GOVERNMENT ORDERS

SUPPLY

ALLOTTED DAY-CAPITAL TRANSFERS

That this House condemn the federal government's refusal to reveal the full facts on the tax-free transfer of two billion dollars out of the country and its decision instead to

attack the credibility of the Auditor General while opening the doors to other capital transfers that will deprive the federal government of hundreds of millions, and possibly billions, of dollars every year.

The Acting Speaker (Mr. Kilger): I hesitate to interrupt the hon. member simply to ask him to co-operate. I am aware that the issue raised by the Hon. Minister of Justice, to which both opposition parties have responded, is of great if not paramount importance for all members of this Parliament.

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However, I must ask the hon. member to co-operate and stick to his motion so the debate remains relevant. With all due respect, despite its importance, the other issue should not be dealt with on this opposition day but wait for another opportunity here in this democratic House.

So I simply ask you to please co-operate and keep to today's motion put forward by the hon. member for Saint-Hyacinthe-Bagot.

Mr. Loubier: Mr. Speaker, I apologize. I sometimes have trouble controlling my emotions, especially when deeply hurt by the comments made by some of our colleagues.

I am happy to rise today to speak to a matter I care deeply about, namely the scandal condemned by the auditor general on May 7, whereby a rich Canadian family managed, in December 1991, to transfer a $2 billion family trust fund to the U.S. without paying a penny in tax on the capital gains from these assets.

This rich family was able to transfer its assets tax free because of a so-called advance ruling by Revenue Canada. It is important to understand what an advance ruling is. Wealthy taxpayers-and it is essentially they who are involved financial operations of this nature and this magnitude-can ask Revenue Canada for an advance ruling on an interpretation of the Income Tax Act in order to protect secure a financial transaction or their own interpretation of the Income Tax Act.

This advance ruling, which was made on December 23, 1991, when everyone was busy partying, was based on a distorted analysis out of touch with the realities of tax laws by senior officials from the revenue and finance departments.

Several unusual facts relating to this issue lead us to believe that the government has some things to hide, that it does not want to shed light on this episode. Indeed, even though the decision was made under the previous Conservative government, it may be that friends of the Liberal Party of Canada, major contributors to the Liberals' election fund, very rich and influential people who gravitate around the centres of power, such as the offices of the Prime Minister and the Minister of Finance, have had some influence, with the result that, today, the government wants to hide things.

The first unusual fact is that senior officials from the revenue and finance departments had several meetings before issuing this ruling. During those meetings, they leaned on one side or the other. First, they said that the family could not transfer to the United States these assets of $2 billion tax free. However, in the end, on December 23, after numerous representations had been made by the tax experts representing the rich family involved, Revenue Canada issued an advance ruling allowing this scandal to take place.

Oddly enough, there are no minutes of these meetings, no report, no written account of the arguments put forth by the two sides before such a distorted interpretation of the tax provisions was made.

The second unusual fact is that, to this day, the ruling, which may have cost hundreds of millions of dollars to Quebec and Canadian taxpayers, is not supported by any technical analysis. There is no technical document.

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When it wants $50 from middle and low income taxpayers, Revenue Canada does not beat around the bush. It issues a notice and sends a long letter explaining that an amount of $50 is due and payable. However, when hundreds of millions of dollars are at stake, no technical document is to be found.

The third unusual fact is that, for almost a week, meetings took place from morning until evening. On December 23, during the holiday season, while everyone was at home relaxing and celebrating Christmas and the New Year, some public servants were at work. The result was that, on that day, Canadian taxpayers' goose was cooked. Quebec and Canadian taxpayers are the ones who, through their taxes, must pay the hundreds of millions that were not paid by the family that transferred $2 billion to the United States.

Two days before Christmas, a family in Canada had additional reasons to celebrate, following Revenue Canada's ruling. However, all the other Canadian families would, had they known about this-because the government kept it a secret-have been saddened by the shameless attitude of senior public servants, who probably acted with the complicity of those in office at the time.

Another strange thing: while all advance rulings by Revenue Canada are normally made public, available to everyone, it took until last March 21, five whole years, for this advance ruling delivered in December 1991 to be made public and for the auditor general, on the basis of this very information, to bring to the public's attention this two billion dollar scandal. Five years.

Do you know what this means? It means that Revenue Canada had things to hide, because it is truly incredible that all these advance rulings were made public over the last five years with one exception. Oddly enough, it was the most important one. Oddly enough, it was the one that is costing Canadian taxpayers hundreds of millions of dollars. It is definitely rather strange.

This implies as well that for five years a small group of people knew, but that the bulk of the public did not. What is the word for this? In the United States, they would be described as insiders, people who were able to profit from their knowledge of the existence of the December 1991 advance ruling, of the existence of an erroneous interpretation, but one given by Revenue Canada regarding certain tax provisions from which others in their limited little group could have profited.

It means that the tax experts representing the very rich Canadian family that transferred its two billion dollars to the United States had a secret, a golden piece of information that they could sell all over the place to other rich Canadian families, because let us not forget that this 1991 ruling served as a precedent.

It means that, for five years, other rich families in Canada were able to profit from this advance ruling, in order to do exactly the same thing as in the case that concerns us, which is to not pay a cent of tax, and have the rest of Canadian taxpayers compensate for the fact that they were able to transfer billions out of the country.

Another strange thing in all this is the attitude of government representatives. When the auditor general made this case public last May, he did so in connection with the work of the House of Commons public accounts committee.

The public accounts committee is the committee that looks at all the recommendations, as it will today with the auditor general's new recommendations, and the public accounts committee examines all the chapters in the auditor general's report, analyzes each of the recommendations, and calls witnesses, as well as looking into the various scandals uncovered by the auditor general, involving spending or the numerous examples of waste in the departments, for instance, or situations such as those that concern us today-a misinterpretation of the tax act. This is the mandate of the auditor general.

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As for the information made public by the auditor general, you have seen the performance before the public accounts committee by the Liberal representatives, including the hon. member for Brome-Missisquoi. You have seen them tearing out their hair in front of the cameras, sending out press releases about how they were going to get to the bottom of the circumstances surrounding this advance ruling, the circumstances which made it possible to avoid taxes because of a loophole in the Income Tax Act.

Two days later, the hon. member was nowhere to be found. The story was that he had been called back to his riding on a very urgent matter, and could not get back until the next week. Finally, he was absent for two weeks. He could not be reached. And why? Because he had received an order from higher up. He had been given orders from higher up to button his lip, because some people linked to the Liberal Party, perhaps even to the PMO or the office of the finance minister, had, or might have, profited directly or indirectly from this ruling. So he was told to keep quiet.

After that, everything went haywire. The Minister of Finance announced he was transferring the case of the two billion dollar trust to the finance committee, so that such an ambiguous situation-as he referred to it- would not be repeated in future. He called it an ambiguity in the tax law, whereas it is not; it is clear that government employees were not entitled to make the interpretation they did.

By transferring the matter to the finance committee, the Minister of Finance was merely clouding the issue. And why? Because the finance committee is not mandated to cast light on a specific case, whereas the mandate of the public accounts committee is to carry out a thorough investigation, to virtually convert itself into a royal commission of inquiry. As for the finance committee, it is not concerned with the day to day administration of tax policy, as the public accounts committee is. Nor does it investigate cases raised by the auditor general. Its focus is on the changes in taxation policy.

By transferring the case to the finance committee, the finance minister certainly was aware-having been an MP and the Minister of Finance long enough-that it would not examine the specific case from 1991, but would make recommendations on future changes to policy.

When it did get to the finance committee, the Liberals' attitude was really scandalous. First, the chairman of the finance committee. When the auditor general appeared before the committee, for more than an hour and a half he scolded the auditor general, was derisive and tried to undermine his credibility by taking the floor. This is unheard of in a committee of the House of Commons: a chairman who decides to take the floor for an hour and a half and tell off the auditor general.

The auditor general, and it is important for taxpayers to realize this, is one of the most venerable institutions of this Parliament. The auditor general is the watchdog of the public purse. He is accountable to Parliament, not to the Liberal Party of Canada.

He judges the performance of managers, their good and, especially, their bad decisions, and reports to Parliament. In other words, he is accountable to the people. He monitors public finances and the interpretation of tax laws in the best interests of the

taxpayers of this country. And the only thing the government side did was undermine the credibility of the auditor general.

Recently, this happened again. The report of the Liberal majority on the finance committee, the very report ordered by the Minister of Finance, said, more or less: ``The auditor general had no mandate to do what he did''. However, he did have a mandate to do what he did and he had done so many times. He has examined the interpretation of tax laws at least seven times in ten years.

When the Liberals were in the opposition, they used the cases of erroneous interpretation of the Income Tax Act by senior officials that were raised by the auditor general. Today, they condemn him. They say the auditor general has no mandate.

Second, they said he had no credibility. That is a serious charge. The auditor general watches over the interests of all taxpayers. He is accountable to Parliament and makes departments, ministers and senior officials give an account of themselves, but they say his analysis is not credible. What is their basis for saying so? They rely on the opinion of six experts who appeared this summer before the finance committee. I was there, and six out of eight experts spoke out against the auditor general.

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Do you know why? Because the six of them, all of them, were tax experts representing wealthy canadian families and helping those families to take millions if not billions of dollars out of Canada in order to avoid paying a cent of income tax on these amounts. Now, has anyone ever seen people who are judge and jury shoot themselves in the foot? Of course not, it would make no sense. But the Liberals, pursuing their saga and their objective, which is to hide the inside information in this matter, relied on these experts.

There is more. Instead of closing the gates and saying that this sort of wrong interpretation would no longer be tolerated, they said that this distorted, wrong and cynical interpretation made by Revenue Canada would become the rule. The borders will be opened. Once the government accepts the report of the Liberal majority, wealthy Canadian families will be able to do as they please. They will be able to transfer millions and billions of dollars without being bothered in any way by Revenue Canada. Mr. Speaker, just try to take $ 2,000 out of Canada and open an account in a foreign country to see if Revenue Canada will allow you to do it. Just try.

The attitude of the Liberals in this matter is bewildering but suggests that the government probably has many things to hide.

As I said earlier this week in this House, if we scratch the blue of the decision taken by the Conservatives in 1991, we will soon find some red underneath. In other words, some influential people in the Liberal Party benefited from this decision. Furthermore, the fact that the standing committee on public accounts cannot go into this matter as thoroughly as it would like to and call witnesses, namely senior officials and even politicians who were involved in this decision in 1991, and even tax experts who were around at the time, suggests that the government is trying to cloud the issue and hide things.

The government has something to hide. There might be people in the Prime Minister's office or in the finance minister's office who do not want this thing to become public knowledge, but it is the Canadian taxpayer who is paying for it, and probably for other cases since, as I mentioned before, and this is very significant, the 1991 case has set a precedent for others. As soon as this kind of advance ruling is handed down, and insiders get wind of it, and we are dealing with insiders here and, by the way, insider trading is an indictable offence in the United States, they may use it to other people's advantage. They might have used it to benefit their clients if they worked for tax consultants, for example.

As a result of this ruling, astronomical sums of money are being transferred abroad without any interference from Revenue Canada. In this case as in others that might have occurred, the government must come to its senses and protect the interests of all taxpayers, not only those who are millionaires or billionaires.

[English]

I would like to take this opportunity to announce to the House that the official opposition is currently working to create a vast coalition coast to coast. This coalition will be constituted of unions, elderly people organizations, student organizations, groups devoted to the well-being of underprivileged people, and Canadian citizens who are fed up with the attitude of the federal government on this issue. We hope this vast coalition will bring some sense to the government.

[Translation]

In the meantime, let us hope that it will see the light, it is in the best interest of all Quebecers and Canadians. It is outrageous for the government to attempt to cover up this scandal, hiding behind false arguments, instead of getting to the bottom of it.

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It is kicking a big fuss, trying all kinds of tricks in the public accounts committee or the finance committee to make sure that the truth will never be known.

I would like to take this opportunity to reiterate, on behalf of Quebecers and Canadians, our trust in the institution of the auditor general and the work Mr. Desautels did on this issue and many others.

If there is an auditor who deserves the highest respect for his work and his integrity, and who has in fact been supported by a former auditor general, Mr. Kenneth Dye, it is Mr. Desautels,

whom, I believe deserves to be applauded for his work instead of having his reputation systematically tarnished by an unscrupulous government.

[English]

Mrs. Sue Barnes (Parliamentary Secretary to Minister of National Revenue, Lib.): Mr. Speaker, I am very pleased to make a brief comment at this time. We have just heard the opening speech on this daylong debate.

