Mr. Speaker, I congratulate the member for Joliette on his excellent presentation. I have had the honour of working with him in recent years, in his capacity as the Bloc Québécois critic on finance. I can say that he has probably become—in spite of himself—an expert on tax havens. Still, unlike some other members of this House, he has never used them for tax evasion purposes.
As my colleague states, we are in complete agreement with Bill S-17, an act to implement an agreement, conventions and protocols concluded between Canada and Gabon, Ireland, Armenia, Oman and Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion.
In fact, we are in favour of tax conventions with countries which have taxation systems similar to Canada's and Quebec's. That is the case with the conventions covered by Bill S-17.
But the same income must not be taxed twice, once when it is earned and a second time in the taxpayer's country of residence. That is only natural. Many tax conventions signed by Canada respect this principle.
The problems arise when Canada signs a tax convention with a tax haven. At that time, the tax convention makes it possible to avoid taxation entirely, and that is tax evasion. Believe it or not, Canada has signed such an agreement with Barbados, a recognized tax haven. As my colleague said, it has only 272,000 inhabitants but has become the third most popular destination for Canadian capital, behind the United States and Great Britain. This is no surprise when one sees the tax rates applied in Barbados.
In 1994, financial transfers from Canada to Barbados totalled $5 billion, a hefty sum. Less than 10 years later, in 2002, this amount stood at nearly $24 billion. That is nothing short of a 369% increase. The previous Auditor General, always ready to sniff out something fishy, and his successor both quite rightly denounced the danger tax havens pose to the Canadian tax base. Let us can take a closer look at this.
In 1992, the Auditor General brought the problem of tax havens to public attention for the first time.
A few years later, in 1996, the Auditor General raised the alarm again, stating this time that the results of Revenue Canada's program to combat it indicate that avoidance continues to pose a serious threat to the tax base.
The current Prime Minister, who was the finance minister back in 1996, responded to the report by saying, “the government is proposing to implement those recommendations swiftly and fully”. That was 1996, almost 10 years ago. The Liberal government has not acted on anything in that Auditor General's report.
In 1998, the Auditor General expressed concern for the third time about the growing use of tax havens and increasing number of bilateral income tax conventions. His report reads, 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.
In 2001, the Auditor General raised for the fourth time the issue of tax havens. In his report of February 2001, he wrote, and I quote:
One of the biggest threats to the tax base lies in the international activities of Canadian taxpayers, particularly the use of tax havens.
Finally, the issue of tax havens was raised, for the fifth time, by the current Auditor General, who wrote in her December 2002 report:
Although Canada amended its rules in 1995, little has changed. Tax havens continue to attract Canadian money. For example, Statistics Canada reports that Canadian direct investment in Barbados has increased from $628 million in 1988 to $23.3 billion in 2001—over a 3,600 percent increase... Information provided to us by the Canada Customs and Revenue Agency shows that in 2000, Canadian corporations received $1.5 billion in dividends from corporations in Barbados.
Another very instructive chronology demonstrates Canada's lack of action and this government's lack of ethics. Let us go back 1992 this time.
My colleague referred to Canada Steamship Lines, which then created CSL International. This is an empty shell that was incorporated in Liberia to take charge, on paper, of all CSL's international operations. CSL International does very little shipping. It is a holding company that owns businesses that do engage in shipping. At the time, it was possible to bring into Canada, tax-free, the profits generated by the Liberian subsidiary of a Canadian company.
In 1994, the current Prime Minister and then finance minister tabled his first budget. The date was February 22, 1994. At the time, he said he wanted to put an end to the use of tax havens, because some Canadian corporations were not paying enough taxes. Therefore, at the time, he wanted to take measures to prevent Canadian based corporations from using foreign affiliates to avoid paying taxes in Canada.
However, the budget implementation bill and the regulations that came into effect in 1995 left one loophole available: Barbados. So, in January 1995, CSL International moved to Barbados. On February 1, 2003, Pierre Préfontaine, the first vice-president of CSL International, confirmed to the CBC that the move had been motivated by the changes made to Canada's taxation rules.
In 1996, far from seeking means to stem the exodus of capital to Barbados by denouncing the convention with that tax haven, Canada encouraged the situation by signing a foreign investment promotion and protection agreement with Barbados on May 29, 1996. In 1996, while he was finance minister, the present Prime Minister introduced Bill C-69, the budget implementation bill proposing more flexible tax treatment for, oddly enough, international shipping companies. That bill died on the order paper when the election was called.
In 1998, the then finance minister and now PM, not having given up, introduced budget implementation Bill C-28, one of the clauses of which addressed shipping.
