Charlie Penson

[Supply, September 18th, 2003]

Madam Speaker, I would like to ask the member a question. Is not the problem here, essentially, and the reason a lot of these Canadian companies, or any company for that matter, go to low taxation districts or areas a reflection that taxes within the domestic market where they operate or the country in which they are based are probably too high?

It seems to me that the fundamental question here is: Should we not be trying to drive down our tax rates in such a way that we could keep these companies' home base here and then we would be able to collect an appropriate amount of tax that would not be in excess of what they could handle?

It would seem to me that this would go a long way to solving Canada's productivity problem which has slipped substantially in the last 20 or 30 years and which we have not been able to regain. Maybe if we kept some of that business at home and taxed it at a reasonable level we would actually gain in the process.

[Supply, September 18th, 2003]

Mr. Speaker, the parliamentary secretary talked about the fact that they are going to take time to look at these issues. I note, though, that the Minister of Finance, when he was asked here over a year ago about progress, basically stonewalled the House. Maybe the parliamentary secretary could tell us what kind of progress is being made, especially on the dividend scheme, which essentially meant that in the year 2000 there was $1.5 billion of money returned to Canada from corporations that was subject to no Canadian tax at all on dividends with the scheme that has been developed.

If there is a review, why is it taking so long before we get some action on it? He will note that two auditors general have asked serious questions about this. The Minister of Finance said he is going to consider it, but several years later there is still no action.

[Supply, September 18th, 2003]

Mr. Speaker, I can only conclude that I now understand why the hon. member is no longer an accountant, because to suggest that Canadians who buy RRSPs pay no taxes on them is simply not true. Tax is delayed, but as soon as they take the money out of course they have to pay taxes. That is unlike the companies that are bringing dividends home through a very elaborate scheme, a scheme that does not meet with the approval of auditors general in this country who are obligated to look at whether Canada and Canadian taxpayers are being well served. It is unlike those individuals who are bringing the dividends home and paying nothing on them in terms of Canadian taxes. Canadians who have RRSPs will pay tax to the government as soon as they start to take the money out.

The member asked the question of whether people should not be allowed to be in office just because they are successful businessmen. That is not the case at all. But I think that those who are trying to misuse our system certainly should not be in office, especially those who simply cannot relate to the average voter out there, to the average person who has to earn a paycheque and sees the government taking bigger and bigger amounts out of that paycheque every month.

In fact, in 1997 when I was campaigning I just happened to be in a heavy duty equipment shop. A person there told me that his take home pay was less then than it had been 10 years before. I said that I did not think so, and he said that it was and he showed me his pay stub.

That is what is happening. Our standard of living has declined under the government, under a series of governments for 30 years. Our productivity is now only 80% of that of the United States, our major trading partner.

The member talked about companies that are deriving their incomes from off shore. I would suggest that most of that is not off shore, it is from the continent. Eighty-seven per cent of our trade is with the United States and it does account for a very big part of our GDP. I do not discount that. But these same companies are only 80% as efficient in terms of productivity.

The industry committee over a number of years has done a series of studies. One of the main culprits time after time is the high level of government taxation in Canada, because government is 11% bigger in Canada than it is in the United States. The same Liberal government over there will argue that it is health care, but health care accounts for about 2% of that 11%. A lot of the rest of it is wasteful spending, and being in areas of business it should not be, and high degrees of regulation. That comes up time after time.

Who was in office during all this time? The same party of the member who asked the question, the same party to which he belongs. I suggest that the Liberals are the biggest part of the problem. When the former finance minister who now aspires to be the prime minister cannot understand or relate to what Canadians are paying in taxes because essentially he does not have to pay any, it seems to me that there is a big problem.

[Supply, September 18th, 2003]

Mr. Speaker, I would make the case that I am reading a direct quote from a CBC interview. I think that is allowed.

Mr. Préfontaine said, “Mr. Martin's assets are in a blind management trust”.

I would raise the issue with the House that if it was the case that the former minister of finance's business was in a blind management trust, maybe he did not know about it. But we know a lot about that since the time; that there were special rules written by the ethics counsellor for the former finance minister's companies. He had a chance to look at it all the time, so it was not true that it was in a blind management trust.

This practice of course attracted a lot of attention, particularly because officials at the Department of Finance and a special taxation committee recommended closing these loopholes in Canada's tax laws. The current Auditor General criticized their existence. Two auditors general have spoken very clearly on this. Mr. Desautels said it was costing Canadian taxpayers hundreds of millions of dollars and wanted it closed off. It was closed off in one area, but loopholes were left in another. The current Auditor General criticized their existence, rightly pointing out that these tax havens were unfair to other Canadian taxpayers.

When asked about the situation in the House of Commons, the current Minister of Finance, and I know because I asked some of these questions myself, made a vague reference to discussions between Barbados and Canada with respect to the treatment of income of international business corporations and the repatriation of active business income to Canadian firms. Basically, he stonewalled.

