The House resumed from February 15 consideration of the motion that Bill , be read the second time and referred to a committee.
:
Mr. Speaker, I feel especially privileged to have the chance to speak twice on Bill , which amends the Income Tax Act. Not everyone has an opportunity to address this highly charged issue.
As I mentioned the last time, this bill is nearly 1,000 pages long and makes a number of very technical changes to Canada’s tax system, changes that have accumulated over more than a decade. It seeks to obtain official approval for the various technical measures that have been put forward by the Minister of Finance over the years, over more than 10 years now, in fact.
We in the NDP believe that the technical changes proposed in Bill will be good for the Canadian tax system and will generally reduce tax avoidance. This is why the NDP will be supporting the bill at second reading.
The NDP believes that, as parliamentarians, as the elected representatives of Canadians, we have a duty to do whatever we can to minimize tax evasion and get rid of loopholes in our legislation, to ensure that the government has all the resources it needs to provide Canadians with the government services and institutions that they depend on and, more importantly, that they deserve.
Because of the Conservative government's budgets, we are facing drastic service cuts that will affect the Canadians who need those services the most. Money that is in the system could be invested in our social programs and in the institutions Canadians depend on, such as the universal public health insurance system. Ultimately, we could even set up other programs. Instead of being used to benefit the most privileged among us, this revenue should benefit the whole of Canadian society. It is important to do everything we can to bring the money back into the system so that the government can use it.
It is all well and good to cut a little bit here, there and everywhere, but we must be able to generate the revenue we need so that we can maintain what we have achieved, improve and enhance existing programs, and then come up with new programs that meet the needs of Canadians. I think that if a government is not able to do this, it is not doing its job. Unfortunately, this is true of the current Conservative government. This is what the NDP will be changing in 2015, when it forms the government, of course.
Since the Conservatives would have us believe that they are good managers of public funds, I find it really surprising and very disappointing that they waited so long before doing what was needed to get the technical amendments in Bill through Parliament.
In fact, the most recent technical tax bill was passed in 2001. That is more than 10 years ago. By 2009, at least 400 technical amendments had still not been enacted.
Bill is huge, nearly 1,000 pages, and it clearly shows that this government must be more responsible in managing tax legislation.
It is absolutely unacceptable to penalize taxpayers and the business sector by perpetuating so much uncertainty and unpredictability in Canada’s taxation amendment process.
Furthermore, because the Conservatives are so slow, we are once again dealing with a massive omnibus bill and we have very little time to really study it and to examine the implications of its legislative measures.
It really is a shame that the Conservatives persist in using this strategy, which, frankly, hinders the work that we in the House must do, that is, to study and consider bills and their impact on the Canadian public. The fact that we are prevented from conducting our parliamentary work properly has a direct impact on Canadian democracy and Canadians’ trust in their elected officials.
At least things are a little better this time around because the Conservatives had the decency to combine a series of bills dealing with the same subject in Bill . It is actually quite refreshing compared to Bill and Bill , bills that sought to hide a raft of drastic and socially harmful changes in areas such as environmental protection, immigration, employment insurance, old age security and many more.
Despite all that, although tax measures are involved and it is all one subject, in general we are in favour of the bill’s content. However, the fact remains that we are dealing with a document that is incredibly long. We do not have much time to study the amendments, which are technical and relatively complex and merit careful study. A number of them have already been implemented by tax professionals, accountants and businesses, but some things are still not clear and should perhaps be given further consideration. Once again, we do not have an opportunity to do so, because this is an omnibus bill.
Every week, my constituents come into my office in to tell me that they are tired of seeing these kinds of bills in the House, tired of seeing these huge documents and tired of seeing that their elected officials, whom they elected to represent them, are incapable of doing their job.
Canadians are fed up with the way this government operates. Things have to change and quickly. The government needs to stop dragging its feet and establish a truly efficient process for quickly and regularly enacting the technical amendments in the comfort letters issued several times a year by the Department of Finance.
I think the message is clear. I will repeat what a number of my colleagues have already said: we will be supporting the bill. However, we must ensure that a situation like the one we are faced with today will not occur again, and we must ensure that the government will present us with technical amendments on a regular basis so that we can do our job properly.
:
Mr. Speaker, I would like to thank the member for his extremely important question.
I have a number of comments. First, I would like to say how important it is to address tax evasion. It is a question of justice and equality for each and every Canadian. These are honest people who are paying their taxes. We want to defend honest Canadians when it comes to employment insurance and the correct use of taxes. The NDP does not defend fraudsters; we defend those who are honest, no matter what the government says.
Allowing certain privileged Canadians to have benefits that none of us here could have is unacceptable, and the fact that they enjoy these benefits at others' expense is just as unacceptable. The government must act quickly.
Second, it is also extremely important that we bring that money back to Canada, to the government, so that we can provide the programs and resources that our people are calling for, that they deserve and that they need.
This government is making cuts in every department, except for the propaganda department, of course. We all have to listen to the half-truths that the government is spewing. It is spending millions of dollars on propaganda at taxpayers' expense.
