IN THE HOUSE ~ Speech ~ NDP Opposition Day Motion ~ stock option deduction loophole and tax havens

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Date: 
Thursday, February 8, 2018

42nd Parliament,1st Session

You can view the video of the full speech here: https://youtu.be/I5XSwO-n7gU

Here are the clips about the stories Peter told of Canadians, John, Jim, Idette and Jagmeet: https://youtu.be/X0Gey5Dl51Q

Context : Opposition Day Motion – NDP
Peter Julian (New Westminster—Burnaby) — That the government cap the stock option deduction loophole and take aggressive action to combat tax havens

(Speech will be fully translated into English soon)
    M. Peter Julian (New Westminster—Burnaby, NPD) propose:
Que la Chambre se souvienne de la résolution qu’elle a adoptée le 8 mars 2017, dans laquelle elle demandait au gouvernement de tenir sa promesse de plafonner l’échappatoire liée aux options d’achat d’actions et de prendre des mesures énergiques pour s’attaquer aux paradis fiscaux, et que la Chambre demande au gouvernement de respecter ce vote en veillant à inclure ce plafond et ces mesures dans le budget de 2018.

Monsieur le Président, comme vous le savez, de ce côté-ci du Parlement, nous n'allons jamais lâcher, nous allons toujours travailler à l'établissement d'un système équitable d'impôt. Nous trouvons cela très important, pour les Canadiens et les Canadiennes qui nous écoutent aujourd'hui. Il va falloir qu'on mette fin au système existant.

    In addition, we are seeing the use of a new tax haven format, and that is the digital tax haven. Our parliamentary leader and revenue critic has been raising this issue, as have I, repeatedly in the House of Commons. In the digital field, we are now seeing big digital players like Facebook, Netflix, and Google making billions of dollars in Canada and not paying a cent of tax. It is a new format for the Liberals, a digital tax haven, which allows for tax-free profits and tax-free money. They are not even paying the GST, which is a double problem.

    Not only do we have these new digital tax havens created by the Liberals, which they allow to continue, but it also means they are undermining legitimate Canadian businesses. In my community, local newspapers are struggling because they have to pay the assortment of taxes, which are part of the common good to contribute to the country, but their competitors do not. The digital tax havens have a profound negative impact on local community resources and cultural industries, yet the Liberals are doing nothing.

    When we talk about aggressive action on tax havens, we are also talking about aggressive action on these digital tax havens, where tens of billions of dollars in profit are made in Canada without a cent of taxation being paid. This is something that absolutely needs to change. We can do better.

Transcription in progress / Transcription en marche

    We are giving the Liberals a second chance. Last March 8, we presented a motion in the House of Commons. It was presented by my colleague from Rosemont—La Petite-Patrie and seconded by my colleague, the member for Sherbrooke, to work to crack down on the incredibly abusive use of the stock option deduction loophole and to take aggressive action against tax havens. The NDP motion passed overwhelmingly.

    Since then, we have actually seen the government backtrack, so we are giving the Liberals a second chance today. Over the next few days if they will vote for our motion next Tuesday, what we are saying and what over 90% of Canadians are calling for, is that in budget 2018 that is coming down in the next few weeks, that the government crack down on the use of the stock option deduction loophole and take aggressive action against tax havens. That is what we believe needs to happen.

    Why is that? We believe very strongly that we are seeing in this country unprecedented inequality. We see this every day. Certainly the statistics are very clear about this as well. We have learned in the last few months that two wealthy Canadians, David Thomson and Galen Weston Sr., now have the same level of wealth as 30% of all Canadians, that is 30% of all Canadians put together have the same wealth as two Canadian men.

    A great deal of why we are seeing that massive increase in inequality is due to the fact that we have an income tax system that is stacked against regular Canadians. We saw just last month figures that show that the average income of Canada's wealthiest CEOs is 200 times that of the average Canadian worker. There is no doubt that we are seeing a massive increase in inequality under the current government. We are seeing more and more wealth concentrated in fewer and fewer hands.

    Regular Canadians are seeing record family debt loads. The figures from Statistics Canada do not lie. Consumer credit, excluding mortgages, now has reached the level of $.6 trillion--$600 billion that Canadian families owe. The average Canadian family now has a record debt load, even worse than under the former Harper government and we are seeing that debt load is increasing. We are now number one among the industrialized countries. That is a crushing level of family debt. What measures has the government put into place to address the income tax inequality? There is the stock option deduction loophole and tax savings. Since we adopted that motion on March 8, we have not seen much action at all.

    When we talk about the stock option deduction loophole, we are not talking about something that is spread out among Canadians generally. I am going to refer to the Toronto Star of January 8, 2018, which said the following in its editorial talking about this issue around tax fairness. It said: The widening wage gap that we are seeing in this country with CEOs earning 200 times that of the average Canadian worker requires that we need to move forward promptly with tax fairness. It has identified as well the stock option loophole. I will quote from the article:
Currently compensation received in the form of stock options is taxed at a much lower rate than regular income. The tax rate was conceived in part to help capital startups attract top talent, but has been co-opted by executives at established companies as a way to reduce their tax load. Until recently, Ottawa lost about $1 billion every year through the loophole, more than 90% of which went to the top one per cent of earners.