I want to make it known to Canadians that during this debate they will hear more than the speculations and the fearmongering that we have just heard. I hope they understand that this is an extremely complex area of tax law.

An open public hearing was made at which time unfortunately no evidence was put forward by the members opposite to prove any of their speculations. So what we have today is a debate on the one side where people are looking to find a problem that they could not find when the hearings transpired. We have a tabled report and what we are doing is open to debate today.

I ask Canadians to listen to members from all sides of this House who will give their opinions. I believe the government, acting responsibly and in a balanced manner, will be able to shed some reality in this discussion.

[Translation]

Mr. Loubier: Mr. Speaker, when they talk about reason, when they say that the government behaved reasonably, I must say it is certainly not the case in this instance. Since the very beginning, it is remarkable how many steps, how many measures the government has taken to cover up, to conceal the situation.

Even in the public accounts committee, of which my colleague is a member, they used every trick in the book; motions were submitted, even a motion saying that light would be shed on this issue in the fall was defeated by the Liberals. It takes some nerve to do that. Every time my colleague, the member for Beauport-Montmorency-Orléans and Chairman of the Standing Committee on Public Accounts, tried to raise the issue, he was turned down. They used the finance committee's analysis as an excuse to say: ``Finance is working on it. Once they have done their job, we will see''.

The Standing Committee on Public Accounts has the authority to act almost as a royal commission of inquiry. Until now, I have not sensed a willingness, on the part of the Liberals, to get to the bottom of this issue. On the contrary; the finance committee report, a Liberal majority report, and even the statements made over the last two weeks by the Prime Minister and the finance minister, show clearly that they want to cover up, and not shed light on the issue.

Not only will they not shed any light, but they announced, in the Liberal majority report which has now been recognized as the government's position on the issue, that what was done in 1991, that misinterpretation of the tax legislation, will now become the general rule. From now on, this is how Revenue Canada will officially interpret the tax provisions.

I want to ask Canadians to consider the so-called reasonable attitude of the government. It is not a reasonable but a outrageous attitude. These people practice patronage. I hope that Canadians will see it some day. I hope that those Canadians that are now Liberal supporters will raise the question in their ridings and ask their members of Parliament for an explanation.

Sometimes I look at Liberal members and I wonder if they read the reports of the committees and of their government. Sometimes I hear things and wonder if I have not landed on another planet. I feel they know nothing about the government's positions and their implications. They just go along with everything.

They go along, they applaud, they smile and say: ``My my, we are good''. They are in fact shooting themselves in the foot.

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They are here to represent their constituents but instead, they applaud the government's positions when in fact that government is only protecting a handful of rich friends of the party. That is not normal. I hope they will wake up eventually because this is no way to behave in politics. It is certainly not our way. And it is most unfortunate.

[English]

Mr. Derek Lee (Scarborough-Rouge River, Lib.): Mr. Speaker, the hon. member leads off debate on this important issue today and he suggests that we have a scandal. The auditor general has reviewed the issue. The Standing Committee on Finance has reviewed the issue. The hon. member has spent 20 minutes or so introducing us to the issue in the House. He suggests that it is a scandal but all that he has done has asked questions.

It is a little too late in his remarks to do it but perhaps a subsequent member will address this. However, I wish that someone would please outline what element of the issue constitutes a scandal. I put this to him and I ask for his reaction.

The advance ruling procedure that was used does not create any new law or any new rights. It is simply a decision by the department on what the tax law was at the time.

If this particular trust had simply changed its domicile without seeking an advance ruling, I put it to him: Would not the department have come to the same conclusion in doing an assessment or making the decision not to do an assessment after the change in

domicile had taken place? It would have come to the same conclusion that the tax law permitted the change in domicile without the deemed dispositions that would otherwise have taken place.

Where is the scandal? If there is a problem it may be in the existing tax law. Unless the member can point to a problem, I suggest to him that an advance ruling would have had the same effect as an assessment would have had after the change in domicile of this trust had taken place.

[Translation]

Mr. Loubier: Mr. Speaker, that is exactly what I was saying. The hon. member, my Liberal colleague, did not read the proceedings of the finance committee, did not read the testimony of the people who appeared before the committee, most of all did not read the auditor general's report and did not read the report of the Liberal majority in the finance committee.

There is a scandal because the economy of the legislation concerning taxable Canadian property-it sounds technical, but that is the objective-the economy of the legislation said this concept, which allowed the transfer of some public corporation assets elsewhere in the world, free of tax, was to be applied only to foreign residents, not to Canadian residents.

The concept of TCA, of taxable Canadian assets, was applied to a Canadian family that transferred $2 billion outside the country and did not pay a cent in taxes. When you talk about the proceedings and the experts who were consulted, as I was mentioning earlier, the six experts your friends claim to be are people who represent rich Canadian families and who allow them to export capital.

I will confront you with 15 experts who have no links with rich Canadian families, academic tax experts, people who know their business, and they will tell you quite the opposite. The auditor general did his job, his interpretation of tax legislation is correct, and it is Revenue Canada's interpretation that is wrong.

The proof of the matter is that Revenue Canada issued a notice in 1985 that said that, in a case such as this one, the TCA, transfers of capital outside the country free of tax, could not apply to Canadian residents. And what is rather strange, in 1991, within a week, during the Christmas holidays, while everyone was celebrating, Revenue Canada's decision was changed following discussions with representatives of rich Canadian families. That is a scandal.

The other scandal is the attitude of the government, of Liberal representatives who, instead of shedding light on this and closing the borders to this flight of rich families' capital, open them wide to favour their friends.

[English]

Mr. Maurizio Bevilacqua (York North, Lib.): Mr. Speaker, I listened very carefully to the hon. member from the opposition and I am still trying to figure out exactly what he is talking about. Today he has certainly presented perhaps the weakest case that he has ever presented in the House of Commons.

The auditor general raised important policy questions in an area that Parliament had not really reviewed in over 25 years which related to this issue. The committee as I understand it in turn produced a report and submitted thoughtful recommendations which the government is reviewing carefully.

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I want this to be very clear for those Canadians who are watching the House of Commons proceedings. There is no evidence of large scale capital flight that is depriving this government of tax revenue owed to it. Canada already has tough tax rules for people who leave the country and these tax rules are much stricter than the ones in almost every other country including the United States, the United Kingdom, France and Germany. They certainly are tougher than the ones in Japan.

Does the hon. member think that by repeating the words ``family trust'' and ``scandal'' that somehow he is going to score political points? Canadians are intelligent and clearly they will find that what the hon. member is simply advocating is cheap politics.

[Translation]

Mr. Loubier: Mr. Speaker, there is a scandal, namely the tax-free transfer of $2 billion abroad, when this kind of thing should not have been done. There have been other such transfers since then, and do you know why? Because the Deputy Minister of National Revenue said so when he appeared before the finance committee. He said that the decision on the first $2 billion may have led to other transfers.

The other point is, you are saying we want to score political points, you will see that the points scored will not be not political. The coalition we are setting up includes organizations from across Canada that are very interested in letting the government know they disagree with this. As you will see, this coalition is apolitical and the Liberals in each of their ridings will feel the heat.

The Acting Speaker (Mr. Kilger): In conclusion, I wish to thank the hon. member for Saint-Hyacinthe-Bagot for his understanding and co-operation, which I accept. As he pointed out to the House, the circumstances were difficult.

[English]

Hon. Douglas Peters (Secretary of State (International Financial Institutions), Lib.): Mr. Speaker, I am very pleased that the hon. member has brought forward this motion. I must admit in listening to him for the last half hour I was not sure whether I was listening to ``This Hour Has 22 Minutes'' or that maybe I was on another planet.

This does give the House an opportunity to see in black and white just what the hon. member and his colleagues have been shouting about for the past several days. As is so often the case, this motion makes it clear that the hon. member is rather confused on more than a few points.

The motion asks the House to condemn the government for failing to shed light on various transactions. I will have more to say in a few moments about what those transactions were and how the motion mischaracterizes them, but first I would like to take a look at the suggestion that the government has somehow been concealing things.

The auditor general issued his report on May 7 of this year. The Minister of Finance immediately asked the House of Commons finance committee to look at the important issues raised by the auditor general.

The Minister of National Revenue announced an immediate moratorium on the kind of advance rulings that had concerned the auditor general. That certainly does not strike me, and I am sure it does not strike Canadians, as the action of a government that wanted to conceal something.

The finance committee was given an extremely broad mandate and held several days of open public hearings. The committee heard from the auditor general and members of the auditor general's staff, a total of eight private sector professional and academic experts, and senior officials from the Departments of National Revenue, Finance and Justice.

The committee invited opposition members, including the hon. member who brought forward this motion, and the auditor general to suggest witnesses. During those hearings all committee members, including the hon. member, were free to ask any and all questions and to discuss any issue they saw fit. These hearings were also open to the public. Is there any possible process that could be more transparent than that?

In addition, the committee has tabled its report complete with partially dissenting opinions from the opposition members. The report is over 60 pages long and deals with every one of the issues identified by the auditor general. Again, I fail to see how this indicates a desire to conceal something.

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In response to the committee report, the Minister of Finance said that the government would look seriously at the recommendations contained in both the majority report and the minority reports and would take action once there had been adequate opportunity for consultation. In the meantime Revenue Canada's rulings moratorium would continue.

How does all of this show any reluctance to shed light on an issue? The fact is the government has acted quickly, transparently and appropriately in response to the concerns raised by the auditor general.

If anyone is afraid to shed light on these matters, it is the hon. member and his colleagues. With their unsubstantiated claims of scandals and billions of dollars worth of capital fleeing the country, they are leaving Canadians entirely in the dark about what are the real issues.

This brings me to the next part of the hon. member's motion. The motion talks about a flight of capital; $2 billion in total that left Canada free of tax. It suggests that even more money, billions even, is sure to leave the country as a result of some unspecified thing the government has done or the government has not done.

The hon. member is a colourful speaker and this is a colourful motion. It has a vision of convoys of Brinks trucks lined up at the U.S. border waiting to go south. Colourful as that image is, Canadians deserve better than this. Canadians know that there is no restriction or tax on moving money out of Canada. Apart from a handful of countries with exchange controls, this is the way the last half of the 20th century world is. Money moves freely and we are all the better for it.

Having confused the issue, the hon. member will now back up and say that what concerns him is not movements of money per se, but movements of untaxed capital gains. Somehow he says $2 billion in assets left the country with no tax being imposed. Here again the truth is considerably less exciting and a whole lot more complicated.

The fact is Canada does tax people leaving Canada on any capital gains their property has accumulated. We are one of only a few countries that do this. Our rules in Canada are tougher than the rules in the United States. Our rules are tougher than the rules in the United Kingdom. Our rules are tougher than the rules in France. Our rules are tougher than the rules in Germany. Our rules are tougher than the rules in Japan. Our rules are tougher than the rules in Switzerland and they are tougher than those in almost any other country anywhere else.

We do not tax people who leave with gains on Canadian property. That is because we will tax the gains on Canadian property when they are actually realized or if a tax treaty applies, the person's new country will tax those gains. This is not a loophole. It is not something of which only rich people or only trusts can take advantage. It is a basic part of our tax system and it has been there since 1972. It makes good policy sense. Do not tax on realized gains unless you have to tax. It is not the only policy we could have and the committee has suggested that it be reconsidered. But it hardly deserves the kind of scorn the hon. member is heaping on it.

The issue that Revenue Canada had to rule on in 1985 and again in 1991 under the previous Tory government was whether certain shares were the kind of property which is known as taxable

Canadian property. The issue is a complex, technical one. There was no immediate clear answer. At the end of the day Revenue Canada said the property was taxable Canadian property.

Last May the auditor general indicated that he was concerned that this might not have been the correct answer in a technical sense. As soon as the minister became aware of the auditor general's concerns, he asked the all-party finance committee to look at the issue with the help of experts. He did not hide from the issue. He faced the issue squarely. He did not put it in an expert's hand. He did not do any of those things. He put it in the hands of an all-party finance committee and asked its members to consult the experts, suggest witnesses and come back.

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The committee invited the opposition to suggest those experts who might participate and the expert opinion was overwhelmingly that Revenue Canada was correct. There was no tax free flight of capital. Let me repeat, there was no tax free flight of capital.

The particular taxpayers concerned did not pay any tax, true. That was because they did not owe any tax. I am sure that not even the hon. member who proposed this motion really wants Revenue Canada to collect tax it is not owed.

The motion goes on talk about other capital leaving the country, as though the government had opened some secret door to let people escape tax. That is absurd.