It is making all these cuts, but it is never going to take in enough revenue to maintain what we have and improve existing programs. It is offering tax breaks to big business, letting people hide their money in tax havens, making cuts, lowering taxes and so on.
It has very little revenue, and it is not able to make the machinery of government work the way it should. And that is why it is so important to keep tax evasion in Canada to a minimum or eliminate it entirely.
:
Mr. Speaker, since the passage of the last technical tax bill in 2001, the government has made a number of tax-related changes through the use of comfort letters.
However, these new measures have become common practice and have never been incorporated into a technical tax bill.
Bill , will incorporate more than 200 changes made to the tax code since 2001, over 12 years ago.
We support this bill because it will implement a series of technical amendments to the tax system that have been developed over the last decade. These technical changes are in fact largely beneficial and necessary. In the NDP, we believe that these changes will ultimately have a positive impact on revenues and are a good way of reducing tax avoidance, as has been discussed at length in this debate.
Tax evasion costs Canadians a lot of money. It is estimated that Canada foregoes revenue amounting to nearly $80 billion every year because of various forms of tax avoidance.
Numerous measures can be adopted to deal with tax avoidance, including the fair and uniform application of tax rules, as is done in this bill, and the automatic exchange of tax information and adoption of a protocol for publishing the taxes paid by corporations. It is in fact impossible to enact all these measures without leadership from the government.
I believe that this bill and the measures it includes are a step in the right direction, to help the government combat tax avoidance and deter these various practices.
Similarly, the bill talks about various measures to ensure that income received by residents of Canada from any source is taxed, and measures relating to the taxation of foreign affiliates of Canadian multinational corporations. The purpose of those measures is essentially to guarantee the integrity of the tax system and deter tax evasion.
The bill also contains provisions implementing various technical measures that have been developed since 2002. Among other things, that part contains anti-avoidance measures, which I will not list because this is very technical, measures limiting the use of foreign tax credit generators in order to avoid foreign tax, measures setting out the rules for taxable Canadian property of non-residents and immigrants, and the creation of a regime for information reporting of tax avoidance transactions so that people can be informed about how avoidance occurs and avoid falling into that trap or to make it easier to identify these forms of avoidance.
Any avoidance transaction that is for the purpose of obtaining a tax benefit will now have to be reported for greater transparency, even if it is not improper.
The bill also includes three new measures that we support and that had not been announced already.
First, a number of federal fiscal constraints will be rectified to solve transition problems.
Second, the formula for the attribution of taxable corporate income that applies to airline corporations is amended to ensure that the taxable income of one of these companies is entirely attributed to the provinces or territories where it has a permanent establishment. That is logical.
Third, a measure relating to the tax treatment of shares owned by short-term residents for departure tax purposes. Obviously, this is all very abstruse, but it is part of the 1,000 pages being added. This adds to the complexity, which we find unfortunate in view of the fact that there have already been 3,000 pages of tax measures in the last few decades.
All in all, by ensuring the integrity of the tax law in force and minimizing the potential loopholes, these measures will operate to increase government revenue. As my colleague said, when government revenue is increased, then we can invest in social programs, for example, and in programs for health care, the environment and greater fairness.
In its present form, however, the tax system is unendingly complex. That complexity affects individuals, for whom it is very difficult to plan their taxes with the vast menu of tax credits we now have.
The tax system also poses problems for Canadian businesses and undermines their competitiveness. If they have to dissect it all and invest in administrators or accountants who have to analyze each of the 200 amendments being made a decade later, for example, that is money that they cannot invest in local jobs or jobs in their small business. It therefore reduces their productivity and competitiveness.
The difficulty of planning their spending also limits investments in innovation and hiring. Clearer tax rules could improve the competitiveness of our businesses and create more jobs.
While we support the bill, the document is nearly 1,000 pages long and has all the makings of an omnibus bill, again. Obviously, the last technical tax bill, which was more than 12 years ago, incorporates certain legislative amendments, some of which go back to 1998. The enormous scope of this bill demonstrates that the government has to be a lot more responsible in its management of tax legislation and make sure that proposals relating to tax law are enacted more regularly.
Unlike the gigantic budget bills, Bill and Bill , the changes made do not affect a huge spectrum of legislation, and rather affect certain specific statutes. But this bill still does much to complicate the work that parliamentarians do in assessing bills, given that a lot of time is needed to process a bill and get through a thousand-page block, time that we do not have today.
As well, prioritizing the elimination of tax loopholes has to be done in a timely manner. Most of these measures have been adopted in current practice. The fact that they are not being enacted until years later brings an element of uncertainty and unforeseeability to the business world. Experience seems to tell us that it might be time to rethink how we do this. Tax bills should be much more modest—shorter, that is—and there should be more of them, introduced on a regular basis, to ensure that their provisions are implemented in a more timely manner.
In addition to legitimizing the work done by parliamentarians, that would operate to reassure the business world. It would also show that we are much more democratic and would mean we could avoid having unenacted tax measures accumulate, since this impedes progress, and at the same time allow us to improve and strengthen the Canadian tax system. It would also operate to facilitate financial planning and management for businesses, taxpayers and tax experts, who themselves have trouble making their way through all this jumble of rules.