    They cite that in 2013, for example, 75 of Canada's 100 top-paid CEOs received part of their income as stock options. This allowed them to accrue combined savings of $495 million, or $6.6 million each. That is half a billion dollars of foregone revenue to subsidize 75 very rich people, half a billion dollars of government funding that provides support for 75 of Canada's richest people. We can do better. We can take those funds and make sure that those very wealthy people pay their fair share of income tax and ensure that we are taking care of regular Canadians. That is what we propose.

    When we talk about the stock option being concentrated, half a billion dollars going to subsidize 75 very rich people, they can see that the harm in taking that out of the income tax system to give to the wealthy has a profound impact on Canadians. However, that is not all, and CCPA has outlined this in very effective terms. When we see what has happened with the corporate income taxes, we also see that corporate income taxes are decreasing as a percentage of what is paid compared to regular Canadians but also in terms of the overall effective corporate income tax rate. The CCPA outlined in its study last year that the effective corporate income tax rate in 2017 under the current government is now much lower, 9.8% after preferential tax considerations are included. That is 9.8% in terms of what the effective corporate income tax rate is for the corporate sector.

    I can assure members that people who are plumbers, construction workers, childcare workers, or nurses are not paying a 9.8% effective income tax rate. Canadians like my family who pay their fair share of taxes, work hard and they want to contribute their taxes because they believe that contributes to the common good but that common good is being undermined by the increasing inequality that we are seeing and an income tax system that is profoundly unjust. It is not an income tax system that is fair in any way, shape, or form. It is an income tax system that increasingly takes away from those who really need the supports of that common good, those common investments that Canadians make, and instead provides those investments as we have seen to the tune of half a billion dollars for 75 of Canada's wealthiest CEOs. When we passed this motion last year, we expected the government to take action; it has not. However, the Liberals now have the opportunity with our motion today to take action in the budget in 2018 and crack down on the abusive use of the stock option deduction.

    We also talked in our motion last year about tax havens, which is an increasing problem in terms of money going offshore, money that should be paid as income tax in Canada. Part of the reason we are seeing such a low effective corporate income tax rate is because of the use of tax havens, money being transferred offshore to the tune of hundreds of billions of dollars. The tax havens are a growing problem, and I will explain why in just a moment, but what we are seeing through the use of the tax havens is at a minimum $10 billion a year that could be used for so many other things, including affordable housing, providing medication to Canadians, ensuring that childcare is supported when we are seeing extraordinarily high costs for childcare for the average Canadian family. All of those things would be taken care of if we actually ensure that the income tax system is fair. However, $10 billion a year at a minimum—and estimates run far higher—is now escaping from Canada Revenue, which means that the common good, those investments that we put and that we make together, are simply being lost.

    In addition, we are seeing the use of a new tax haven format, and that is the digital tax haven. Our parliamentary leader and revenue critic has been raising this issue, as have I, repeatedly in the House of Commons. In the digital field, we are now seeing big digital players like Facebook, Netflix, and Google making billions of dollars in Canada and not paying a cent of tax. It is a new format for the Liberals, a digital tax haven, which allows for tax-free profits and tax-free money. They are not even paying the GST, which is a double problem.

    Not only do we have these new digital tax havens created by the Liberals, which they allow to continue, but it also means they are undermining legitimate Canadian businesses. In my community, local newspapers are struggling because they have to pay the assortment of taxes, which are part of the common good to contribute to the country, but their competitors do not. The digital tax havens have a profound negative impact on local community resources and cultural industries, yet the Liberals are doing nothing.

    When we talk about aggressive action on tax havens, we are also talking about aggressive action on these digital tax havens, where tens of billions of dollars in profit are made in Canada without a cent of taxation being paid. This is something that absolutely needs to change. We can do better.

    J'ai mentionné il y a quelques minutes la question des paradis fiscaux. J'ai déjà parlé un peu de toutes ces questions relatives aux paradis fiscaux digitaux. Depuis que cette motion a été adoptée l'année passée, on voit que les libéraux sont très agressifs, mais pas contre les paradis fiscaux. Ils font plutôt la promotion de ces paradis fiscaux. Ils signent une entente après l'autre pour élargir le champ des paradis fiscaux. Or, 90 % des Canadiens ne sont pas d'accord avec eux. Pourtant, c'est ce qu'ils font. Ils élargissent le champ des paradis fiscaux.

    Justement, l'année passée, ils ont ratifié un accord avec les Îles Cook, qui est un paradis fiscal du Pacifique Sud. Selon Marwah Rizqy, professeure à l'Université de Sherbrooke, « ce devient un autre endroit où ce sera stratégique pour les entreprises de s'incorporer et rapatrier les profits libres d'impôt. » André Lareau, professeur de fiscalité internationale à l'Université Laval, a dit: « Avec l'entente que les libéraux viennent de signer, c'est choquant de constater que le Canada adopte une approche qui lui fait perdre son pouvoir d'imposition. » Ces citations viennent d'un excellent journaliste, Boris Proulx, du Journal de Montréal.