The committee found that in 1985 and 1991 the rulings did not open any new avoidance opportunities. With the Minister of National Revenue's continuing moratorium even in the unlikely event that there was some yet undiscovered, secret way to exploit the current rules, taxpayers could not be certain their avoidance techniques would work because the Minister of National Revenue has put a moratorium on advance rulings.

It is true that there is a flight of capital under way right now. That flight of capital is into Canada. Business people and investors around the world realize Canada is such a good place to invest their money, to do business, and there is a flight of capital into Canada these days.

Regrettably the separatist government in Quebec makes it hard for that province to attract its share of this new investment. It is understandable that the hon. member tries to distract attention from what are the real issues. Those real issues are that the separatist government in Quebec is not attracting the amount of money into Quebec that could have attracted if there was another government.

The simple fact is that this issue, important as it is, does not involve any flight of capital. The issue of tax is not a flight of capital. People come into and leave Canada all the time. Some of them are rich people, and some of them are poor people. Some of them do not owe any tax but that does not mean that our system is grossly deficient, much less that there is some government conspiracy to let people off their legal obligations.

The motion also talks about the government attacking the credibility of the auditor general. The hon. member said that the committee denounced the auditor general. That is simply not the case. That is pure unadulterated rhetoric.

The hon. member is well aware that the report of the finance committee is just that, it is a report of the finance committee. The committee is composed of members of Parliament from all officially recognized parties in the House. The role of a parliamentary committee is a vital one to our democratic process. The work of the committee is the work of its members. Its work does not represent government policy, it represents the work of its members.

The government would not have it any other way. We value the work of the committees of this House. Even the hon. member who put forward this motion would not want to have a system whereby the work of committees was not independent.

By ignoring this distinction I can only conclude the hon. member does not wish to deal with the difficult policy choices that the report implies, not when there is an easy headline, not by repeating irrelevant accusations, not by simply defending the auditor general against non-existent attacks. Those are the tactics of the opposition members and they are certainly irrelevant.

In summary, this motion is an excellent written summary of everything that is wrong with the official opposition's approach to so many complex matters. It ignores the real question. It repeats unprovable accusations. It denounces the government for acting irresponsibly. It simplifies to a point of incoherence some very difficult public policy issues. All of these are untrue. All of these are ridiculous. The motion will be rejected by anyone who believes in parliamentary democracy and believes in the rule of law.

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Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, it is a pleasure to speak to the opposition motion today. As I see it, there are two major issues that flow from the motion and from this whole issue.

First is the government's attempt to redirect criticism for the handling of the affair by blaming the auditor general. That is the first big issue. The second is how confusing Canada's taxation system is, and the failure of the government to provide crystal clear tax policy that prevents disputes of the type we are talking about today. Those are the two big issues.

I want to say a couple of words about this specific incident. What we have here is a curious set of events that led up to the tax ruling in 1991 and a curious set of events that get us to this point in the debate in 1996.

A tax ruling was made that was not made public which had a curious lack of documentation surrounding it. We know that this ruling allowed $2 billion to leave the country in a circumstance where, ordinarily, it may have been taxed. The final point I make with respect to all this is that the auditor general looked at all this and found that there was no wrongdoing.

While there are many unanswered questions, the government has done a very poor job of making tax policy clear. It is very wrong and irresponsible when its members turn around and criticize the auditor general.

The Bloc Quebecois has gone way beyond the pale in suggesting that there is some kind of great scandal here, that Canadians are going to rise up. That is just a little hyperbole on its part.

However, the opposition motion gives us the chance to talk a little more about these two issues, the government using the auditor general to escape accepting responsibility for the lack of clear tax policy and really how confusing our taxation system is.

What I regard perhaps as the most serious of the two issues is the efforts of the government to blame the auditor general and to try to redirect criticism to him so that it does not have to take the heat for not being clear about tax policy.

This has become a theme, really, for the government. I point to the recent responses to questioning by the Prime Minister with respect to the Somalia inquiry. He is blaming the inquiry, in this case, for some of the problems he is having. He is blaming it for taking too long and for being too tough on witnesses.

I see a theme developing where the government is trying to blame other people. In the case we are talking about, its members are blaming the auditor general, an officer of the House and not accepting responsibility themselves. This will catch up with the government so that its members cannot continue to blame other people, particularly independent agencies, when things go wrong.

There is no shortage of incidents where things have gone wrong for the government and I want to talk about a few of those for a moment if I might.

I hate to continue to raise this, but I feel duty bound to do so because it is one of the things people have been talking about the most over the last little while. It is something that Canadians are very concerned about.

I go back to the whole issue of the broken promise on the GST. We had a situation where the government was blaming the media when it came to its broken GST promise: ``Oh no, we didn't promise to scrap the GST. Look at our red book''. Of course, they were on national television doing exactly that. Again, they were trying to shift the blame. They did it on the GST on reading.

(1145 )

The Prime Minister wrote the don't tax reading coalition and said he would remove the GST on reading materials. We have had policy conventions since then, in 1992 and in 1994, where the government said that it would remove the GST on reading. Now the government is trying to say: ``You must have misunderstood. That is not really what we meant at all''. This is despite the fact that it is in Hansard and in all kinds of public documents. Again, the government seems to have a problem accepting any responsibility, just like in this debate over the auditor general and his criticism of taxation policy.

We have a situation where the government promised to provide 150,000 day care spaces but it will not accept responsibility for making that promise. I do not support the government when it comes to providing these day care spaces. We believe that it should take a different tact. However, that is not the issue. The government made a promise in the red book and it is now trying to weasel out of it.

During the recent debate over cuts to the CBC, there is a pledge in the red book which states that the government will provide stable funding for the CBC. The heritage minister has been one of the most vociferous defenders of funding the CBC over the years. On numerous occasions the minister has said that we must protect the CBC. I do not agree with protecting funding for CBC Television, not at all, but that is not the issue. The government is trying to weasel out of its promise. It is trying to get out of accepting responsibility for the promises that it made in the past. Again, that is what it was trying to do with the auditor general.

The auditor general should not be investigating those policy areas, the government is saying, he should not even be looking at all those kinds of things because it makes it look bad. That is too bad. It is the government and it has to start accepting some responsibility.

Another issue where the government is trying to get out of a previous promise and shift responsibility away is on the Canadian Wheat Board. I remember very well during the election campaign when we had the Prime Minister and the current minister of agriculture saying they wanted a plebiscite on the wheat board issue. However, there has been no plebiscite.

We also know that since then they have brought down a panel that was going to review the whole issue of the wheat board, what it should be involved in and should there be options for farmers other than the wheat board. The minister hand picked these people and said he was going to listen to their recommendations. Again he is trying to get out of that responsibility. He and the Prime Minister is now preparing Canadians for the fact that they will not meet their promise. We again have the government trying to slide out of a responsibility, a promise it has made.

It does not end there. I want to talk about the big kahuna of promises, the big promise that the government made during the last election campaign. It was jobs, jobs, jobs. I just want to talk about that in detail for a moment.

The Liberals won the election in part because of a promise to create jobs, jobs, jobs. The issue we are talking about they have again tried to redirect criticism from the public, from opposition parties and from other interested people over the issue of family trusts. They have tried to pin it on the auditor general. However, I fail to see how the auditor general or the Somalia inquiry or any of those other groups are responsible for the complete and utter failure of the government to fulfil its promise to provide jobs for Canadians.

We still have, as we did in 1993, 1.5 million unemployed Canadians in this country. That is a scandal. That is what the Bloc Quebecois should be calling a scandal because that truly is. It is not just the unemployed Canadians, it is the underemployed Canadians: 25 per cent of Canadians underemployed. Half of all Canadians are worried about keeping the jobs they currently have. There is scarcely a person in this country who does not know somebody who is unemployed or very afraid of not being able to get a job when they get of school. There is 15 per cent youth unemployment in this country. There are people with Ph.Ds working at minimum wage in jobs that certainly are well below their qualifications. We need the government to start accepting some responsibility for all these broken promises.

(1150)

Members across the way will say that on average unemployment is going down. That is like saying, as the member for Calgary Southwest says from time to time, that the guy with his feet in a bucket of ice water and his hair on fire on average feels pretty good.

When we talk about unemployment we cannot look at averages. Unemployment in Newfoundland is up around 20 per cent, 25 per cent, 50 per cent, 70 per cent in some communities. That is an absolute human tragedy of monumental proportions. Improvements in the job picture in Alberta do not help the people in Newfoundland one bit. And so we must insist that the government start to accept some responsibility for all the promises it has made.

People in Atlantic Canada, people in Quebec are desperate to find jobs. The government cannot continue, as it has done in the finance committee report, to push the blame on to somebody else. The government of the land is in charge of the levers of power. It makes the decisions. It rode to power on the promise that it would provide jobs, jobs, jobs.

Canadians have a right to know what the government is doing to fulfil that promise, and if it does not fulfil that promise they expect the government to take responsibility, not to shift the blame to somebody else. It is time the government started accepting responsibility.

When a six-year old child does not accept responsibility it is bad. But when adult men and women, capable people, people who are supposedly the cream of the crop, people who make up the caucus and the cabinet of the country, refuse to accept responsibility for promises that are on paper, which they campaigned on, it is scandalous. It is ridiculous.

This government will pay a price. I personally am going to ensure it does. When people make promises like the government has made and refuse to accept responsibility when they do not fulfil them, then they only contribute to the tremendous cynicism we see across the country today when it comes to people's respect for politicians. Is it any wonder people are so disrespectful of politicians today? Hardly.

The government made another promise which it has tried to slide out of, to weasel out of. The red book it states:

A Liberal government will appoint an independent ethics counsellor to advise both public officials and lobbyists in the day to day application of the code of conduct for public officials. The ethics counsellor will be appointed after consultation with the leaders of all parties in the House of Commons and will report directly to Parliament.

We have had situations like when the former heritage minister met clients of his department for a fundraising dinner. We asked that these situations be referred to an independent ethics commissioner. What happened? Nothing, despite the fact that the Prime Minister and the government promised in writing to do that. Another promise in writing, another promise broken. And again the government shifted responsibility and said: ``Perhaps we were misunderstood. We really do not mean the words that are on this paper''.

I do not buy that and Canadians do not buy it either. It is an absolutely ridiculous package of-

Mr. Strahl: Use the right words now.

Mr. Solberg: I have to find the right words-misleading words, which Canadians are simply not going to buy. Canadians are tired of being misled on a whole variety of issues and they are not going to accept it any more.

(1155)

I have talked for a few minutes about one of the two issues that I have identified as being ones that are important and which flow from this whole debate over family trusts and the finance committee's criticizing the auditor general. I have talked about the attempt by the government to shift responsibility over to, in this case, an independent officer of the House, the auditor general. In other cases the government has tried to shift responsibility to whomever it thinks it can.

The second issue I wanted to raise is the whole issue of the confusing taxation system. The government has been in power for three years. Why has it not clarified this particular fine point of taxation law which is so much in discussion and part of the controversy we are talking about today? The fact of the matter is until this issue was raised nobody did anything about it, despite the fact that the government has been in power for three years.

It is fairly clear that Canadians are concerned about how confusing the taxation system is. As the hon. member for Saint-Hyacinthe-Bagot pointed out a few minutes ago, when it is $50 that the average guys owes the government goes after them hammer and claw. It is no secret that the government has actually cranked up its revenue department to go after anybody at all who looks like they have missed including a penny on their taxation forms. There is no question-and I am sure hon. members will attribute to this-that there are more and more people who are complaining to MPs about how vigorous the taxation department has become in scraping every cent out of its pocketbooks so that it can continue to bring more revenue into the government. That is another issue which I will touch on in a moment.

The taxation system is extremely confusing. The Income Tax Act is 2,000 pages thick. There are currently 10,000 cases before the courts on the issue of taxation law. There are all kinds of people who have very serious concerns about the complexity of the tax system.

One of the promises which our party has made is that we would look at the complexity of the taxation system. People have a basic right to understand how the taxation system works. When the government is taking half of a person's money in taxes, it is a basic right for people to be able to understand why the government is taking the money and what it proposes to do with it.

Since this government came to power we have seen 33 tax increases. I have a feeling that people would be a lot more sympathetic to the taxation system in general if overall taxes were not so high. Right now somewhere in the range of 50 cents on every dollar earned goes to pay taxes. That is scandalous. The Bloc Quebecois was talking about a scandal. That is scandalous.

Perhaps people do not realize that since 1983, since the Tories came to power and then the Liberals after them, we have seen

federal personal taxes increase $4,000 a year per individual taxpayer. That is absolutely ridiculous. Then there are excise taxes, which have increased another $1,100 a year.

The finance minister has talked about how he has not raised personal taxes. That simply is not the case. He has raised personal taxes. He has done all kinds of things to do that. There have been 33 tax increases of various kinds since the government came to power. People have felt it in their pocketbooks.