As well, enacting tax measures speedily after they are announced would also enable the government to collect large sums of money that could be reinvested in programs for health care, education, food inspection and environmental assessment, for example.
This position is shared by many experts, including the former Auditor General of Canada, Sheila Fraser, the Certified General Accountants Association of Canada, as well as Marlene Legare, former senior chief of the Sales Tax Division at the Department of Finance. They all agree that this will help improve the process and simplify our tax legislation, which is becoming increasingly complex.
We recently led a campaign against the excessive fees that credit card companies are charging small and medium-sized businesses and other merchants. Businesses are already overwhelmed by all the paperwork. With all that those companies contribute to Canada, the Conservatives—who claim to be the best advocates of local economies and small and medium-sized businesses—are blocking the growth of local economies and job creation. It is hard to believe the Conservatives when they introduce these kinds of bills.
In closing, in 2009, the former Auditor General of Canada, Sheila Fraser, was already concerned about the fact that at least 400 technical amendments still had not been enacted through legislation. Bill enacts more than 200 of these measures and changes. I wish to echo Ms. Fraser's concerns, given that another 200 changes still have not been applied and remain outstanding.
Can the government tell us when it plans to incorporate those measures into legislation and how? It would be a shame to have to wait another 10 years before those changes are adopted, especially since, much like this bill overall, they will have a positive impact on Canada's tax system. Just like the measures that will be added to the legislation thanks to Bill , the purpose of these measures is to ensure the integrity of our existing tax legislation, close the loopholes to discourage tax avoidance, increase our revenues and therefore take part in positive economics.
:
Mr. Speaker, I am very pleased to follow the member for , who gave a wonderful, detailed speech.
We have just begun to really delve into this bill that is more than 1,000 pages long. Bill is absolutely enormous.
As my colleague just said, we are talking about measures that should have been taken 10 or more years ago. Some of them go back as far as 1998. We have to wonder why the government took so long to introduce this huge bill in the House. Why did it take so long to address the 200 various sectors affected by previous budgets? Why did the government drag its feet on introducing these technical amendments in the House?
[English]
When we look at the size and scope of this massive bill, we are talking about areas touched throughout the tax system: changing how labour-sponsored venture capital corporations are treated and the transitional issues that arise from that; amending corporate taxable income allocation formulas; looking at the tax treatment of shares dealing with offshore investment fund property and non-resident trusts; dealing with taxation of foreign affiliates of Canadian multinational corporations, affecting legislation that touches both common law and civil law; avoiding anti-avoidance measures for specific leasing properties; clarifying rules on taxable Canadian properties; looking at housekeeping changes to the Excise Tax Act; clarifying the minister's authority; allowing for tax administration agreements; and putting in place coordinating amendments.
Many of these measures date from more than a decade ago. As my colleagues from and mentioned earlier, the former Auditor General of Canada called the government on its complete absence of bringing forward all of the 1,000 pages of technical amendments that should have been brought forward years ago.
Commitments were made at one point. I am not going to criticize just the Conservatives. I am going to criticize the Liberals, as well.
Indications were made in the past that these types of technical amendments should be brought in on an annual basis. What the Parliament of Canada would be called upon to look through would be, basically, one-twelfth of what we are looking at today. On an annual basis, technical treatment would then be updated. That is a necessary part of our tax system. That would mean, as well, that we would avoid the kinds of loopholes that exist when the House of Commons passes budgets or measures are put into place and the technical amendments are never brought forward.
That is not what happened under the Liberals. We know now that the Liberals were simply unable to put in place an effective administrative structure for technical amendments. It has not happened under the Conservatives, either. This is something New Democrats deplore. Of course, we support these technical amendments, but instead of dealing with a yearly review that would allow those technical amendments to be brought in in a systematic way and on a timely basis, we are dealing with another massive Conservative bill of 1,000 pages that Parliament is being asked to scrutinize, because for over a decade, the work was not done.
This is symptomatic of why many Canadians consider the idea of Conservative administrative competence to be an oxymoron. We have seen this time and time again, whether we are talking about technical amendments that have not been brought in or massive budget bills that are thrown on the floor of the House of Commons without the government having any understanding of what the impacts are.
We saw last spring massive changes to environmental assessments and the National Energy Board. Charitable people would say that the government was simply unaware of what it was trying to do when it gutted 99% of environmental assessments in this country. That is what a charitable person would say. The government was simply incompetent. Many others believe that it was mean-spirited and deliberate. Even though the government pretended that it had no idea that it was gutting 99% of environmental assessments in this country, the government actually did understand that it was doing that when it threw those amendments forward. Either way, what we are seeing is administrative incompetence and mean-spiritedness of the highest order.
I am privileged to come from the political party that over the last 20 years, when it has been in power, according to the federal Ministry of Finance, has been the most effective at managing the nation's finances and paying down debt in various provinces. For the last 20 years, the fiscal period returns, year after year, have indicated that NDP governments are much better at balancing budgets and paying down debt. They are much better than their Conservative counterparts and much better than their Liberal counterparts, who seem to be even worse than the Conservatives, if people can believe that, in terms of balancing budgets and paying down debt. Fiscal period returns show that. We certainly have no lessons to learn from anybody.