And again today, when the revenue minister had the opportunity to say “we are going to close off these loopholes, we know there is a problem here”, she basically dismissed this argument as partisan. I cannot understand why the minister would do this, except that maybe she wants to keep her job and thinks that once the new prime minister is in place she will still be in cabinet.

There has been a lot of talk about Liberal arrogance. Imagine the nerve of the government allowing these tax havens to exist and allowing some people to bring their dividends home tax free, while at the same time the revenue department has been accused, and I think rightly so, of harassing the mom and pop operations, the corner stores across the country, which have to put up with audits all the time.

So there is one set of rules for small business and individuals in Canada and another set of rules for the elite. It is galling enough that it involved the former minister of finance. Now he aspires to be even higher in government. He wants to be the prime minister. How can this man relate to the Canadian public? Most people who do not want to pay taxes in Canada think our taxes are too high. We have Canadian professionals coming right out of university saying taxes are too high and they are going to move to the United States. But they then go and live in the United States. They do not try to have it both ways. They do not try to avoid paying tax in Canada and then try to enjoy all the benefits of the Canadian system that those taxes generate from other people. It is absolute hypocrisy. I think it is hypocrisy of the worst kind.

I hope very much that this is exposed in the run-up to the next election. I think it is going to be a huge issue, which needs to be dealt with. It seems to me that a person who aspires to be prime minister should be able to relate to the Canadian public. He should be able to relate to the person who says that these high taxes are hurting us.

High taxes are hurting us, and the taxes are being collected for what? They are being wasted on ad contracts. We have a big RCMP investigation of the Liberal Party itself in Quebec right now. We had the HRDC scandal, when they lost a billion dollars of taxpayers' money. How does that relate to someone in this House who is in a position of authority and does not have to pay any taxes, saying, “Oh, that does not really bother me that much, because I do not pay taxes.” I think that is the height of hypocrisy and he should pay a heavy price in the next election.

[Supply, September 18th, 2003]

Mr. Speaker, I am splitting my time with my colleague, the member for Lethbridge. I am pleased to stand today to take part in this debate because I think it is an important one.

In my view, this is really a story about hypocrisy: the hypocrisy of those in this government who want one set of rules for themselves and another set of rules for ordinary Canadians, the mom and pop corner store operations that have to pay a lot of taxes.

The reality is that Canada is a high tax country. Most Canadians would like to pay lower taxes. I think that is a given. We hear it all the time. But they also recognize that they have a responsibility: if they are going to take advantage of services, they have to pay tax.

What Canadians object to is wasteful spending and spending on priority areas that they do not share. They do not like to give money to huge corporations. If they want to buy shares in some corporation in Canada, they can do that through a public offering or the stock market, but they do not want the Government of Canada doing that for them. They think big government should be curtailed.

There was a little bit of a reprieve in the size of government in the mid-1990s when the Mexican peso crisis and the credit downgrades on Canadian debt forced the Liberals to deal with Canada's fiscal problems, but of course the Liberal government chose to bite the bullet only after it was forced to. How did it do so? Basically it transferred its problem to the provinces by offloading a whole large area of government spending. Health care, I would suggest, has never fully recovered from that offloading. The government chose the easy way. Transfers to provinces were cut very dramatically while cuts to its own departments were very small.

Canadians did get a tax break in the year 2000, after six years of tax increases under this government, but just before the last election. In early 2000, the Canadian Alliance proposed a $100 billion tax reduction plan which the Liberals claimed was not affordable. To ensure electoral success, however, following strong Alliance polling numbers, the Liberals introduced their tax plan to appeal to a growing number of Canadians demanding a tax cut. Although the Liberal plan was smaller than the Alliance plan, it stole several key proposals to augment its policy expediency.

Further spending and tax cuts are required, but since the government's spending has been increasing since that time, the total federal expenditures are up by over $36 billion since 1997. I will not hold my breath that we will see tax cuts any time soon.

That sets the stage for a government that says one thing and puts in special rules for its friends, or in some cases maybe even its own members, but raises taxes time after time in Canada for the mom and pop operations and individual Canadians. I think this is the height of hypocrisy.

I said earlier that Canadians understand the need to pay taxes. Therefore, it is especially galling when those in a position to take advantage and dodge their responsibilities to the taxman do just that. I would suggest that those in authority, those in that position, include the former minister of finance. It is downright infuriating when somebody who is in that position of authority to require Canadians to pay extra taxes, as he has done over a long period of time, ensures that their own tax bill is considerably lighter than otherwise might be the case. How are they doing that?