Somebody suggested to me the other day that what should happen for people to really appreciate how much governments are taxing them is for them to write out a cheque every month to send into Revenue Canada for their taxes, as opposed to having those taxes come directly off their paycheques. Then people would come to appreciate just how heavily they are being taxed. Many people understand that.

The average family of four in Canada makes an income of somewhere around $54,000. Roughly half of that, $27,000, goes to pay taxes of all kinds. If someone had to write a cheque to Revenue Canada every month for taxes, it would be well over $2,000 a month. A mortgage payment of $1,000 is a pretty big payment every month. But stop and consider for a moment that people would have to cut a cheque for over $2,000 a month to pay the taxes in this country. It is absolutely outrageous.

(1200)

We talk about people who are fearful for their jobs. We talk about people who are afraid to start a business, afraid to risk any money they have saved. And how can they save very much when taxes are this high? We wonder why we have an unemployment problem in this country. To me it is not a very complicated problem. When we are paying that much in taxes, how is it possible to save the kind of money that is needed to start businesses? It is virtually impossible.

I will give another example of how the government is working against the ability of people to save money and start businesses and create jobs. This is a perfect example of how the government has proceeded with its tax increases.

On April 22 there was a change in the tax rules affecting the notional input tax credit. When I try to explain it, it becomes very complicated and people just throw up their hands and their eyes glaze over. The net effect of it is that it removes about a billion dollars from the bottom line of small businesses. According to some estimates it amounts to a billion dollars a year. That means those small businesses have to find that billion dollars somewhere else.

Where do they find it? They either find it by charging higher prices to consumers and therefore that tax increase is passed on, or they let people go or perhaps close down their business. Again

people become unemployed. The government has done this over and over and over again.

When we are talking about the taxation system and the point I was trying to make a few minutes ago, I think people would be a lot more willing to suffer with a complicated taxation system if they knew that the government was not using the fact that the system was so complicated and so mystifying to people to raise taxes in a surreptitious way as it has done time and time again.

Another good example is the move to limit how much a person can contribute to RRSPs. That is not a direct tax on personal incomes but the effect is exactly the same as if the government put a tax on personal incomes. What happens is that people end up having to pay more income taxes because they cannot save the money they have traditionally saved through RRSPs for their retirement. On the other hand the Canada pension plan is really in trouble and the government's response to that is to limit the amount that can be put into RRSPs so that people can provide for themselves in their retirement.

Why not give people the dignity of being able to save for their retirement? But the government continuously works in surreptitious ways against the interests of people who are trying to provide for themselves, trying to create jobs by starting small businesses, people who simply want to have a few dollars put away so that perhaps they can take a vacation when they get older, put their kids through university and have the things that back in the 1960s and early 1970s people just took for granted.

I do not think Canadians are demanding a lot. They do not want some utopia in the future. They want the same kind of country we used to have. They want a country where there are balanced budgets, where governments live within their means, where there are small governments which are not in their faces at every turn and every step they take.

Canadians want some reasonable division of responsibilities between different levels of government. Do we really need to have different levels of government involved in every aspect of our lives? Do we have to have three levels of government looking after the environment? Do we have to have two levels of government involved in mining, tourism and agriculture? People want smaller government. They want a balanced budget. They want a taxation system they can understand. I do not think it is being unreasonable.

(1205)

Canadians want taxes that are high enough I suppose, in that they are willing to pay taxes to look after some basic social programs. They want health care and some kind of a pension plan. But they do not want taxes going into all these wacky social engineering programs that we have seen in the past. They do not want tax dollars going into job training programs that bear no fruit as we have seen over and over again. They say let people who know how to do it do it.

Canadians do not want to see tax dollars going into regional development programs where we fund all kinds businesses which in turn use those dollars to compete against the people who are the ones who contributed the tax dollars in the first place. That is crazy. We end up putting prosperous businesses out of work or putting them under by subsidizing businesses that have been unprofitable to that point. That is crazy yet the government somehow cannot get the message.

I am grateful the Bloc has raised this issue today. I do think there are two big issues that have come from it and I will just touch on them briefly as I sum up.

The issue of the auditor general reporting on the apparent irregularity in tax law points to a couple of different major issues. One of them is the fact that the government has tried to shift the responsibility away from itself on to the auditor general, someone who has saved us billions of dollars in the past. We only wish that everybody in the government would be so vigilant in finding waste.

The other big issue is our confusing tax system. Our member for Calgary Centre has spent hours and hours speaking to people across Canada about the need to reform our taxation system. We hope that this issue will help bring home the need for government to do that.

I want to conclude by saying a word about the auditor general. It is very important when we have these independent officers of the House that the government think long and hard before criticizing these people. It is no secret that the auditor general and successive auditors general have saved the House billions of dollars over the years.

The one final request I would make is for the government to learn a lesson from the auditor general and to apply the same powers to an ethics commissioner. Then as part of the opposition we would not be talking about all the scandals we have to talk about.

Mrs. Sue Barnes (Parliamentary Secretary to Minister of National Revenue, Lib.): Mr. Speaker, I would like to make a brief comment and then to ask the hon. member a question.

My comment stems from the fact that I have listened to a rambling dissertation. At times I had a problem finding the relevance to today's motion. Nevertheless the hon. member said something that interested me and which I think is very reflective of his party's position on many different topics.

He talked about Canadians wanting the government and country they used to have. I find this a major problem. They are always looking backward. Unfortunately the real responsibility of a government is to look forward. This Liberal government is dealing in business, in tax and in every issue. It is not looking backward but looking forward to the future, forward for a better situation for

Canadians. That includes very deliberate, well thought out, practical management of a tax system, a system that is very complex.

We in Canada are getting more and more of our jobs from international trade. When the Liberals took office one in five jobs in this country depended upon international trade. It is now much closer to one in three jobs in Canada depending on international trade. One of the things that has enabled us to do this, among many others because Canadians are very productive people, is the fact that we have a very sophisticated, advanced and by definition therefore complex tax treatment. I know that simple is the way the Reform Party likes things but some things are complex. Part of the complexity of our tax treatment is the fact that we have to deal internationally.

(1210 )

Many corporations today are international corporations. They do not just do business in one country, they are multinational. This applies also to the people in Canada. Our Canadians are gathered from around the world. We get income and enhancement to our economy from investment from outside of this country. People are also leaving at different stages of their lives. Many people come to this country, work for many years and then retire and leave it. They do not want to dispose of all their property and pay tax at that point in time. Some of them may want to keep property here and have the income flowing from that property. There are very serious complications to the broad range of the Canadian public on these issues.

International tax agreements modify Canadian tax law. That is at the basic concept of what happened here in the report of the finance committee. It was a 60-page document. It dealt with process, it dealt with policy, but at the heart of the document what we have is an understanding that Canada has over 60 bilateral trade agreements. That helps Canadians to do international transactions. In fact, the Canadian tax act is modified by law by the international tax agreements. For instance, with the United States we have 10 years after the migration to collect the tax.

My question for the hon. member is: Does the member of the Reform Party believe in honouring our international tax agreements for the benefit of Canadian citizens?

Mr. Solberg: Mr. Speaker, of course we believe in honouring our tax treaties but I simply must respond to some of the things the hon. member said.

She spoke with some conviction about how wonderful it was to be involved in international trade, how it was providing jobs and that kind of thing. I agree. It is a very important aspect of what we do in Canada.

I am just curious to know why the hon. member and her colleagues fought so hard against international agreements like NAFTA and actually broke their promise to renegotiate it. Again I find it fairly strange. I was talking about broken promises. I thank the hon. member for reminding me of a major one that the Liberals broke which was that they were going to renegotiate the NAFTA agreement. Of course they completely and utterly failed to do that. I do not know who they are going to blame that one on. They cannot blame the auditor general for that one. I guess they will have to accept some responsibility for that one themselves.

With respect to the complexity of the taxation system, we are not suggesting that we can reduce thousands and thousands of pages of tax rulings down to a single page. Hardly. We are suggesting that after three years in government the government should have done something to clarify that particular piece of tax legislation. The government employs batteries of lawyers and accountants. By this point in the government's mandate it is important that it look at all its taxation policies and ensure that there are not big loopholes or at least there are not issues that are up for dispute which would allow people potentially to ship $2 billion out of the country without it being taxed.

The Deputy Speaker: The hon. member for Mississauga South has one minute and then the member has one minute to reply.

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, on the tax issue, the Reform Party has long advocated a flat tax system which allows for a basic exemption, no deductions, very simple. Reformers have also advocated replacing established pension plans with RRSPs. I see the member is nodding his head and he acknowledges that these are two things Reform has talked about.

The fact is that a flat tax approach basically shifts the tax burden from high income earners to middle income earners. How does the member square that system which does not allow deductions, including deductions for RRSPs, with Reform's other position that we should have more RRSPs to deal with pension entitlements?

Mr. Solberg: Mr. Speaker, there is more than one version of a flat tax.

The hon. member for Calgary Centre has presented a version which would include RRSPs and would be a modified version of the present system. It would be far simpler, far less complicated, and people would be able to understand it a lot more. He is just being reasonable. He is saying: ``Let's not throw out everything that we have done up until now. Let's remember that the current tax system is what undergirds different parts of the economy''.

(1215)

If we yank it out in one big sweeping movement, there will be all kinds of implications throughout the economy. He has presented a very reasonable way of simplifying the system, still allowing people to save for their own retirement, especially at a time when

the government has failed to do anything to preserve the Canada pension plan, thus imperilling the future of many Canadians.

[Translation]

Mr. Richard Bélisle (La Prairie, BQ): Mr. Speaker, as we all know, for nearly two weeks now, the Prime Minister and the Minister of National Revenue have either evaded the official opposition's questions about this scandal concerning family trusts or attempted to trivialize the fact that $2 billion were transferred to the U.S totally tax-free.

There is indeed a political scandal when, for three years, a government prevented the auditor general from getting to the bottom of this issue and, after the auditor general finally succeeded in alerting the Canadian public to this financial scandal, the Liberal majority on the finance committee found nothing better to do than to attack this senior official who is accountable only to Parliament.

Instead of shedding light on this issue that reeks of political opportunism and patronage, the Minister of National Revenue has the gall to say that the Bloc Quebecois is misleading the public on this issue. To inform the public is to mislead the public, is that it? The government's approach is really quite amazing.

I would rather take the word of the auditor general, the real ombudsman of those who pay taxes in this country, over that of the Liberal revenue minister. According to the Canadian press, the minister believes that the problem is not family trusts, but rather the rules governing the transfer of funds abroad. What we know for a fact is that $2 billion were transferred outside of Canada without a penny being paid in taxes and that these funds came from family trusts.

The Liberals are out to destroy the credibility of one of the most important institutions of our parliamentary system: the Office of the Auditor General of Canada. In their report, they arrive at a distorted interpretation of the Income Tax Act in order to justify the inconsistency of the revenue and finance departments, relying blindly on the testimony of six experts from the private sector, who are clearly in a conflict of interest position.

In its report, the Liberal majority on the finance committee launched into an unprecedented attack against the Office of the Auditor General of Canada, one of the most respected institutions of our democratic system. Already, during the hearings of the finance committee, we witnessed disgraceful scenes where, for nearly two hours, the chairman himself outrageously and arrogantly attacked the credibility of the auditor general.

Analyzing the auditor general's role and mandate, one immediately sees the limits that the Liberal majority wishes to impose. The Office of the Auditor General plays a key role in making an independent evaluation of the information provided to Parliament by the government. A Revenue Canada ruling, which seems to contravene the spirit of the Income Tax Act, was made in great haste, without any notes or minutes, one December 23, and could cost Canadian taxpayers hundreds of millions, according to the auditor general.

Should this issue be debated in the House of Commons? To ask the question is to answer it.

(1220)

The act setting out the auditor general's mandate is clear. Nevertheless, the Liberal majority attacks it, attempting to discredit his role for purely partisan reasons.

In his 1984, 1985, 1987, 1990, 1992, and even 1993 reports, the auditor general analyzed the application of the Income Tax Act, without anyone at the time questioning his mandate, his expertise, or even the appropriateness of his intervention. Quite the contrary, the Liberals, who were then in the opposition, did not hesitate to use the reports to attack the Conservative government. How is it today that the Liberal majority is systematically attacking a pillar of our system of parliamentary accountability?

The analysis of all the events which followed the tabling of the report underscores the overt partisanship of the Liberal government, which is attempting to hush the whole thing up.

Following the revelations of The Globe and Mail, the government gagged the Standing Committee on Public Accounts by referring the issue of family trusts to the Standing Committee on Finance whose chairman is, of course, not a member of the opposition.