I would say to the Canadian public that we always have to endeavour to be better and more transparent. We had the stand in the House today and put forward an NDP bill to put in place a Parliamentary Budget Officer. What we believe in is a system of checks and balances, in terms of finance, to ensure that the public is aware that the figures we are putting forward are tested by an impartial third party. We believe in supporting our Auditor General's department and in actually enhancing the ability of the Auditor General to look at the nation's finances as well.
What have the Conservatives done? It is quite the opposite. By death from a thousand cuts, they have cut back on the Auditor General's ability to actually look at the nation's finances. They are seriously, in the most vicious, underhanded way, attacking the Parliamentary Budget Officer. They are systematically removing, and this is the only government in the western world doing this, the checks and balances the Canadian public depends on.
On our side of the House, not only are we better financial administrators, we also believe in the impartiality of a third party to ensure and verify that the financial figures put forward by a government are tested and are subject to those rigorous tests of checks and balances the Canadian public expects.
In my riding of Burnaby—New Westminster, what I hear most often from people who voted Conservative last time, because I still had about a third of the public in Burnaby—New Westminster vote Conservative last time, is that they voted for administrative competence, and they have gotten incompetence. They say that they voted for some kind of honesty on fiscal matters and have gotten exactly the opposite.
People who voted Conservative are now saying that what they got is the F-35 scandal, the continuous shame of Conservative senators trying to bilk the public and milk the public of every last dollar, pretending they live in provinces where they do not and trying to break the law in a couple of jurisdictions.
What former Conservative voters, because they are not going to vote that way in 2015, are telling us is that it is not what they voted for, but that is what they have gotten.
When we look back to Bill , we can see that this is symptomatic of a much greater malaise. We have a Conservative government that is administratively incompetent, that is mean-spirited and that is unable to control the natural inclination of the to go after shiny baubles and pay whatever it takes, whether we are talking about the Muskoka spending of $1 billion or the $40 billion or more that would go into the F-35s or the ongoing scandal of Senate-gate, with 15 Conservative senators now trying to hide where they live to cover up their past indiscretions.
When we look at all of those things, what we see is symptomatic of why so many Canadians are saying that what they want to see, whether we are talking about a bill like this or any other government decision, is competence. They want to see a government that actually understands the impacts of what it is doing. They want to see a government that is not bringing forward 14 years of technical amendments, because it has been dropping the ball, systemically, for the last seven years.
In 2015, what Canadians will get is a government that is competent, an NDP government that will be submitting technical amendments on an annual basis, because that is what is right and proper for this House of Commons to consider.
:
Mr. Speaker, I do not think that my speech will be as amusing as the one given by my colleague from . It was an excellent speech. I will try to make my points as interesting as possible.
As legislators, we have a duty to take a serious look at bills such as Bill . It is obviously a very large bill. We are seeing that a lot in the House.
The NDP and many key players and experts in the fields of finance and accounting agree on that point. The majority of the changes in Bill will protect the integrity of the tax law in force. But we have been waiting a long time for these technical amendments to be introduced as part of a tax bill in the House. The most recent review of technical amendments happened in 2001. That was a long time ago.
There are amendments that date back to 1998, so this should have been ready a long time ago under the Liberal governments or under the current Conservative government. There is some reluctance to ensure that our tax laws are up-to-date. All Canadians should be wondering why it takes so long to get these things sorted out.
For example, this fall, the Certified General Accountants Association of Canada stated in its pre-budget submission to the Standing Committee on Finance that:
[T]he key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction. Therefore, CGA-Canada makes the following...recommendations: Modernize Canada’s tax system—make it simple, transparent and more efficient; introduce and pass a technical tax bill to deal with unlegislated tax proposals; implement a “sunset provision” to prevent future legislative backlogs...
There are therefore three elements: modernize the system; introduce the bill that is before us today; and make sure that the major delay that has resulted in us having to examine a bill that is a few hundred pages long does not happen again. As CGA said: it is good for our economy.
The Conservatives are always saying that the economy is their priority, but one has to wonder if that is really true when it takes them so long to respond to a request from the Certified General Accountants Association of Canada, a basic request that is good for our economy. The Conservatives seem to agree on these elements but their measures do not live up to the rhetoric, such as what we heard today.
We can therefore truthfully say that the Conservatives are not meeting their responsibilities properly and that this bill is very late. This government took over seven years to remedy the chronic delay in passing technical tax amendments.
In 2009, former Auditor General Sheila Fraser pointed out that more than 400 amendments were outstanding, as they had not been enacted by legislation. She noted that:
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.
She added that it is advisable for such a bill to be presented every year in order to make routine changes to tax laws. That is what the Conservative government wanted to do, but it never happened.
Today, we have a huge bill that would enact more than 200 of these changes. There are still hundreds of changes that must be enacted by a technical tax bill and that await debate in Parliament.
