Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Brossard—La Prairie.
I am pleased to rise today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.
First of all, I would like to point out that this is a huge bill. It is almost 1,000 pages long and contains many technical amendments. The bill is extremely complex and only adds to the complexity of our tax system, which says a lot. It is, without question, a real omnibus bill.
However, unlike the mammoth budget bills we have seen recently, at least this one contains technical changes to a few very closely related bills. So, this represents quite a change, since we do not have to focus on a range of topics that have noting to do with the bill.
Nevertheless, the scope of this bill demonstrates just how much the government must do better to ensure the integrity of our tax system. Such a large bill can only complicate the work of parliamentarians and penalize businesspeople. Thus, it is imperative that the government do a better job managing our tax system, starting with introducing tax-related legislation on a more regular basis.
That is exactly what the Auditor General recommended in her fall 2009 report, which said:
If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.
The purpose of Bill C-48 is to make some highly technical changes to our tax system that have been accumulating for a very long time. Most of these changes have been announced in press releases and comfort letters from the Minister of Finance and in budgets since the most recent technical bill passed over 11 years ago.
These changes will definitely be revenue positive and, more importantly, help prevent tax avoidance. Accordingly, we strongly support the changes proposed in this bill. Tax evasion and avoidance are fundamental problems that we need to address.
It is therefore high time that action was taken to stop tax evasion and tax avoidance that deprive the government of large amounts of revenue. Government revenue comes in large part from taxation, and we must protect the integrity of our tax system and ensure it is equitable. We cannot just forget about this tax revenue.
While we support the amendments made by the bill, the government must make these changes in a timely fashion, instead of doing everything at the same time. The most recent technical bill was passed in 2001. Why did the government wait so long before taking legislative measures to implement the 200 or so technical amendments that were still pending?
Canada’s Auditor General noted with concern in 2009 that there was a backlog of at least 400 technical amendments that had not been enacted. The report that she released in the fall of 2009 was nonetheless very clear about this and emphasized the fact that tax practitioners had expressed a need for the legislative changes that the comfort letters identified to be enacted.
This is therefore very complex bill, and I will take this opportunity to go through some of its parts in detail, to draw attention to what it is we are discussing.
Bill C-48 deals first with offshore investment fund property and non-resident trusts. Some of the proposals in the bill were in fact part of the 2010 budget and the budget of August 2010. The amendments in this part of the bill aim primarily at protecting the integrity of the tax system and preventing tax avoidance. For instance, there are measures that are meant to guarantee the taxation of Canadian residents’ worldwide income from all sources. This was not the case in the past, and this measure will have the effect of discouraging tax evasion.
Bill C-48 also deals with the taxation of Canadian multinational corporations with foreign affiliates. Here again, the intent of these amendments is the same: to protect the integrity of the tax system and prevent tax avoidance.
There are other measures to prevent tax avoidance, such as those relating to specified leasing property, to subject income trusts and partnerships to the same loss utilization restrictions as transactions between corporations, to limit the use of foreign tax credit generators in order to avoid paying foreign income tax, to clarify the rules on taxable Canadian property of non-residents and migrants, and to establish a tax avoidance information system.
Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Other reporting requirements will apply if the transaction raises questions as to its lawfulness.
This is just a brief overview of some of the amendments included in the bill. While all of these changes are important and necessary, I would still like to point out that the government has taken too long to enact these technical amendments. Knowing that the most recent technical tax bill was passed in 2001, we can say that the time frame was far too long.
In the meantime, the government racked up hundreds of outstanding technical changes over the years. Some of the changes in Bill C-48 go back as far as 1998. These changes should have been made periodically and not through a massive 1,000-page bill. This bill includes a series of beneficial and necessary measures. The government must change its way of doing things. It must considerably improve the amendment process, which is far too slow, as we have seen. The ever-growing backlog of tax measures must stop.
In other words, the government must introduce a greater number of smaller bills, in order for their provisions to be enacted in a more timely fashion. That is precisely the view of the former senior chief of the Sales Tax Division at the Department of Finance, who said the following in September 2000:
Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis. As I said, it is a trade-off between how many bills enter onto the agenda, and their size and timeliness
Accordingly, in order to beef up our tax system, we must simplify tax legislation by making it clearer and more predictable. Obviously, that means incorporating tax policy changes into legislation on a more regular basis and therefore in a reasonable timeframe.
The complexity of our tax system creates many loopholes for businesses and individuals, which makes it especially difficult to achieve fairness in our system. I think we should seize the opportunity that this massive bill is giving us to debate the complexity and fairness of the system.
We need to have a real discussion about taxation in Canada. For example, there are many non-refundable tax credits offered by this government. These credits can only be used by people who pay taxes and, therefore, they are not available to the people most in need, who earn less. I am thinking specifically of the disability tax credit. People with the lowest incomes are exactly the people most in need of this assistance, and they should be targeted by this program. Consequently, these non-refundable tax credits have a limited ability to foster income security.
In conclusion, we support Bill C-48. However, I would like to point out that the government must improve the administration of its tax laws, especially the process for making amendments. We fully support the amendments in this bill. It includes measures to eliminate tax evasion and avoidance, while preserving the integrity of our tax system. This is an important fight for the NDP as it attempts to ensure that our system is fair.