados, and its important offshore financial sector is led by Canadian banks and insurance companies. Canadians now account for 90% of Barbados' offshore banking.

In view of the fact that that country is a tax haven, does my colleague not find it somewhat shocking to find such propaganda on the DFAIT web site?

[Gasoline Tax, September 17th, 2003]

Mr. Speaker, the minister chose to reduce the tax liabilities of oil companies instead of helping consumers, who are being hit with one gasoline price hike after another. Is the Minister of Finance going to maintain the policy developed by his predecessor, who was more concerned with the major oil companies than with consumers and the disadvantaged?

[Gasoline Tax, September 17th, 2003]

Mr. Speaker, on the one hand, the finance minister's predecessor reduced the tax burden of oil companies by more than $250 million while, on the other hand, maintaining the 1.5¢ increase in the excise tax on gasoline, which was designed to eliminate the deficit. The fact is that since the deficit was eliminated, this tax has allowed the government to rake in at least $2.8 billion.

Now that the deficit is gone, will the Minister of Finance eliminate this tax for which there is no longer any justification, or does he plan to maintain it and go along with a strategy put in place by his predecessor?

[Chief Actuary Act, September 16th, 2003]

Mr. Speaker, this is my first speech since the summer vacation ended and I am pleased to speak today on the bill presented by the hon. member for Calgary—Nose Hill, and by the way, offer her my congratulations on her initiative.

The purpose of this bill is to establish the Office of the Chief Actuary of Canada. This bill would give the Chief Actuary the same status as a senior official, acting independently and reporting directly to Parliament, just as the Auditor General does.

Basically, the purpose of Bill C-421 is to make the administration of the federal government even more transparent. During the first hour of debate, before the summer holiday, the parliamentary secretary gave us all a good laugh about the confidence Canadians have in their pension system.

But once upon a time, these same Canadians, and those who interest me most, the Quebeckers, had confidence in the employment insurance program.

However, the current state of the employment insurance fund is now known. An accounting process was used to literally make off with $46 billion from the fund and reallocate it to all kinds of things, and benefits and programs have been cut. The fund's programs have been completely eliminated. As a result, the confidence of Canadians in the pension system has been greatly reduced.

Not much more can be said today, as I mentioned, when fewer and fewer contributors are eligible for benefits, because this government has decided to restrict the eligibility criteria, continue to maintain premiums at levels beyond the fund's needs and dip into the fund's surplus to fund its other budget operations. I gave an example of this earlier.

What people need to remember is that the hon. member for Saint-Maurice, who is preparing to step down as Prime Minister, and the hon. member for LaSalle—Émard, the future Prime Minister, are the ones responsible for the financial disaster the government currently finds itself in.

Not so long ago, shortly before I was elected, we had the unemployment insurance system. Today, it is called employment insurance. The main purpose of unemployment insurance and the unemployment insurance fund was to provide workers who had lost their job with replacement income to help tide them over. This is no longer true. Consequently, we believe that an actuary would provide Canadians and Quebeckers with greater transparency.

If we had an independent fund and an actuary who answered to Parliament, $46 billion—soon to be $58 billion—would not have been diverted from a fund intended to provide workers with a replacement income.

The pension system needs an actuary to ensure greater transparency for Canadians and Quebeckers.

The Bloc Quebecois has said it numerous times, and I will say it again today, due to the political decisions of the Liberals, workers are no longer guaranteed access to a suitable employment insurance system, not to mention the fact that the fund will not be used for other means.

Members of the Standing Committee on Finance called on numerous occasions on the finance minister and his parliamentary secretary to justify the employment insurance fund contribution rate, a rate we feel is far higher than it needs to be, as proven by the surplus it accumulates year after year.

The response we got, on two separate occasions, was that this year income was going to be offset by expenditures.

It seems that there may be a flagrant lack of communication within this government, when the Minister of Human Resources Development maintains that there will be a surplus again this year, one that will be close to $3 billion. Obviously, there is a problem.

As for the bill before the House, I fail to see how the government could object to it. With the odour of scandal hanging yet again in the air, it has every interest in creating all the conditions necessary to ensure that there is indeed transparency, and not just lip service to it in speeches.

So that is what Bill C-421 is about. I feel it is a very good means of ensuring greater transparency and reassuring the people of Quebec and of Canada about their pension plan.

I believe that public servants need to be responsible for what they do on behalf of the state, and that the Liberal government must also raise its level of accountability with respect to its programs. This has already been mentioned by the member for Calgary—Nose Hill in introducing this bill, with the strong backing of the Canadian Institute of Actuaries. I wish to assure her of the support of the Bloc Quebecois.