Unfortunately, I am not surprised that it has taken so long to put these changes into a bill, which does not even cover all the changes. The Conservatives talk about good management and accountability, but they never take appropriate action. It is truly unfortunate, because their talk could almost be taken for propaganda. They say that they are good managers of the economy, but we see that it is not true at all. It takes them a long time to do things that are very routine, that should be done every year. They are incapable of sound financial management. That is evident from the supplementary estimates. It is truly unfortunate that the Conservatives do not walk the talk.
The reality is that the Conservative government's inaction has resulted in a huge backlog. We now have a gigantic technical bill of almost 1,000 pages, and we have not even addressed half of the changes.
We must use tax measures to combat tax avoidance and tax evasion and protect the integrity of our tax system at the same time. We support the changes in this bill, especially those that would curb tax avoidance. This is something the NDP has been focused on for a long time. However, the massive size of this bill shows that there is a lot of work to be done to turn these technical changes into legislative measures as quickly as possible. Otherwise, we are penalizing the business sector and making things difficult for Parliament. It is very complicated for Canadians when these measures are not included in a bill.
That is why, although we support the bill at second reading, we urge the government to do its homework, since Canadians should not have to wait a decade for the government to be accountable to Parliament by making tax amendments. That is simply not acceptable.
The even admitted himself in a press release that the government had failed to take action. I quote:
It has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments. This has created a significant backlog of outstanding measures that need to be addressed to provide certainty for Canadian taxpayers...
Why did he not do something sooner?
It is rather refreshing to hear a Conservative admit that members of his party have caused economic uncertainty. However, I do not think this admission shows that they are aware of their negligence or that they are committed to change. It has been four years since the Auditor General told the government to fix this problem urgently.
That is all I have to say about this. As I indicated, I will support this bill. It is a long time coming. It is unfortunate that it has been introduced in this fashion and I hope that in the future we will see something simpler.
:
Mr. Speaker, I am pleased to stand in the House, following some excellent speeches coming from my colleagues in support of Bill at second reading. They have indicated the fact that it is time for Canada to get on with it and bring forward changes to our taxation laws, many of which have been practised informally but should be enshrined in legislation. We are saying that it is a long time coming.
The New Democrats believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being made in the bill, especially those that aim to reduce tax avoidance.
We note that this is an extremely lengthy bill, known as an omnibus bill. However, unlike the omnibus bills that the government has chosen to bring forward, this actually looks at an area of legislation rather than bringing everything in, including the kitchen sink. Not only that, the bill is focused on making technical changes and not the deep structural changes that we have seen time and time again from the government. If we are bringing in a bill that covers a lot of ground, it ought to be done in a specific manner, looking closely at related legislation like Bill does.
The massive size of the bill demonstrates that there is still work to be done in getting such technical changes legislated in a timely fashion. We believe that failing to do so in a timely fashion hurts the business community and makes it difficult for proper evaluation by Parliament. Therefore, we are here to truly ask the government to move forward in a timely manner on legislation that has been in front of us and certainly necessary for some time.
In 2009 a very highly respected Canadian, Sheila Fraser, the former auditor general of Canada, said:
No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.
This message comes directly from a respected Canadian, someone whose role continues to be one of ensuring that we are accountable, efficient and effective in the work we are doing as parliamentarians and certainly the work the government is doing. However, not unlike in other areas, we see that when it comes to moving forward in responding to the reality that Canadians face today, the government has been too slow to act.
While informal arrangements have been made all along the way, Canadians would like to see a strong framework of legislation when it comes to taxation so we deal with them fairly, ensuring that people are not falling through the cracks and that taxes are not being avoided or evaded. Therefore, this is a perfect case of needing to listen to people like the former auditor general of Canada and many others who have indicated that it is time to move on and implement the kind of legislation we have before us.
As well, this is more broadly about prioritizing the sense of fairness that Canadians ought to have when it comes to anything, even when we are talking about taxation. It is something that is at the core of our concept of citizenship and how we give back to society, how we give back to government, recognizing that Canadians do their part in working hard and returning back to the state part of their hard-earned money in order for us to have the kinds of programs, services and infrastructure that we all deserve.
Unfortunately, things are becoming more and more difficult for so many Canadians. This is in part because the social safety net that allows them to get out there and access gainful employment and make a dignified life for themselves is increasingly more challenging as the social safety net is weakened.
Just this week in the House, the NDP has raised a number of instances in which this is the case. Perhaps the best example is the weakening and the cuts to the employment insurance program. As we know, these changes will have a disproportionate negative impact on seasonal and cyclical workers. These are people who go out, do their jobs and support the economy in our regions all across the country. A good chunk of their money goes back into the coffers of the Canadian government to ensure we have the kinds of services on which we depend on.
Unfortunately, Canadians who are now being turned away from accessing employment insurance, who are being forced to move away, who are being forced to look at social assistance or welfare, will no longer be able to contribute to our system of taxation and return the kind of revenue that Canada depends on the way they used to.