For the Bloc québécois, it is obvious that this change of attitude shows the bad faith of the Liberals, who are trying, through stalling tactics, to hush up the scandal and, through unwarranted attacks, to undermine the credibility of the auditor general himself.

During the two years I was the chair of the Standing Committee on Public Accounts, I remember how much respect all the members, even Liberal members, had for the auditor general. Why this sudden change of attitude? Why have the Liberal members who were sitting or are still sitting today on the public accounts committee suddenly been silenced? This about-face by the Liberals brings us back to the issue of influence exerted by partisan interests and probably by friends of the Liberal Party and contributors to the Liberals' campaign fund.

The conclusion to be drawn from this less than edifying saga for the members opposite is that the government is trying to protect people close to the top who benefited from the generosity of Revenue Canada, or even to hide a possible conflict of interest.

With the tabling of its report, the Liberal majority has shown how little respect it has for parliamentary institutions and has succeeded roundly in fuelling people's cynical view of politicians who are more committed to party interests than to good government.

Let us look at how this truly amazing story has unfolded. The auditor general reviewed two advance rulings on the transfer to the United States of assets worth at least $2 billion formerly held in Canadian family trusts, despite what the revenue minister had to say.

The Standing Committee on Finance was then asked by the Minister of Finance himself to examine the ambiguous provisions of the Income Tax Act pointed out in the auditor general's report. Meanwhile, in order to analyze and interpret the law correctly, the finance committee called several tax experts as witnesses. Now, in its report, contrary to all expectations, the finance committee has endorsed without reservation Revenue Canada's interpretation, and based its findings only on the evidence given by six out of eight experts called earlier this summer to give evidence before the committee without even ruling on the appropriateness of the evidence heard.

The Liberal majority accepted only those comments made by the tax experts who were in a position to devise such a tax planning scheme for their customers. However, the Liberals never saw fit to include in the report the comments made by a disinterested authority, like the distinguished Professor Brooks of the faculty of law in Toronto.

(1225)

The matter the Standing Committee on Finance had to settle was whether what Parliament intended was clear. Can Canadian residents have taxable Canadian property or not? That was the issue at stake.

As the Liberal majority put it in the report, the crucial issue on which the decisions were ultimately to be based was whether such property could be taxable Canadian property belonging to a Canadian resident.

If the answer is yes, then it is possible for a Canadian resident to transfer property abroad and to avoid paying taxes in Canada immediately. In such a case, the taxes will be collected by the American government instead of the Canadian government, if the property transferred is sold more than 10 years after the transfer. However, if the answer is no, as we believe it to be, it means that the concept of taxable Canadian property cannot apply to a Canadian resident and that the capital gain is deemed to be taxable as soon as the property leaves the country.

Up until the advance ruling-because it was an advance ruling Revenue Canada made in 1991-taxable Canadian property applied only to non-residents. In all likelihood, Parliament intended to control the taxation of capital gains earned by non-residents. However, section 85(1)(i) of the Act stipulates that capital stock of public corporations is taxable Canadian property when it is received as consideration for capital stock of private corporations.

That is what the trust argued in its request for an advance ruling. However, according to the spirit of the law, this provision only applies when capital stock of public corporations is bought by non-residents. In the Act, when the application of the concept of taxable Canadian property becomes relevant for a resident, it is usually made very clear, as the following examples will show.

Section 48(1)(a) indicates, and I quote: ``any property that would be taxable Canadian property if at no time in the year he had been resident in Canada''.

Section 107(5) also stipulates, and I quote: ``property that is or would, if at no time in the taxation year of the trust in which it was so distributed the trust had been resident in Canada''.

In its ruling, Revenue Canada mentioned that residents can have taxable Canadian property, which in itself sets a very dangerous precedent based only on section 97(2) of the Act. The Liberal majority report never questioned the use of a single paragraph of section 97 concerning precisely the taxation of partnerships to determine Parliament's intentions on such an important issue.

Rather, the Liberal majority was satisfied with the analysis by six of the eight experts called who, as you will all remember, work for firms involved in such transactions for the benefit of private customers.

The proposal by the Bloc Quebecois could not be clearer: even though the issue is essentially one of the holding by residents of a taxable Canadian property, that matter was never examined by the majority report. Section 97(2) to the effect that Canadian residents can hold taxable Canadian property was never questioned.

Yet, in our opinion, invoking this section to determine the taxation of family trust property transferred outside of Canada is contrary to Parliament's intentions in the case of taxable Canadian property. Only non-residents should be able to use this taxable Canadian property concept, and that is well covered in the Act.

(1230)

Therefore, section 97(2)c) of the Act should be revoked, thus eliminating this type of tax planning, which the Auditor General of Canada so rightly condemned.

Our position is also shared by Professor Neil Brooks, a consultant whose impartiality is absolutely beyond doubt. He said, and I quote:

[English]

``My position is that the ruling the taxpayer received in this case is wrong in law and policy and common sense''.

[Translation]

This could not be any clearer, as was emphasized by Professor Brooks:

[English]

``Wrong in law and policy and common sense''.

[Translation]

Not one of the other expert witnesses challenged this argument by Professor Brooks. Parliament's intentions are crystal clear. Moreover, the auditor general argued that the Act-specifically sections 197(5), 115(1), 128(1) and 85(1)-shows rather clearly that Parliament did not want Canadian residents to possess ``taxable Canadian property''.

Consequently, in view of the auditor general's findings and the experts' testimony before the Standing Committee on Finance, we are compelled now to put forward three recommendations-and, in this regard, I fully support the three recommendations of the Bloc Quebecois minority report as well as the motion on family trusts tabled today by the hon. member for Saint-Hyacinthe-Bagot.

Section 97(2)c) must be revoked to eliminate the lack of clarity pointed out by the auditor general in his report.

The definition of ``taxable Canadian property'' must also be changed as soon as practicable so that residents cannot own ``taxable Canadian property''. This is the simplest and surest way to eliminate any tax avoidance by transferring property outside Canada.

Finally, the 1991 ruling must be cancelled so that no one can ever again refer to it to avoid paying taxes due to all Canadian taxpayers.

[English]

Mrs. Sue Barnes (Parliamentary Secretary to Minister of National Revenue, Lib.): Mr. Speaker, I think it is necessary to comment again on some of the matters that have been raised in the hon. member's speech.

First, the finance committee's report as tabled in the House, a public document, found that there was no loophole or tax evasion involved here. Revenue Canada applied the law correctly.

Second, I must restate that Canada has one of the tightest systems for taxing people who move abroad. The fact that Canada does not tax some gains until they are actually realized is not a loophole. Nor is it a loophole that our tax treaties give us the right to tax some gains and our treaty partners have the right to tax other gains. That is the important main element, the migration of people outside the country. This is what we are talking about here, the tax treatment of these people when they leave the country. There are very definite rules in the Income Tax act.

As a lawyer I have never been told that one subsection has a priority over another subsection unless it states that explicitly. So to say that there is just a little subsection here, so do not bother with it, is ridiculous. The experts backed that up in a very public, open round table meeting that went on for over six hours last spring, and members of the opposition were there.

Again we have a minority report from the opposition members who have brought this motion today which is just politics. It does not state reality. Reality of the Canadian tax law today in Canada is a very complex situation. What any government should do is constantly improve.

The report came up with very definite recommendations for the finance minister to consider. The report has been tabled. Those recommendations are on the table and they will be considered in due course. Canadians deserve the best tax law that we can come up with, but it has to be fair. The process has to be open. We have certainly had an open process.

(1235)

I find it unbelievable that he thinks a policy decision concerning tax should not be debated in the finance committee. He may not even be aware that after tabling his report, the auditor general himself sent a letter off to the chair of the finance committee which stated that these sections of his report were under the purview of the finance committee and that it might want to look at them. That is the reality.

What we have here is politics. I understand that the opposition's job is to play politics. Unfortunately for it, the job of government is to govern and when we govern we govern with the real facts.

[Translation]

Mr. Bélisle: Mr. Speaker, the parliamentary secretary is telling us that it is a public document and that the opposition's objections are of a political nature. I would like to respond to the parliamentary secretary by submitting to him the three following elements.

First, I would like to inform him that the only ones who support the government are six experts out of the eight who appeared before the finance committee. And, as everyone knows, these six experts have very close and direct connections with rich Canadian families. Professor Brooks, whom I mentioned earlier in my speech, did not agree at all with their position.

I would also like to point out to the parliamentary secretary that the group Cho!ces, a newly formed group which agrees with the auditor general's recommendation, intends to challenge Revenue Canada's ruling in the courts.

I would like to add that even if the legality of Revenue Canada's ruling is questionable, I believe that we must also consider the fairness of the ruling for all Canadian taxpayers.

I would now like to point out the third element. As my colleague, the member for Saint-Hyacinthe-Bagot, said this morning, this decision was taken on the sly 24 hours before Christmas. We know that the notice had been rejected by junior officials for a few months in 1991.

Suddenly, 24 hours before Christmas, as the member for Saint-Hyacinthe-Bagot said, when the turkey was on the table everywhere in Canada, senior officials from Revenue Canada and Finance Canada examined the case and, at a few hours notice, allowed the $2 billion out of the country. This is really outrageous.

[English]

The Deputy Speaker: The hon. member for Cariboo-Chilcotin has about a minute to make a question or comment. Then we will move on to debate.

Mr. Philip Mayfield (Cariboo-Chilcotin, Ref.): Mr. Speaker, I would like to begin by thanking the hon. member and the Bloc for bringing this motion to the House today.

I want to know if the members of the Bloc will be pointing to the ongoing thrust of the government for more and more-

The Deputy Speaker: Is the member finished his question? If not, could he please put his question now.

(1240)

Mr. Mayfield: I want to ask how members of the Bloc would have the legislation changed to prevent the government from doing this.

[Translation]

Mr. Bélisle: Mr. Speaker, I agree with what the Reform member is implying. We should immediately change the Canadian legislation, the Income Tax Act, to prevent, from now on, amounts of money as huge as those transferred in 1991 being moved out of the country a few hours before the end of the fiscal year.

I think that instead of trying to put the auditor general on the spot and to prevent him from carrying out his mandate, from acting like a real ombudsman for Canadian taxpayers, the finance committee should immediately review this aspect of the act and prevent, in future, anyone from transferring out of Canada and tax free such amounts of money.

[English]

Mr. Jim Peterson (Willowdale, Lib.): Mr. Speaker, the auditor general reported a short while ago to Parliament on some prior tax rulings given by Revenue Canada, one in 1985 and another in 1991. This report comes six years after the last ruling was given. The essence of his report was: ``The rulings may have circumvented the intent of the law''.

The auditor general was good enough to send me in a letter a copy of his report to Parliament. As chairman of the finance committee I took this very seriously, just as the government took this issue very seriously. Here we had one of the most respected and important institutions and individuals in the parliamentary process saying there might have been a misinterpretation or misapplication of the law as it existed. This is a very serious charge.

Very quickly members of the finance committee called before us the auditor general and his officials and asked him to explain further what had happened. That was not the end of our discussions. We called as well public servants from the office of the Departments of Revenue Canada, Justice and Finance to assist us in dealing with this issue.

In listening to the auditor general here is basically what he said: ``We have absolutely no evidence of impropriety on behalf of Canada's officials. We have absolutely no evidence of political interference, but we still think they misapplied the law''. This is an extremely complex area of the law and as the auditor general said, it is an area of the law which is very ambiguous.

There are provisions in the Income Tax Act which pointed in one direction and there were other provisions which pointed in an opposite direction. I wish it were not so, but our Income Tax Act is very thick and there is not one practitioner in Canada today who can in all honesty say they understand all aspects of that code. The profession has had to break itself down into people who are experts on particular areas of the Income Tax Act. To further complicate the issue, it is not just the Income Tax Act, but on top of that was the overlay of the Canada-U.S. tax treaty which involved a further set of complications.

(1245)

What did we do as a committee? We decided that since the auditor general and his officials had charged that there may have been a misapplication of the law, and since we are not the experts, or could ever hope to be the final arbiters of a dispute of this nature we asked a group of tax experts, not just tax experts in general but international tax experts to come before the committee. The auditor general suggested certain experts. Professor Neil Brooks from Osgoode Hall appeared before us at the request of the auditor general. All opposition parties had an opportunity to suggest who those experts should be.

We asked those experts if the prior ruling given by Revenue Canada officials was a misapplication of the law? Out of the eight experts there, one said it may have been. Professor Brooks said it definitely was. The six others said in no way was this a misapplication of the law. That is what we reported to Parliament.