    Les libéraux ont élargi le champ des paradis fiscaux, en adoptant un autre accord avec un autre paradis fiscal, ce qui va nous faire perdre encore plus de ces biens communs faisant partie de la fiscalité commune. Cela va donner aux entreprises encore plus de possibilités.

    Cela ne s'arrête pas là: la semaine passée, nous avons su que les libéraux ont signé une entente avec Antigua-et-Barbuda, un autre paradis fiscal. Dans l'entente, on dit très clairement que « Une fois en vigueur, l'accord déclenchera l'application des dispositions de la législation fiscale du Canada, qui permettent que les revenus tirés d'une entreprise exploitée activement par une filiale étrangère d'une société canadienne à Antigua-et-Barbuda soit payée à la société-mère canadienne sous forme de dividendes exonérées de l'impôt canadien. »

    Dans l'accord, le fonctionnaire, qui, de toute évidence, ne parle pas français, a gardé la mention des Îles Cook pour dire que cet accord s'applique aux entreprises des Îles Cook. Effectivement, c'est la même entente que celle signée avec les Îles Cook, sauf qu'on a changé les noms, mais ce n'est pas très bien fait. Par exemple, on a changé les noms pour ajouter Antigua-et-Barbuda.

    La semaine passée aussi, on a signé un accord avec la Grenade, un autre paradis fiscale notoire. C'est le même type d'entente. Encore une fois, c'est un copier-collé. On voit que les Îles Cook apparaissent toujours dans cet accord.

Transcription in progress / Transcription en marche

    We might ask what the impact of this is. Let me speak to the impact of a couple of cases that I know of.

     John, who lives in my riding, has paid his taxes all his life. He managed to accumulate a small pension. However, with the increasing cost of rent, and because there has been no investment by the government into affordable housing, he found it more and more difficult to pay his rent. Can members imagine the impact of realizing that we are not able to keep the apartment that we have loved for so long, after working all of our life, after paying our taxes, and after establishing a modest pension? He had to leave. He could not pay for his apartment, so he shared a one-bedroom apartment with a friend. He slept on the couch. That worked for a time. However, these seniors who were trying to share that cramped living space just to keep a roof over their head were unable to. He was then found by an outreach worker sleeping on the floor of a parking lot in downtown New Westminster because of the lack of affordable housing from the government. When the government gives away tens of billions of dollars, allows tax havens to prosper, and allows 75 CEOs to get $6 million each from a stock option deduction, that has an impact on people like John.

    Let me talk about Jim. Jim is just outside the Parliament. Any MP here could go and talk to him. He is on the bridge between the Château Laurier and East Block. Every day he has to beg because there is no pharmacare and he has to pay $600 a month for the medication that keeps him alive. I said to him this morning, “Jim, I'm going to talk about you in the House of Commons.” He said, “Yes, go and fight on my behalf. We need fair taxes and a government that actually cares about us.” Jim is hurt when we send tens of billions of dollars overseas and we cannot pay for a pharmacare program in this country.

Transcription in progress / Transcription en marche

    Madame la Présidente, le gouvernement a attaqué un groupe: les personnes handicapées. Il supprime le crédit d'impôt pour les personnes handicapées. Le gouvernement leur demande de rembourser certains montants affectés au régime enregistré pour personnes handicapées.

    Je vais parler d'une autre personne, mais je ne donnerai pas son vrai nom. Je vais l'appeler Idette. Elle est atteinte du cancer et elle a un enfant handicapé.

    Au lieu de s'attaquer aux paradis fiscaux, le gouvernement actuel demande à la famille d'Idette de rembourser tous ces montants parce qu'il a changé les critères d'admissibilité au crédit d'impôt pour les personnes handicapées. Les libéraux ne s'attaquent pas aux paradis fiscaux, ils s'attaquent aux personnes handicapées.

     Nous pouvons faire mieux. Nous pouvons établir un système dans lequel les gens, comme Idette, Jim et John, sont traités équitablement et dans lequel nous avons un système d'impôt équitable.

The final story I am going to talk about is Jagmeet Singh. He is the new leader of the NDP. He was not born with a silver spoon in his mouth. He had to work when his father fell ill and be the breadwinner for his family. He has grown up understanding that one has to work hard and contribute to one's community. That is what he has done all his life. He has a different vision. He believes that we need to establish a fair income tax system. Like the 90% of Canadians in a most recent poll done by Canadians for Tax Fairness and Leadnow, he believes that we need to shut down these tax havens, and the digital tax havens as well. He is the kind of leader that we need in this country. He is the kind of person who understands that the Jims, Johns, and Ediths of this country should not be pushed aside but rather supported by the government. That is really what this debate is about today. It is not about the mechanics of money around stock option deductions, tax havens or digital tax havens, it is about how Canadians are treated, whether they are treated fairly or not. They have not been treated fairly by the government. We can do so much better. The current government could do so much better. In the budget that will be coming in a few weeks' time, it should crackdown on the stock option deduction loophole, and take aggressive action against tax havens and digital tax havens. I hope it does that.