Unfortunately, these changes will be felt first by the unemployed or by seasonal workers. Then those impacts will reverberate. They will reverberate once we start seeing communities suffer as a result of seasonal industries no longer being able to find people to work in them. Communities will suffer as we see the service and retail sectors not able to make a go of it because there is less income cycling through the community. We will also see communities and regions lose innovators and people who come to regions and benefit from the domino effect of many of these seasonal industries. That effect will snowball into an unfortunate situation where Canada will have less revenue coming back into its coffers from taxation to do the kind of work we need to do. Therefore, we will start seeing a weakening of essential services.
For the NDP, that is an unacceptable notion. After all, we as parliamentarians are here to guide Canada forward and to work with Canadians so we get better at who we are and so we can improve the standard of living that we all depend on. Unfortunately, the government has made some real structural changes and some severe cuts that will turn us back from the direction that we ought to take.
Therefore, when we are talking about the issue of fairness, it goes back to a fundamental Canadian value, and that is we all work hard and we all want to be part of giving back to our society, our community and our family. However, we need to ensure there are structures in place, like proper and fair tax legislation, like social programs that allow our seasonal industries and our regions to continue to contribute to our economy and our wealth and to ensure Canadians have the kinds of things that have set us apart from the rest of the world, whether it is investment in health care, education, housing or infrastructure. These are the kinds of things we do not see from the government.
I would note, particularly, that the legislation also refers to the First Nations Goods and Services Tax Act, again recognizing the issue of tax fairness when it comes to first nations people and recognizing treaty rights and the key role that first nations people have played in building the wealth of Canada and the need for the Government of Canada to be partners going forward when it comes to aboriginal people in our country.
There is a lot of work to do and I am proud to be part of a party, the NDP, that stands in the House every day and calls for fairness. Today, when we are showing our support for Bill and debating in the House, this is no exception. We hope the government will show fairness when it comes to Canadians in every other way.
:
Mr. Speaker, I am pleased to have the opportunity to join this debate on Bill .
I hope to use what little time I have to expand on the broader issue of how governments generate revenue, and the role of parliamentarians in being charged with the responsibility of the scrutiny, oversight and due diligence associated with generating revenue through taxation, and then, of course, the spending of that revenue. I do not suppose there is anything more important that MPs do than that. It is certainly the primary function and why our constituents give us their confidence to supervise the public purse.
At the outset, I was pleased to see that Bill deals with tax avoidance and tax evasion as well as a number of intricacies in the tax system itself.
Chartered accountants and virtually all of the tax lawyers and tax accountants advertise on their websites something called the “tax-motivated expatriation”. They call it that because it has a nicer ring than “sleazy tax-cheating loopholes”, which is what it is when tax avoidance and tax evasion allows one to be a tax fugitive by harbouring one's resources and taking advantage of what taxes buy in terms of a stable, safe community, with public services, policing and health care. It is putting one's money offshore to hide it from the prying eyes of the public and the taxman, and not paying one's fair share but getting the best of both worlds. I am glad that finally this Parliament is seized of the issue.
I was here years ago when the Liberals were in power. Ironically, they tore up a number of tax treaties with different tax havens. However, they left 11 in place, one of which, of course, was where the leader of the Liberal Party at the time, who became Prime Minister, had his 13 shadow company in tax havens, stashing his business away from the tax system, the very tax system that allowed him to live in a such a decent country. That kind of thing makes my blood boil. The tax-cheating loopholes through tax havens has always bothered me.
Another thing that has bugged me is that we focus so much on generating tax revenue, yet we overlook other obvious sources of bankrolling the social services we need. One that comes to mind is another Liberal invention, the corporate welfare program called “technology partnership loans”. Some who have been around here for a while will remember the TPLs, technology partnership loan system.
I did some research when we had been dealing with the paying back of student loans. During the estimates, we learned that the government had to write off $280 million, I think it was, in the supplementary estimates (C). However, 87% of all the money loaned in student loans is paid back, and 95% of all the individuals pay it back. The numbers are jigged because I guess some have larger loans, but 95% of all the people who borrow student loans pay back every penny they owe to that program. With the technology partnership loans under the Liberal government, it is entirely the opposite, with 5% being paid back and 95% outstanding.
When is a loan not a loan? Well, if one never pays it back, it is not a loan at all, but a gift, a handout. It is corporate welfare. It is dumping a wheelbarrow full of dough into somebody's business where one is obviously expecting some kind of a quid pro quo. Why we leave these outstanding technology partnership loans dangling there, I will never understand.
The Canadian Taxpayers Federation just did a big report on this in its latest monthly magazine. Members can look it up to see exactly how much which companies borrowed, and how much, if any, they have paid back. It goes on page after page with these hugely profitable companies.
One of my complaints about across-the-board general tax cuts to business is simply this. Any kind of a tax cut to business should be tied to some kind of quid pro quo, a performance, a job creation, some benefit to the taxpayer other than just helping to subsidize the activities of that company, with the exception possibly of SMEs.
When the NDP government was elected in Manitoba, the small business tax rate was 11%. The Conservatives of the day were gouging small businesses mercilessly, to the point where they were staggering under the load. They were crippled by over-taxation in the province of Manitoba. When the NDP was elected, it systematically and annually reduced the small business tax as much as it could afford, 1% at a time. Every year it went down by 1%.