Overlaying this question of whether this difficult judgment taken by Revenue Canada officials was correct or not was that when the facts were released saying that the prior tax ruling involved some $2 billion having been transferred out of Canada by family trusts to the United States, almost immediately on release of that report, speculation occurred regarding the precise identity of the taxpayer. This raised tremendous concerns throughout Canada's tax community. The essence of our voluntary system of tax compliance and reporting is that the confidentiality of the taxpayer must always be respected. It is a criminal offence to breach taxpayer confidentiality.

Obviously, the auditor general was concerned about this. He presented to us an opinion saying that what he had released had not been a breach of the law. That was never a concern on the committee. The concern expressed to us by Canada's tax community was that, if you cannot go for a prior ruling without fear of having your name disclosed in the press, then why go for a tax ruling? If someone can contest publicly a tax ruling with the possibility that the taxpayer's name can be revealed, what will this do to the ruling process?

The auditor general, in his report to Parliament a couple of years ago, said: ``It is so critical where there are complex and ambiguous laws, the taxpayers need the certainty of prior rulings''. We certainly agree with him.

(1250 )

Something we commented on in our report was that it is critical that any of us as members of Parliament, members of the finance committee, members of the government, members of the public departments, be it revenue, justice or finance or be it the auditor general, that we respect the confidentiality of taxpayers. It behoves us in our actions in the House of Commons and elsewhere to make sure that we respect that confidentiality in order to preserve the integrity of a system of income taxation based on voluntary compliance.

Members of the Bloc Quebecois have tried to make a great deal out of this particular issue. They said that this breach of confidentiality was not because of the release of all of this detailed information to the public by the auditor general but that it was ``because of a source inside the federal government itself that the names were divulged''. Never once did the Bloc Quebecois call that person before us or say who it was. They are alleging that an official in the government breached this confidentiality.

This is casting an aspersion on the entire revenue and finance departments. If they are going to make this charge, then they have the obligation to bring the name of that individual forward other than to dwell on issues of allegation.

Bloc members have said as well that the government muzzled the public accounts committee by transferring the family trust issue to the finance committee. The critic for the Bloc Quebecois approached me and said: ``We want to make sure that the finance committee deals with this issue''. Why would he change his mind? After all it was dealing with provisions of the Income Tax Act. Are they not the purview of the finance committee? Had not the auditor general asked us to look at it? Had not the government asked us to look at it? These are the things that we are supposed to do.

Let us not pretend that we in the finance committee have been trying to block discussion of this issue. We made the offer to all opposition parties to hold any other sessions, to call any other witnesses they wanted. They said that they had heard enough.

What did we do in the finance committee as a result of these hearings? We reported what the vast majority of Canada's tax experts, some of the leading names in the country, such as Davies, Ward & Beck, Goodman & Carr, Ernst & Young, Coopers & Lybrand, the people who deal with these issues on a specialized basis, Davies, Warden & Beck, Stikeman Elliott, people who deal with these issues on a daily basis, told us. They told us that the ruling given by revenue was not wrong.

What did we also find out in our hearings? We found out that before revenue ruled in this particular case it did a couple of things. It called on justice for an interpretation of this complex and ambiguous area in the Income Tax Act. Justice serves as the lawyer to the Revenue Canada officials. Justice said: ``We believe that the way the Income Tax Act reads, taxable Canadian property can be owned by a resident of Canada''. That was the technical issue involved. However, Revenue Canada did not stop with the opinion of the lawyer of the justice department. It went to the finance officials. It asked: ``What do you think is the intent of the law? Can residents of Canada own taxable Canadian property?'' The finance officials said, yes.

(1255 )

I ask members in the House to consider this situation. You are working in the Department of National Revenue and are asked to give a ruling. You realize that it is complex. There are ambiguities. You consult the department's lawyers. Not only that, you go further and find out from finance what it thinks the law was intended to do. Should there be a higher duty imposed on you as a public servant than to consult your lawyers and finance? Should it be the obligation of anybody in any department of this government who has doubts about anything to go and consult the auditor general in advance?

What standard of care are we attempting to impose on our public officials who are not here in Ottawa to get rich? We know they cannot. Public servants have had a freeze on their salaries for five years. If someone wants to get rich he or she goes into the private sector. What standard of care are we as politicians attempting to impose on them? I submit that no higher standard of care could have been exercised by revenue officials when they consulted their lawyers and finance, knowing that the law was not certain.

What did we recommend as a finance committee? We said: ``Auditor general, in spite of the fact that we have some misgivings about the way your disclosures resulted in speculation in the name of the taxpayer and despite the fact that the experts we called before us do not agree with your interpretation of the law, i.e. that it should not have been ruled on such except for Professor Neil Brooks who is a frequent witness before our committee, always at the behest of the Bloc but this time at the behest of the auditor general, while we do not agree that this ruling may have misinterpreted the intent of the law, nevertheless, we think the point you have made before us is critical. We think you have discovered a loophole in the law. We think you have discovered an area where we must act to change the law''.

That is why in our report we have suggested many changes in the law, changes which go far beyond those proposed in the minority report of the Bloc. Our suggestions for plugging the loopholes and for tightening up the Canadian tax net go far beyond what the opposition parties have suggested they would do. Therefore, before they criticize us let them look to their own decisions and maybe reconsider them.

Let us be very clear. Apart from having a very complex and ambiguous tax law in this area, the testimony before us indicated that Canada already has probably the tightest tax net when it comes to taxpayers leaving our country, perhaps along with Australia and Denmark. In spite of that, we recommended that the government act quickly to make that tax net even tighter.

We said that we should look at deemed realizations for all property when a taxpayer leaves this country. We might not collect it immediately because that would be stupid. Sometimes people leave this country and take up residence elsewhere but have shares in a small business which is ongoing or they may own an apartment building or a house. Is it right to charge them the tax the moment they leave the country as opposed to when they actually sell that property?

(1300)

We are not prepared to be stupid. We have to recognize that in our tax systems different individuals and different circumstances have different needs.

We came down fully and squarely against the type of thing that happened, in terms of trusts being able to take large sums out of this country. We have recommended that in the future that type of provision not be allowed.

We have recommended that there be increased reporting requirements for Canadians leaving the country so that in circumstances where the tax system might not otherwise pick up what those assets may be that are subject to future disposition and which we may not be able to track in a coherent way, Revenue Canada has a way of doing that. These recommendations were not pulled out of the blue, they were based on expert testimony we heard.

In conclusion, the majority report thanks the auditor general for having brought these matters to our attention. The greatest compliment, apart from thanking him, we could have paid to him was that we said: ``We do not like the result. We are, therefore, henceforth going to recommend to Parliament that the law be changed''. We, as well as the auditor general I am sure, hope that in the future there will be continuing access to the ruling process and the speculation as to the identity of the taxpayer, the breach in confidentiality, will not have a chilling impact on the need to have these rulings.

I am pleased to report that the auditor general vindicated the integrity of the process and the bona fides of our officials. I believe we have all benefited from having this matter brought to light.

[Translation]

Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr. Speaker, basically, I have four points to make. I think that with time and with the wearing effect of politics, the hon. member for Willowdale, who is chairman of the finance committee, became a misinformation expert.

He said that they took the issue seriously and that the auditor general is one of the most respected institutions, but he does not believe his own words. I say that because when the auditor general appeared before the committee, the member for Willowdale, with the complicity of senior civil servants who took part in the 1991 advanced ruling allowing the transfer of $2 billion outside of Canada tax free, tried for an hour and a half to give him hell, catch him off guard and undermine his credibility.

That continued when the liberal majority report produced under the direction of the chairman of the finance committee was made public. What do we find in that report? Two things. A major part of it continued the attack on the reputation of the auditor general. He was accused of violating confidentiality rules when the leak, mentioned in the Globe and Mail a few days after the auditor general made the scandal public, was traced back to Revenue Canada. Maybe there are civil servants who have had enough of the establishment and the complicity between the decision-makers responsible for those advanced rulings and the wealthy Canadian families. I think that is the truth of the matter. The report denigrated the auditor general.

One other example of misinformation is the statement by the chairman of the finance committee, the hon. member for Willowdale, that the Liberal proposals go farther than those of the Bloc. Sure they go farther in the sense that they open wide the doors to massive capital transfers for Canadian millionaires and billionaires. They certainly do go farther.

We are saying that this loophole must be closed. We must put an end to twisted interpretations, such as the ones we got from the senior officials who made this shameful decision in 1991 without doing a technical analysis of the Income Tax Act and without taking the time to write the minutes of the numerous meetings they had for one week until December 23, 1991.

As for the experts, here is another thing that goes against the credibility of the chairman of the finance committee. He is the one who invited these experts. Six of the experts that were at that table were invited by him.

(1305)

These experts have no credibility whatsoever, as far as I am concerned. Do you know why? Because they come from the very tax consulting firms which help rich Canadian families transfer their money out of the country. On the word of these six experts chosen by the chairman, chosen by the establishment of the Liberal Party of Canada, the Liberal majority report says there is no problem, there are no capital transfers.

Finally, when the member for Willowdale and chairman of the finance committee says that the financial community is worried, I can understand why because, for the first time in a very long time, the auditor general and the official opposition have uncovered a scandal, a conspiracy that has been going on for decades between the deputy ministers, the assistant deputy ministers and the senior officials responsible for advance rulings and the rich Canadian families who want to take money out of the country. That was the concern of the financial community.

I will never forget a certain Mr. Goodman, a tax expert invited by the Liberal Party of Canada, by the chairman of the finance committee, who said: ``The auditor general should have never informed Canadians of these kinds of things. They are far too complex''.

What that expert was saying really is that, when dealing with complex issues, it is better that the public be kept in the dark. When these kinds of scandals occur, they have to be hidden. Even the auditor general, who is accountable to Parliament, to the people, and who is the watchdog of our public finances, should have kept his mouth shut because it was outside his mandate. That is the reality of the situation.

It bothers me when I hear remarks like the ones made by the chairman of the finance committee, which I think are misleading and are the reason why this man is losing even more credibility not only with his own committee members, but also with Canadians. The picture painted by the chairman of the finance committee is totally contrary to the facts.

[English]

Mr. Peterson: Mr. Speaker, there are a number of points which have been brought up by the hon. member.

First, he said we are saying there was no flight of capital, that through the committee process we were involved in a flight of capital. What took place was under a former government. The majority side on the committee said there was a flight of capital but we must stop it. We are the ones who are saying this is not right and we have recommended the changes to the law.

I find it passing strange that the hon. member, the chief financial critic for the Bloc, would say the experts who were called before our committee have no credibility whatsoever. In the same breath he said the Liberal majority attacked the message bearer, the auditor general.

Let me be very clear. It was not an attack. It was a mild rebuke. We criticized the way the auditor general released the information which led to speculation as to who the taxpayer was and according to the experts before us could put a chill on the entire ruling process.

We accepted the rulings. All the experts said that the ruling given by Revenue Canada had been proper in the circumstances. A fundamental aspect of our report was that we accepted his criticism of a system that allowed that money to escape and we recommended the loopholes be plugged.

I find it passing strange that his only attack on our report was that we attacked the auditor general. We said exactly what I have just said.

The member, as did all members, had the opportunity to bring other experts before our committee to deal with the precise complex and ambiguous tax provisions in question. Why does he attack them? If he did not like them he could have brought others. He had that opportunity. So for him to say we were attacking the messenger is fundamentally how he is attacking our report. He said he did not like the message and that these experts who came before us were not able to give us proper advice.

(1310)

To say that, he is attacking the basis on which some of the biggest and finest auditing companies and legal firms in this country act. Their opinions have to be right. Their opinions are relied upon by shareholders, taxpayers, by others, by the people who buy shares in public companies. Their integrity and their wisdom are critical to this process.

For him to attack the messengers the way he said we were, which is a total mistake, a misinterpretation of the situation, is to me totally inconsistent. I wish he would stick to the issues and I wish he would join us in urging the government to plug these loopholes as quickly as possible.

[Translation]

Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, our Liberal colleague, the chairman of the Standing Committee on Finance, continues to insist that the present government is not

touched by the December 1991 ruling, because the ruling was made under the former government.

If that is true, why is the present government refusing to shed light on everything that preceded this meeting? Why does it approve of the fact that there were no minutes? Are we to understand that this shows better than anything that they could say that Canadian Conservatives and Liberals are as alike as peas in a pod, that they owe their existence to the same slush fund, that they are both in cahoots with financial circles, as was clear one evening when I took part-as I will tell you shortly-in the farce at which leading Canadian lights that advise wealthy families came to tell elected representatives and the public that they should mind their own business, that we were attacking the integrity of the Canadian tax regime?

