Madam Speaker, I am very pleased to rise in the House today to speak to this motion. In my opinion, tax avoidance and tax evasion rank right up there with world peace and the need to save the planet. This is an extremely important issue.
In the riding of Laurier—Sainte-Marie, there are community organizations that are struggling to make ends meet and cannot hire the staff they need. I meet with young people who would like the government to invest in their future and in the green economy. Some immigrants need more services, and that includes French tests that cost the same as English tests.
Some organizations that help homeless women have to turn people away because they do not have enough room. There are families with children who have to choose between paying rent and paying for groceries because the government is not investing enough in affordable housing and social housing.
All across the country, people are waiting for reasonably priced day care spaces, workers want the government to invest in job retraining, children are living in poverty, and indigenous people want the government to keep its promises.
Far too often, there are not enough resources to accomplish all these basic things. However, the resources are there. In the meantime, we are losing hundreds of billions of dollars to tax evasion and aggressive tax avoidance.
There is no reason this lost money should not be recovered. Some tangible measures can be taken immediately. One clear and straightforward example would be to get rid of the stock options tax loophole for CEOs. When CEOs are paid with stock options, their salary is considered a capital gain and is taxed at half the regular rate. Through this option, roughly 8,000 Canadians have deducted on average $400,000 from their taxable income.
Someone who earns $40,000 does not have that option. They have to pay the regular tax rate that applies to that salary. However, CEOs are entitled to reduce a big part of their income by 50%. It is interesting because during the election campaign, the Liberals promised to cap it at $100,000. I think that is rather generous. However, once elected, they broke their promise. What a surprise.
There are other very simple things that can be done. We could amend the tax rules for businesses that are fond of using shell companies, which have no economic purpose. They only serve to protect the wealth of the ultra-rich. Therefore, we could ask businesses to provide proof of the economic reasons justifying the existence of foreign subsidiaries.
We could also review tax agreements that allow businesses to report their profits in tax havens and to return them to Canada tax free. In my opinion, this is vitally important. There are 92 such treaties with countries such as Barbados, Jamaica, and the Republic of Malta, among others, which allow people to commit tax evasion simply by sending billions of dollars to tax havens without paying taxes.
For example, between 1988 and 2001, direct Canadian investment in Barbados rose from $628 million to $23.3 billion, a 3,600% increase.
It is also crucial that we put an end to penalty-free tax amnesty deals for individuals suspected of tax evasion.
Case in point, recently a deal was made with KPMG clients shielding them from civil or criminal prosecution as well as fines and penalties.
If I file my taxes late, I have to pay a fine. Same goes for the guy next door and all other ordinary Canadians, but people who get caught evading taxes do not have to pay a fine. Worse still, a young teenager who shoplifts has to pay the price, but the super-rich do not have to pay anything back.
We also need a higher threshold for foreign subsidiaries' interest payments. That is another tax avoidance strategy. I do not have much time, so I will not go into detail, but meaningful action can be taken now.
The truth is, we do not really know how much money is involved because tax evasion and tax avoidance, by definition, hide money. Still, if we had that money, we could fund our social programs.
In the longer term, we need to work at the international level. I would like to see Canada take a leadership role because everyone has to pull together on this if we want things to change. The impact in places like Africa can be significant. We give a lot of international aid to African countries. Those countries lose much more to tax avoidance and evasion than they receive in international aid. There is a long-term benefit here because if we help them, if we all work together to do away with the schemes that individuals and big corporations are typically involved in, that can help African countries. We would not have to invest as much. There are a lot of knock-on effects to consider here.
Dealing with this issue would therefore allow us to recover those resources, and that is very important. However, I would like to point out in closing that this is not simply a matter of resources. It is also a matter of social justice. Taxes are the price that must be paid for living in a civilized world, a democracy with community spirit. Everyone must do their part to the best of their ability. It is therefore a matter of social justice. It is also about democracy because, sooner or later, this practice will jeopardize it. Societies are becoming increasingly unstable because they are no longer able to fund their basic social programs. However, it is almost as though there is a network of people who lives between one tax haven and another without any civic engagement toward the governments of the countries where they do business or toward society in general.
I want to close with a plug for the film The Price We Pay. I highly recommend it to those who have not seen it.
I am very proud to support this motion. I hope that all of my colleagues in the House will do the same.