Could you guess, Mr. Speaker, perhaps with hand signals, what you think the small business taxation rate in the socialist paradise of Manitoba is today? Are you willing to hazard a guess, sir? It is a great big goose egg: zero. The small business tax in Manitoba is zero because there is ample empirical evidence to show that when a tax break is given to small businesses, they hire people, expand their businesses, invest in their companies and generate wealth in the community. We know that every dollar spent in the community is spent at least four times before it finds its natural state of repose in some rich man's pocket, which he then invests offshore in a tax haven.
The economic game is not supposed to be like some shady ring toss on a carnival midway. However, that is the way people feel sometimes when it is stacked so heavily against ordinary working people who are simply trying to earn a living, pay their taxes and get decent services.
I used one example with regard to the Liberal regime. I am a little hostile toward the Liberals right now; I was just having a fight with my colleague from Manitoba. I have to remind people that a lot of the time that I spent here was under a Liberal regime. The Liberals chose to balance the books by three things that are still timely and topical today. They cut $50 billion in social transfers to the provinces. That $50 billion gave them a start, cutting and hacking and slashing through every social program by which we define ourselves as Canadians, in the most ruthless and irresponsible way one can imagine.
Where do members think the Liberals got the second part? People forget there was a $40 billion surplus in the public pension plan and the final parting act by Marcel Masse, the Treasury Board president at the time, was to scoop every single penny out of the surplus of the public service pension plan and take it unto themselves. They were not allowed to, and they had to pass legislation to do it. That surplus should have at least been divided among the beneficiaries and contributors, but the Liberals scooped 100%.
Where did they get the third part for their budget balancing? They got it from the EI fund: $57 billion that was not theirs. They did not contribute a single penny to it. They scooped $57 billion out of the EI fund. Let me talk about the impact of the cuts to EI. They created a program where nobody qualified anymore, but everybody had to pay into it. An analysis was done, and their changes to EI in 1997 caused $20.8 million a year of federal money for my riding to be sucked right out of that riding, with all of the corresponding beneficial spending associated with that $20 million. It was like night and day. That is how to not balance a budget. We are talking about revenue, how to generate revenue and how governments get the money they need to provide the services they are obliged to provide. That is not something we want replicated.
When we talk about taxation, we need to talk about the redistribution of wealth. It is one of the ways to redistribute the great wealth of a great nation so that we all enjoy the benefits of living in this society. We forget some of the big picture issues when we drill down and analyze these increasingly complex tax documents. If we are guided by the underlying motif that it is a way to fair taxes, leading to good public services, it is not something to be lamented, and tax avoidance by tax fugitives in sleazy tax-cheating loopholes is not to be tolerated.
:
Mr. Speaker, I always find it amusing to listen to my two colleagues from Winnipeg. They have a very particular sense of humour. Unfortunately, I do not share that same sense of humour.
I will take 10 minutes to try and talk about a bill that I thought was a bookend when I first saw it. When I saw how big it was, I was taken aback. If you wait a decade to make changes to a system that so obviously needs them, it is clear that special attention needs to be paid once you do make them. This 942-page document is more like a pillow than bedtime reading.
As I said, there are nearly 1,000 very technical pages to be studied in Bill .
For many people, myself included, it will likely take another decade to analyze and understand what this mammoth bill, this huge document, is all about.
In all, Bill will amend close to 20 acts and regulations. That is a huge number and it shows that the , the and others have clearly failed to take action in this regard over the past few years.
Basically, part 1 will implement amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in offshore investment fund property. Parts 2 and 3 will implement various technical amendments, once again, relating to the taxation of Canadian multinational corporations with foreign affiliates.
As a result, many Canadian businesses will have to meet new tax obligations in order to abide by the new rules set out in Bill .
Since other changes will be made to this tax framework, businesses will also have to deal with the International Financial Reporting Standards, the infamous IFRS, which require businesses to identify the impact of the changes to the tax legislation and to the tax rate for the period in which the legislation is in the process of being adopted. However, for the purposes of the United States' generally accepted accounting principles or GAAP, the proposals must be adopted.
Do Canadian companies that prepare their financial statements using the accounting standards for private enterprises in accordance with the tax method that has yet to be implemented also have to identify the impact of the changes to the tax legislation and to the tax rate for the period in which the legislation is in the process of being adopted?
If so, companies that present their financial information using the IFRS will have to take into account the changes set out in Bill when preparing their financial statements for the fiscal years ending after November 20, 2012. On the other hand, businesses that present their financial information using the United States' GAAP will not have to take into account the changes set out in Bill until the bill is passed or, more specifically, until it receives royal assent.
Needless to say, the CGAs and accounting firms of this world will be fairly busy in the coming weeks and months. What is more, the NDP sincerely believes that we must fight tax avoidance and tax evasion, while preserving the integrity of our tax system. I am sure that this is very important to all members of the House. We therefore support the changes set out in Bill , particularly those that seek to reduce tax avoidance.
In my riding, when people come to see me about the Income Tax Act—which happens more often than one might think, especially middle income earners who are having a hard time making ends meet—they often talk to me about tax evasion. They are really worried about their future.