I would like our honourable colleague, whose arrogance occasionally creeps through, to comment on this.

[English]

Mr. Peterson: Mr. Speaker, the hon. member is alleging that we were trying to cover things up. The official opposition, the Bloc Quebecois, was asked whether it had any witnesses to bring forward. We said we will deal with any of these issues. We wanted it fully dealt with in the finance committee, just as the Bloc had asked us to deal with it fully in the finance committee. We contacted it a number of times and it said ``no, we have no more witnesses''.

How could we be the ones who are trying to cover up things when we opened it up to discussion of any sort? We called the witnesses asked for by the Bloc, the Reform and the auditor general. We asked them: ``Do you want to have any more hearings or can we get to the report stage on this issue?'' That is not a cover-up. Would they please quit making innuendoes and allegations which have no foundation whatsoever.

[Translation]

Mr. Maurice Bernier (Mégantic-Compton-Stanstead, BQ): Mr. Speaker, before addressing the motion before us today, I would like to begin by informing you that, henceforth, the Bloc Mps will be dividing their time into two periods of ten minutes, and that my colleague from Trois-Rivières will be speaking immediately after me.

(1315)

When the matter of the family trusts resurfaced to become a source of concern to all Canadians and all Quebecers, thanks to the efforts of the members of the Bloc Quebecois-I shall come back to this point-and when the official opposition suggested that this opposition day be devoted to the matter of family trusts, I made it known to my colleague from Ste-Hyacinthe-Bagot that I wanted to intervene in this debate. I am far from claiming to be a tax expert, which is why I will let others explain the matter in detail-as my colleague for Saint-Hyacinthe-Bagot has already done on several occasions, moreover-but I would like to draw the attention of this House to the context surrounding this whole affair.

This matter of family trusts is one that has been of concern to the Bloc Quebecois almost since its inception. In the last campaign, the Bloc raised the issue on numerous occasions. After the Bloc obtained 54 seats and gained recognition as the official opposition in this House, the Leader of the Opposition at that time, Mr. Bouchard, raised the question of family trusts on a number of occasions during his interventions in this House.

The auditor general's report fully justifies our concerns, proving that we were right to raise the issue in recent years, while the Liberals on the other side of this House have clearly sought to stifle this shameful scandal by every means possible.

I just heard the hon. member for Willowdale. I suggest that he audition for the festival ``Juste pour rire'' next year in Montreal, or ``Just for laughs'' if he prefers, since there is an English version, because his comments outside this House, in committee and here in the House today should be good for laughs. We cannot afford to take them seriously.

The auditor general put his finger on a major problem in the tax system. The government may argue that the loophole pointed out by the auditor general goes back to the previous government. As the hon. member for Trois-Rivières just said, if the Conservative government was responsible, why is this government reluctant to shed every possible light on the problem?

It is pretty obvious, and this has been said time and time again, that there is only one reason why the government does not want to shed light on the matter. It wants to protect its own interests and the interests of those who support it. It is a big joke to hear the hon. member for Willowdale describe these experts as people whose credibility is undisputed, although it is public knowledge that they belong to companies that finance the Liberal Party and the Conservative Party. That is public knowledge. It is not gossip or libel. It is a fact that representatives of these companies finance the Liberal Party.

(1320)

For the government to invite experts like these, competent though they may be, is like inviting some foxes and asking them for tips on protecting the chicken coop. That is what happened. They invited experts who consistently provide funding for the Liberal Party and told them: ``Could you tell us whether it is right to take money out of Canada and invest it elsewhere, to avoid paying

income tax?'' It would have been astonishing indeed if the experts had not answered the way they did.

Take the Minister of Finance. A week ago on Radio-Canada, a journalist asked him whether he had a family trust. He answer is on the record-and I took the trouble of listening to the news bulletin again to be sure I did not misquote him-and it was as follows, and I will quote him verbatim: ``There are many family trusts. When you have young children, you do that. In case I die, I would want someone to take care of my children''. But that has no connection with income tax.

When he said this, the Minister of Finance admitted that he himself had a family trust, and that the reason was to protect his children. But who in this House will protect the children of the unemployed, victims of cuts that have been made for the past two or three years? The same finance minister says, admits in each budget he brings down that, with the unemployment insurance fund, he makes $5 billion in profits every year at the expense of the unemployed and of single mothers who do not have even enough to support their children. Who is the Minister of Finance trying to protect? The answer is obvious. Now who will protect these families living on unemployment insurance which, contrary to what the Minister of National Revenue said, cannot escape the Income Tax Act because they cannot afford to have family trusts?

It takes some nerve to state, as the Minister of National Revenue did in this House, that anyone can have a family trust. It may be true of seniors who decide to move to Florida. What seniors in Canada and Quebec can afford a family trust when their pensions are being cut back? Who, among the unemployed, I repeat, can afford a family trust?

They are mocking people. Mocking people and undermining the credibility of our institutions. And because of that, the people have lost faith not only in our tax system, but also in governments and their elected officers.

I will conclude by reminding the House that the Bloc Quebecois has given itself a mandate to promote sovereignty, and we will keep promoting sovereignty. We have also given ourselves a mandate to represent the interests of Quebec in this House. Our work on the family trust issue is a perfect example of the kind of work we have done here over the past three years. And the auditor general agrees with the Bloc Quebecois. His message is that someone in this House has to be free to stand up and condemn these unacceptable actions on the part of this government.

Mr. Dan McTeague (Ontario, Lib.): Mr. Speaker, of course, I listened carefully. It was difficult not to hear the passionate comments made by the hon. member who spoke before me about an issue that undoubtedly affects him and which he feels passionately about.

(1325)

But I think it is rather interesting that this same member, pointed first at the government benches instead of using the opportunity to talk with his seven colleagues who were in the Tory government in the last Parliament.

[English]

It seems to me to be rather inconsistent for this member to be pointing a finger at this side of the House when he has not taken the first step, a logical step, a rational step, to ask members of his own caucus who were part and parcel of that problem in the early 1990s when several of those members, including the former leader of his party, were at the front bench of the government that made that decision.

When will the hon. member start to talk to some of his Conservative cronies in his own party and maybe ask them where this process began, why they are not here asking the same questions he is now asking rather hypocritically?

[Translation]

Mr. Bernier (Mégantic-Compton-Stanstead): Mr. Speaker, again, we will have another representative at the Just for Laughs Festival. I cannot believe the comments made by the hon. member from Ontario, who, usually, takes positions that show he is capable of thinking and also of being critical.

I understand that, when we are dealing with money, finances or election funds, money talks. So, like all his colleagues, the hon. member from Ontario must rise in this House to defend the foxes lurking around the henhouse.

In response to the hon. member, who asked me why I do not look at my colleagues and ask them what they are doing about family trusts, I can tell him that I am quite happy to turn to my colleagues, especially the former leader of the Bloc Quebecois who is now the premier of Quebec. He himself raised this matter in this House several times during the 1993 election campaign-we could show you the many speeches he gave on this and the questions that were asked about family trusts. No, I am not ashamed to turn to my colleagues who used to be in the Conservative Party, because they have done an extraordinary job as Bloc representatives in this House. Those who are still among us continue to do so.

I wish I could say the same about our Liberal colleagues. Again, I hope they will change their minds and shift directions. The credibility of our institutions is at stake. Your credibility and that of the finance and revenue departments is at stake.

When we ask people to pay taxes and to do their share to correct the current situation, everyone must pull his or her weight, including the rich.

Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, I am pleased to take part in this very important debate.

As the hon. member for Mégantic-Compton-Stanstead just pointed out, the Bloc Quebecois has long been concerned with this issue. Our founding president, Lucien Bouchard, now the premier of Quebec, had made it one of his primary concerns, as has our finance critic-this is part of Canadian Parliamentary tradition. Given the rule of secrecy and the lack of transparency, the Bloc Quebecois lacked a source. Therefore, we must congratulate and thank the auditor general for having had the courage to tell parliamentarians and Canadians about this scandal, back in May.

We are not among those who seek to discredit, to condemn and to attack institutions because we are not pleased with them, as did former Liberal Prime Minister Trudeau-the Liberal party has a long tradition in this regard-when he lambasted the auditor general of the time for questioning the transaction whereby Petrofina was to become Petro-Canada.

(1330)

The auditor general had to go to the Supreme Court to find out what his real powers were, given Mr. Trudeau's arrogant and contemptuous attitude. The chairman of the finance committee, who used strong arm tactics with the auditor general as an institution and as an individual, also displayed a similar attitude.

We will not get into this; we leave it to others in this House. We feel that, by raising the issue of transfer, otherwise known as tax evasion and the flight of capital, the auditor general should be highly commended for bringing the public debate back on the issue of family trusts. This is the point I want to focus on.

Family trusts promote a concentration of wealth in the hands of some very rich Canadian families. Given the solid arguments made against family trusts by ordinary people, it is time we led the debate and the fight against secret investments. After all, our tax system is supposedly based on a fundamental rule of fairness, whereby everyone must pay his due to the taxman. Since the month of May, this has given us an opportunity to learn a bit, not much mind you, but a bit about family trusts and their very existence.

We learned from the public accounts committee and the finance committee that, according to the revenue minister, and contrary to what a deputy minister seems to have said in committee, family trusts exist for those who want to be sure they can pay for a retirement in some southern clime.

The finance minister sees them as a way of protecting his children. Very original. As for the deputy minister, he said a number of months ago that he did not understand the Bloc Quebecois' obsession with family trusts, because they exist to protect families with handicapped children.

We therefore learned, since the revelations of the auditor general who asked the deputy minister of revenue how many family trusts there were in Canada, that there were 100,000. A few weeks later, at a meeting of the finance committee, this 100,000 became 140,000. When we know that two of them represent one billion each and that their transfer to the United States has apparently deprived the tax man of $400 to $600 million, we are not talking peanuts. These are large amounts of money.

On the topic of family trusts of one billion dollars each, we asked a deputy minister how many there were of $500 million and up. He replied that he could not say, that he did not have that kind of information. It is a scandal. It is a scandal because, according to the spirit of the Income Tax Act, there is a fundamental rule, which is perhaps tacit, that everyone must contribute according to their means.

When they come up with strategies like these, with the backing of the financial advisers whom we know, who advise wealthy families in order to help them move their money out of Canada and Quebec and to protect them even when they keep it inside the country, that is what is going on right now, it is in order to help people who have the means not to contribute their share. And everyone else must therefore contribute that much more.

In the times we live in, as my colleague was saying earlier, with public finances in the state they are in, the most rudimentary sense of morality would require that everyone contribute according to their means and that, in so far as possible, this type of strategy be prohibited.

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We know about the cuts now being made throughout Canada in the fields of health, education, social assistance, unemployment insurance, culture, and public housing. We know about the cuts being made to community groups that provide assistance to the most disadvantaged. We know about the alarming increase in the number of food banks across Canada. We know about the increase in unemployment. We are aware of the whole ideological trend to dismantling the state, to limiting the role of government, one of whose main roles is precisely to better distribute the wealth, but this is contradicted by the discourse, attitude and language of the chairman of the Standing Committee on Finance, who criticizes one of the taxation ombudsmen who exists in our system, which works reasonably well when the rules are followed, furthermore, which makes Canada a developed country, a great democracy. When you make the claims that are made here, in this country, you must be consistent all the way.

In these times when money is lacking-for what Canada has is not a problem of spending but a problem of revenue-that problem is highlighted in a most extraordinary way by the question raised by the family trusts and the way they are reducing tax revenues. It is therefore necessary to have a precise idea of family trusts, to

know exactly how many have been set up following their creation under the Trudeau government in 1972. The figures will have to be broken down into categories, because not all family trusts may be billion dollar ones. We would have to know how many involved $100,000 or more, how many between $100,000 and $250,000, how many between $250,000 and $500,000, and so on. How many between $1 million and $5 million, how many between $5 million and $100 million, how many $500 million and up, as well as details on all the billion dollar ones. We would have to have precise information on their impact on the Canadian tax system and on each of the provinces of origin. It seems likely, for instance, that there would be some such family trusts in the Maritimes, New Brunswick, in particular. Without naming names, one might well think that the government of New Brunswick may have been deprived of some very considerable tax revenue by this sort of subterfuge.

Ontario and Quebec, which have prominent families, also come to mind. We are entitled at least to exact figures on the effort required of other taxpayers, who have no choice about, for they cannot afford to hire the top tax guns, those same people invited by the chairman of the finance committee, who, despite all of their unarguable qualifications, are clearly in conflict of interest.