I thank the Bloc for introducing this motion today, because it just reveals the hypocrisy, with special tax havens and special rules for dividends coming back that avoid taxes. Who could take advantage of that? I want to quote the former auditor general, who talked about those who took advantage of Liberia. It was said that “Liberia wasn't simply a tax haven--foreign affiliates there were also allowed to bring their profits back into Canada, tax-free”.

So it was not good enough that they could register their companies there and stay there themselves, but they were able transfer their profits back to Canada, tax free. There were very, very low taxes or none at all in some cases.

What did the auditor general at that time say? The former auditor general was trying to shut down these kinds of tax havens. Denis Desautels said that they were costing the government hundreds of millions of dollars. To deal with that, in early 1994 the former minister of finance said in his budget speech:

Certain Canadian corporations are not paying an appropriate level of tax. Accordingly, we are taking measures to prevent companies from using foreign affiliates to avoid paying taxes which are otherwise due.

That sounds pretty good, but what was the reality? What did he choose to do? He did choose to close one loophole, that which encouraged Canadian companies to locate in countries that did not have a tax treaty with Canada. That is why the former minister of finance's company, Canada Steamship Lines, used to proudly fly the flag of Liberia. However, when he ended that tax advantage, which he said he was going to do in his budget, he very conveniently had an escape hatch, one that most Canadians did not know about at the time. He quickly relocated his businesses at CSL and his flag to Barbados.

Although Canada does have a tax treaty with Barbados, there is a loophole, one that the Minister of National Revenue conveniently forgot to mention today. It allows companies, and in particular the company belonging to the member for LaSalle--Émard, to transfer CSL dividends back to Canada completely tax free. This was exactly the opposite of what the former auditor general wanted when he said that Canadian companies were avoiding paying hundreds of millions of dollars of tax.

I want to quote from a CBC interview about a year ago on Disclosure , which said that the former minister of finance “didn't shut down all the tax havens. Across the Atlantic, he kept Barbados open, and that's exactly where [Canada Steamship Lines] went next”. Disclosure asked, “Why did you move your shell companies to Barbados in 1995?” That is just a year after he closed down the Liberian one.

Mr. Préfontaine from CSL said, “We moved them to Barbados because of the change to Canadian tax rules”.

There just happened to be a convenient tax loophole escape hatch for the former finance minister's company. Disclosure went on to ask, “Was Paul Martin aware of this--when you moved to Barbados in 1995?”

[Agriculture, June 13th, 2003]

Mr. Speaker, that is part of the problem. No proposal will be put on the table. It has been almost a month since this scare started to affect beef producers and it is an economic loss to the livestock industry.

The president of the Canadian Cattlemen's Association says the minister's BSE compensation plan for loan guarantees is like throwing a rock to a drowning man. The industry needs cash, not more debt.

I ask again, will the government commit to an immediate cash injection for the feedlot industry that is losing millions of dollars a day?

[Agriculture, June 13th, 2003]

Mr. Speaker, I do not think bringing in the Rolling Stones is going to solve that problem.

It is estimated that by next week, losses to the livestock industry will be over $1 billion due to the BSE scare. The beef industry has rejected the government's latest proposal, saying loans simply are not the answer. As they say, “You cannot borrow yourself out of trouble”.

Now it appears the government is using this disaster to blackmail the provinces into signing its agricultural policy framework. I ask the minister, will the government introduce a comprehensive compensation package outside of the APF?

[Main Estimates, 2003-04, June 12th, 2003]

Mr. Speaker, I would like to ask the President of the Treasury Board if the bill is in its usual format?

[Supply, June 12th, 2003]

Madam Speaker, I certainly agree with the member for Prince Albert. Even on rail transportation, rail basically pays the excise tax on fuel and there are a lot of bulk commodities shipped out of the west. The prices that consumers and people who ship products are charged is reflective of that. Their prices are higher because that excise tax is figured into it.

As I said, there is $4.7 billion raised from the excise tax per year and only $190 million ever goes back to anyone. That is distributed across the whole country and probably not too much of it in the member's riding of Prince Albert.

[Supply, June 12th, 2003]

Mr. Speaker, that is a very strange question. Of course the municipalities are going to welcome it. When Alberta is not used to getting anything from the federal government, $43 million is like money from home. If the government were to give the Alberta municipalities' association a choice of taking it through this kind of program with all of the political aspects or having a dedicated source of revenue through some kind of thing like the excise tax on fuel, I am sure the response from those same officials would be that they would rather have a dedicated source that is predictable and there all the time rather than these knee-jerk programs that come from the government to buy votes.

In Alberta I think the Liberals are still clinging on to a couple of seats in Edmonton and it would be interesting to find out where these grants went to. I know that the past experience is that they had been very politically motivated. I am not saying that Edmonton West got it, but there is a pretty good chance, I think, that this is the way it works. It has worked like that in the past and I am sure that given a choice, given their druthers, people would like to have a dedicated source that is non-political in nature.