It is certainly not by weakening regional economies with repressive employment insurance measures, with measures that are no good for a social climate that is already deeply troubled by the Conservative government's inaction when it comes to economic development for the regions of Quebec, that the population will be delighted by or care about a document that is nearly 1,000 pages, like Bill .
The main concern of the people in my region, which was once so prosperous in the manufacturing, farming and forestry sectors, is jobs, jobs, jobs. The Conservatives claim they have created 900,000 jobs. I am not seeing these 900,000 virtual jobs. People are beginning to recognize this sham, and they are disappointed.
This document is a perfect example of an omnibus bill, and that is the only thing my constituents will remember. This bill's massive size is proof that there is still work to be done in transforming such technical amendments into legislation, and in a timely manner, otherwise it will penalize the business community and complicate Parliament's work.
The most recent technical tax bill was passed in 2001. Since then, any changes made between the passing of the two technical tax bills have been made by the Department of Finance through comfort letters. Most of these changes become common practice afterwards, even if they are not enacted in any tax legislation. This was even confirmed by the Auditor General.
In 2009, the Auditor General expressed concern that more than 400 of these comfort letters had not yet been passed into law. As some of my colleagues pointed out, more than 200 of these letters are in the bill to amend various tax laws.
Most tax practitioners are pleased with the comfort letter process. However, the Auditor General's report indicated that they had expressed a need for the legislative changes that the comfort letters identified.
The vast majority of the amendments contained in this bill have already been announced in press releases, the finance department's comfort letters and the budgets for the 11 years that have elapsed since the last technical bill was passed.
The government says that it is worried about the economy. I would like to point out that it has shown a certain neglect and skepticism.
We believe that these amendments will result in increased revenues, which is a good thing, and that they are a good way to reduce tax avoidance. As I pointed out, the vast majority of these measures were put into practice several years ago, and tax measures usually go into effect as soon as they are announced.
The sweeping nature of this bill shows that the government must be more responsible in managing tax laws, and it must ensure that proposed changes to these laws are adopted on a more regular basis.
In closing, we nevertheless support this effort because, as I mentioned, most of these measures have been in effect for a number of years and they should increase government revenues.
What my colleagues and my constituents want is for tax dollars collected as a result of these measures to be invested in our communities that really need them.
:
Mr. Speaker, first, I want to say that we support Bill because it will have some positive effects on revenues, and the changes it makes will help deter tax avoidance, which is good.
I find it interesting that the bill talks a lot about tax avoidance. Members know that the middle class, which pays taxes, can rarely use tax avoidance tactics to pay less and have a little breathing room. The people who have the means to pay taxes also have the means to find ways to avoid them, while the middle class is suffocating under the weight of all of the government's cuts. I think it is good that this bill addresses the issue of tax avoidance. I wanted to share that with my colleagues. Our tax system must be managed much more responsibly, and we must ensure its integrity.
I have a question for the government. Why did it wait so long to legislate measures that have been around for 10 years? Some of these came into effect in 1998. I was 13 years old in 1998. That was a long time ago. The government opposite is not the only one to blame, because it has not been in power since 1998. Thank goodness, since who knows what the House would look like. I get the impression that they suddenly woke up and decided they needed to legislate some tax measures. I find that a little odd.
I do not claim to be a financial expert. I probably never will be. It is not a topic that interests me as much as housing, which I talk about all the time. I am no financial expert, but it seems to me that a competent government should have woken up a little sooner.
When I look at how long this document is, I pity the poor Standing Committee on Finance, which has to examine it. The word “omnibus” also comes to mind. I will certainly never approve of this way of doing things and neither will my party, obviously. The government has a tendency to put everything in one bill, and I do not agree with that practice. For example, Bill amends the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act.
Given the importance of these four laws, the length of the bill and the need for the measures set out in this bill, I am afraid that the committee will do a poor job of examining the bill, which would be too bad considering how important it is.
Honestly, I find that this bill, which is coming from a government that claims to be so concerned about the health of our economy, is really late, and I think that it should be examined in a different manner. The himself admitted that the government failed to take action. I would not like to be part of the Conservative cabinet right now.
That being said, given the government's inaction on so many matters of vital importance to our country, I am not really surprised to see that it has been so negligent with regard to tax avoidance and the integrity of our tax system.
I am talking about inaction. I am talking about a government that does not understand the importance of homelessness and affordable housing programs, for example. I am talking about a botched EI reform at a time when workers need EI the most. I am talking about a government that barely makes any investments in the environment, thereby endangering the quality of life of future generations. I am talking about a government that neglects infrastructure to the point where I am now afraid to drive on the Champlain Bridge, and I believe that is a legitimate fear.
When this bill is passed and tax avoidance is being discouraged, can we hope to see revenue increase?
In my riding, there is a lack of affordable housing. Homelessness is on the rise and agricultural businesses are losing skilled employees because of the EI reform. What is more, many environmental organizations are fighting to give our children a habitable earth. Clearly, we also need health infrastructure, a commuter train and a tunnel in order to promote the economic development of our region. Once this measure is implemented, will others follow?
I will stop there.