We must know exactly what the situation is. We must know, for each province, what the impact is of a measure that was introduced by Pierre Eliott Trudeau, the man of the just society. We see the dishonesty of these people who are prepared to sign documents, as they did, to protect and reinforce the government's position.

I am nearing the end of my speech. Instead of trying to confuse the issue, the government must examine not only the Revenue Canada ruling of December 23, 1991, but the whole issue of the existence of family trusts and their impact on the tax system, and this in order to really protect the credibility and integrity of our tax system, which, as I said earlier, was a big issue with one of the experts. As a member of Parliament I attended this incredible evening, this masquerade, when one of the Bay Street experts told the chairman that he was shocked by the attitude and behaviour of the auditor general, who should never have revealed to the public and the Canadian people that such practices existed because it would undermine the integrity of our Canadian tax system.

This means that they go along with it. There are mechanisms to ensure that those who can pay their taxes, who should pay their taxes, who have the means to pay taxes-We know that in Canada today, there are people who do not have sufficient income to pay their taxes. Those who do, those who are lucky and those who have worked for their money, but must realize that others are not that lucky and that we live in a civilized society. Wealth must be spread around, and this has to happen through the government, because we live in a society, and the government apparatus is a symbol of the well-organized, civilized and developed society we have. It means we have elections, elected representatives and mechanisms to redistribute wealth. We must protect those institutions, but the government's present attitude is very disturbing. We should not be

surprised when citizens become increasingly cynical and critical of institutions like ours, when these institutions no longer appear to be doing their job.

(1340)

[English]

Mr. Roy Cullen (Etobicoke North, Lib.): Mr. Speaker, I listened with interest as the member of the Bloc argued this point about the tax ruling and the situation surrounding it. I am quite puzzled.

This is a highly complex area of tax law, despite the best intentions of the members of the Bloc and members like me. As the member for Willowdale pointed out, members of the Bloc had the opportunity to bring in their own experts but instead chose not to.

When the members of the Bloc stand up in this House it is usually to criticize members on our side for not answering their questions, but they have not really dealt with the question of why they did not bring in their own experts.

If they are saying the experts who were there were in the hands of the members of this party, that is a serious affront to the integrity of those professionals who did appear and it does not deal with the question of why they did not bring in their own experts.

When the members of the Bloc get up in the House it is really not to debate public policy. That has been my experience notwithstanding my short period in this House. When they get up it is to argue a parochial interest of the province of Quebec.

I wonder if their interest in this issue is not driven by fiduciary policy or interests of the Government of Canada and the people of Canada. Rather, they may be concerned about the flight of capital from Quebec not necessarily to the United States but perhaps to Ontario. It is known that this is happening which I think is tragic.

Perhaps the Bloc is positioning itself on this issue in terms of flight of capital. I cannot understand why it would have any other interest in this topic.

[Translation]

Mr. Rocheleau: Mr. Speaker, first of all, on the subject of experts, I would like to reassure my hon. colleague from Etobicoke North by telling him that, if ever the government stops covering things up, as it just managed to do in the finance committee and is trying to do in the public accounts committee, if the government will take its responsibility and accept to shed light on the matter, you will see that experts can be found, perhaps mainly in Quebec but also in Canada, whose hands are not tied. They are not legion,

but they are distinguished. The Bloc had identified a few; we found some and I am told that they will testify.

But we must realize, and I have on good authority, that the auditor general is having huge problems with high finance officials, high finance advisors, because these people are not at all pleased with the auditor general passing this kind of judgment on their work, which goes against public opinion.

Perhaps my hon. colleague from Etobicoke North should bear in mind that the auditor general is having a very hard time because free-thinking advisors are hard to find. They are all related parties because this is their livelihood.

As for the Quebec fact, I hope that my hon. colleague simply misheard. When we talk about the Canadian tax system, about the flight of $2 billion from Canada, about $400 or $500 million in uncollected taxes, I do not think that we are talking only for Quebec. I think that we are doing our job as the Canadian official opposition, representing the interests of small taxpayers and middle-class taxpayers, who are being bled dry and are paying for those who should be paying more.

[English]

Mrs. Sue Barnes (Parliamentary Secretary to Minister of National Revenue, Lib.): Mr. Speaker, I rise to speak on the motion brought forward today by the official opposition. This motion asks the House to denounce the government for refusing to shed light on certain transactions. However, I would like to suggest that it is actually the opposition members themselves who are refusing to see the light in this matter.

The motion also contends that the government has attacked the credibility of the auditor general while allowing millions of dollars to leave the country.

It would appear once again that the opposition is more content with promoting unfounded allegations and wild accusations than it is with a substantive review of the real issue and the true facts.

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The issues to which the motion vaguely refers were first raised by the auditor general in his May 7 report that focused on legislative policies and advance ruling procedures governing taxable Canadian property, not family trusts.

Members will recall that immediately following the release of the auditor general's report, the government acted quickly by referring the issues raised in the report to the House of Commons Standing Committee on Finance for review. That is where tax policy is made and then followed up by the decisions of government through its cabinet.

That review has now been completed and the finance committee on September 18 issued a report and it is now tabled in the House. It is a public document. The finance committee's report represents a well documented and very thorough review of the important issues identified by the auditor general. We thank him for pointing out those policy areas. Its findings and recommendations directly contradict the exaggerations and confused contents of the motion before us today. However, it is a Bloc official opposition motion today and we are obliged to debate the motion put before us.

The finance committee began its review on May 28. In the course of the examination it heard from the auditor general and members of his staff. It heard from senior officials of Revenue Canada, the Department of Justice and the Department of Finance. The committee also consulted eight of Canada's leading private sector and academic tax experts whose views, the committee noted in its report, greatly facilitated the committee's understanding of some of the technicalities of the tax law in the area.

The finance committee is to be commended for acting quickly, consulting broadly and producing a thorough and, I must say, long report, including recommendations on so complex a topic in such a short time. We realize this is an important issue to be dealt with. Not surprisingly perhaps the committee determined that the law regarding taxable Canadian property is complex. It noted that the government has not reviewed the policy on taxpayer migration in any substantial way for at least 25 years. Now we have done this.

However, rather than make cheap political points by trying to confuse the issue even further, like today from the opposition member, the committee has sought to clarify the issues by recommending changes to the law. The report's five recommendations for changes in the law aim at clarifying policy regarding Canada's taxation of individuals who become or cease to be residents of Canada. The report provides substantive advice to the government on strengthening tax law.

While the policy and legislative recommendations are welcomed and will be closely examined by the Ministers of Finance and National Revenue, I want to focus my remarks today to the report's procedural findings and recommendations.

I am very pleased to say that based on its expert assisted, independent review of the facts, the finance committee has found that Revenue Canada applied the law correctly and was justified in issuing its 1985 and 1991 advance tax rulings. The committee's report firmly supports the department's decisions in those cases.

I believe the findings of the committee clearly confirm the fairness and the integrity of the Canadian tax system and the department's decisions in the cases and the administration by Revenue Canada. I am especially pleased to note that the independent experts consulted by the committee were almost unanimous in stating that the rulings then correctly applied existing law without evidence of any revenue loss resulting from the rulings.

Of the eight prominent tax experts, six testified that Revenue Canada's interpretation was a correct reading of the law. The report quotes Mr. Wolfe Goodman, an expert in the field of international tax law, as an example of the majority opinion. Mr. Goodman states: ``The auditor general considers that this ruling circumvented the intent of the law and, with respect, Mr. Chairman and members, I think the ruling properly applied the policy of the legislation''.

Based on this and similar testimony, the finance committee saw no reason to prefer the auditor general's view on this question to the views of both its government tax experts and a strong majority of tax professionals from the private sector. Also, contrary to the auditor general's suggestion in his May 7 report, the committee concluded that under its existing policies, Revenue Canada had no basis for refusing to issue the 1985 and 1991 rulings and was justified in doing so.

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It is evident that in these cases the process worked as it should have. Any other decision or action would have circumvented the law and infringed on the legitimate rights of the taxpayer involved to fair and equitable treatment under our laws.

Further, the committee found no indication of political or other interference with respect to the rulings. I must underline this. While it should be noted that the auditor general never questioned the integrity and professionalism of Revenue Canada officials, the report confirmed there was no impropriety on the part of any official. On this point the Minister of National Revenue has already stated that she has met with the auditor general and asked him directly if he thought there had been any political interference in this file and he assured her there was none.

The finance committee heard a range of witnesses from all departments concerned on this issue and they found no evidence of impropriety. Therefore, we must be satisfied that there was no impropriety involved here.

Also, importantly, the report concluded that the rulings did not or are not likely to cost Canada any significant tax revenue. The committee noted that the auditor general and his officials were unable to identify any significant new tax avoidance opportunity created for other taxpayers by these rulings. That is what the auditor general tells us.

The issues raised by the auditor general have to be kept in perspective. The auditor general said that Revenue Canada's 1991 ruling may have cost significant tax revenue, not that it did, but that it might have. This was obviously a concern. The finance committee looked at it carefully and concluded that there was no evidence that the ruling cost Canada anything. Nor was there evidence-and we are talking evidence, not speculation-that the ruling opened up any new avoidance opportunities. There has been no flight of capital, as opposition members seem to think. This should not be surprising. Canada's tax rules for people who leave the country are stricter than the rules of almost every other country in the world.

In addition to this, the Minister of National Revenue placed a moratorium on any further rulings on taxable Canadian property while the finance committee was doing its very important review of this area of the Income Tax Act. The minister has extended this moratorium until the Minister of Finance has the opportunity to consider the policy recommendations of the committee and to make decisions concerning appropriate changes if they are necessary. We heard earlier today that many people think we can make improvements and I would agree with that. Is this not assurance enough for the opposition that the door is not wide open to the transfer of capital without paying appropriate taxes?

With respect to the question of the decision making process, the finance committee observed in its findings that immediately on publication of the auditor general's report the minister directed Revenue Canada to take immediate steps to improve documentation of its tax policy interpretations. In this context, the department has revised its procedures to ensure that a proper record is prepared of the considerations that play an important part of the decision making process to issue an advanced income tax ruling or an opinion.

When Revenue Canada issues a written request to the departments of finance or justice it will continue to provide a level of background information, explanation and analysis appropriate to conveying a full appreciation of the issue and its potential impact. Revenue Canada will also retain in the permanent advanced rulings file the complete documentation and analysis required in support of any interpretations.

It is evidence that through these steps the Minister of National Revenue has acted quickly to improve the openness and the transparency of the process. The finance committee also expressed its full support for the decision of the minister to publicize all advanced tax rulings as of January 1996 with appropriate editing to ensure taxpayer confidentiality. I wish to point out once again that decision was made even before this documentation, this report of the auditor general, came out.

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Revenue Canada electronically publishes and distributes all advance tax rulings to various tax publishing houses in Canada and provides them to the public at Revenue Canada's tax services offices within 90 days of their issuance.

As for the report's second administrative recommendation, Revenue Canada has already taken steps to ensure consistency between its rulings and opinions dealing with similar areas of the law. Since the 1985 ruling, the department has implemented an electronic research database. This provides easy access to all previous opinions and rulings for research and comparison purposes. I think that is an important improvement.

I would like to emphasize that Revenue Canada is a world class organization that enjoys an enviable international reputation and record of success. It has worked very hard to establish this record through its successful administration of over 185 acts and regulations, incentives, credits and international agreements and treaties.

The department employees over 40,000 professional and dedicated public servants. In order to support their dealings with their millions of clients, each employee requires the confidence and deserves the respect of Canadians to do their job well. Fairness, equity and integrity are the basic principles on which they must earn the confidence and respect of Canadians.

The credibility of the department depends on its adherence to these principles in everything it does and in every decision it makes. That is why concerns raised in the auditor general's May 7 report have been fully addressed by the finance committee in order to prevent any undermining of public confidence that is so crucial to the successful operation of any tax system.

Since this system relies heavily on self-assessment and voluntary compliance for its efficient operation, anything that erodes confidence in the revenue administration weakens the system as a whole. Therefore it is important to everyone in Canada and to the day to day working of the department that there is both actual and perceived fairness and integrity in the administration of the Canadian tax system.

In conclusion, I would like to state that in my view Canadians have been well served by the finance committee report on taxable Canadian property. We have five practical recommendations for change and improvement. We will be waiting to see the new policy that those recommendations come up with.

[Translation]

The Speaker: Our colleague still has a few minutes left. She may continue her speech after Oral Question Period.

* * *

THE AUDITOR GENERAL'S REPORT

[English]

Pursuant to Standing Order 108(3)(d), this document is deemed to have been permanently referred to the Standing Committee on Public Accounts.

As it is almost 2 p.m., we will proceed to Statements by Members.

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