Madam Speaker, I will be splitting my time with the member for Skeena—Bulkley Valley.
Last night a constituent wrote to me. She is a senior living in Victoria and had been reading about the CBC's investigation into the KPMG affair. She had heard of the NDP's call for a full investigation and felt the government was stonewalling. She said, “It seems that there's one law for the rich and another law for the poor in Canada.”
This motion is about answering her letter. It is about proving to her and to all Canadians that the Liberal government is committed to a fair and equitable tax system without golden loopholes for the super rich. The motion calls on the government to take two simple steps: first, keep its promise and limit the $1 billion a year stock options loophole; and second, tackle the multi-billion dollar problem of tax havens by tightening the rules for shell companies, closing loopholes for international tax treaties, and ending sweetheart amnesty deals for millionaire tax cheats.
Before I get into the details of the motion and the solution it proposes, let us talk about why it matters. This debate touches on two fundamental issues. First, it is about fairness. Specifically, it is about upholding a fair bargain between Canadians, between those who work hard and play by the rules and those who seek a free ride at their neighbour's expense. It is also about something even more fundamental. It is about maintaining and strengthening that basic social bargain that allows us to come together and work collectively for the public good. If we want to build a better, more just, and more prosperous Canada, if we are not content with the status quo, then we must uphold that bargain.
The motion is not just about our arcane tax law or fixing past mistakes; it is about the future. It is about how we can eliminate the deficit and kick-start a sluggish economy by offering working parents affordable child care. It is about how we can support seniors with a pharmacare plan and not outsource their care to Chinese corporations. That is what is at stake when the government lets big corporations and multi-millionaires walk right out the door without paying their bill, leaving ordinary Canadians to pick up the tab.
With this motion, the NDP is proposing solutions. First, the government can make good on its billion dollar broken promise to fix the stock options deduction loophole. It was originally meant to help start-ups take off, but the deduction has now become a free ride for the super rich. Ninety per cent of the benefits of this loophole go to those who make incomes more than a quarter of a million dollars a year. This costs all Canadians about $1 billion a year, and 75¢ of each dollar goes to 8,000 super-rich individuals who use it to trim their tax bill by an average of $400,000 a year. Clearly, there are better uses for this money.
In the last election, the NDP proposed limiting this deduction, protecting its legitimate use for start-ups. We suggested that every dollar saved, all $500 million, be put toward combatting child poverty. The Liberals made a similar promise, but they broke it in budget 2016.
Failing to close this loophole cost almost $700 million in lost revenue last year alone. If the promise had been kept, the money could have been used, for instance, to make up the shortfall in child welfare services for aboriginal kids, without the NDP having to force the government's hand with an opposition motion like this one. It is long past time to limit this loophole and narrow it back to its original intention, which was to help start-ups attract their first employees. Canadians will be watching on March 22 to see if because of this motion in Parliament the government finally keeps its promise.
The second part of the motion is about tackling tax havens. Again, while Canadians are furious about the government's appallingly lacklustre response to the KPMG affair, the Panama papers, and other such revelations, it is important that they understand this is not just about multinational corporations and unscrupulous millionaires. It also affects small local businesses in our communities.
In Victoria, I spoke to the owner of a small coffee shop. He told me that his effective tax rate is much bigger than the big Starbucks on the corner. Why? Starbucks is able to access international tax havens and therefore pay an incredibly low rate of tax. As another constituent told me last night, there is one set of rules for the ultra-rich and another set of rules for the rest of us.
Refusing to take action against big corporations that break the rules hurts small businesses, which are the real engine of economic growth and job creation in our country. One solution proposed here is to tighten the rules for shell companies.
In 2014, I introduced a piece of legislation in the House that would enable the government and our courts to more effectively identify, pursue, and convict tax cheats. To do this, my bill would impose what is called an “economic substance test” on transactions. In other words, a corporation must prove that there is a legitimate business case for transactions beyond simply avoiding paying its fair share of taxes in Canada. There has to be an economic substance. Creating an economic substance test would recover significant uncollected revenue that could support better public services in Canada. When I bring that bill back into this Parliament, I hope the government will support it.
The bottom line is simple. There is no shortage of solutions if the government is finally ready to get to work. For instance, nearly four years ago, we worked with the finance committee to study tax evasion and the use of tax havens. In a supplementary report, the NDP members of the finance committee proposed solutions that should have been implemented then and must be implemented now.
At that time, the government testified that no effort was being made to measure the amount of the so-called “tax gap”. We proposed that it do so, and we called on the government to join the United States, the United Kingdom, Australia, and other countries in measuring the existence of this tax gap. We also asked the Canada Revenue Agency to require corporations to disclose all taxes paid in other jurisdictions so that Canadians could monitor their operations in offshore tax shelters, and we asked the Auditor General to monitor the success of the Canada Revenue Agency in prosecuting and settling cases of tax evasion.
This is information that all Canadians deserve to know. For instance, can the government tell Canadians just how many people have been jailed for tax evasion? How many have been jailed for aggressive international tax dodges? How many prosecutions have been launched? To keep faith in the integrity of our tax system, the public must see that individuals who break the rules are caught and appropriately punished for seeking a free ride at the expense of hard-working, taxpaying Canadians.
We see carpenters and hairdressers named on the Canada Revenue Agency website, but I ask how many international tax cheats we will find there. The answer is zero. When tax cheats go unpunished, it puts a heavier burden on the backs of ordinary Canadians. We will not stand for that, and neither should the government.
In conclusion, I ask all members and Canadians listening at home to remember just how important this is to all of us. A recent Conference Board report estimated that the tax gap of lost revenue could be as high as $47 billion a year. Every dollar of that could be put to use, such as having an affordable child care program, helping seniors get the prescriptions they need through a national pharmacare program, creating new jobs in clean energy, building new infrastructure to ease congestion and support commerce, eliminating the deficit and easing the burden on future generations. However, none of this can be done if the government refuses to take real action, and if we continue to allow Canadians' faith in the fairness of our tax system to be eroded.
It is in that spirit, with an eye to the future, not just the mistakes of the past, that I urge all members to support this motion.
