Madam Speaker, once again, I would like to thank the sponsor of today's motion, the member for Joliette, for his speech and his initiative on an extremely important and timely issue.

In 2016, I believe it is more important than ever to address this problem. Although efforts have been made by the current and previous governments, there is still much work to be done in several areas. Therefore, it is quite appropriate to raise the issue of Barbados today.

It is fairly obvious that there is a problem with Barbados. We need only look at the numbers to realize it. My colleague mentioned a few. In 2014, $71 billion was invested in Barbados. Over the past 10 years, $390 billion has been invested there. It is the second-largest destination, after the United States, for Canadian foreign direct investment, ahead of the entire Asia and Pacific region. The reason is quite simple, and I will explain later.

Why are such incredible amounts of money being invested in a country like Barbados, which has a population of 284,000 and a GDP of roughly $3.7 billion?

In 2014, Canadians invested $71 billion in Barbados. There has to be a reason. I do not think it is because the sun is warmer than in the Cayman Islands or Hong Kong. There is a very simple fundamental problem: Canada signed a tax treaty with Barbados that prevents double taxation.

My Conservative colleague explained the rules. When someone brings back profits reported in a foreign country and Canada has an agreement with that country to prevent double taxation, the individual simply needs to prove that he has paid taxes in the original country so that he will not have to pay taxes again in Canada.

It makes sense to have an agreement to prevent double taxation with countries like the United Kingdom or United States, since this is fair for our businesses. However, Barbados has a tax rate of 0.25% to 2.5% for international companies, so it is clear why Canadian businesses are interested in investing there and reporting their profits there. Why pay 15% tax in Canada, or 11% in the case of small and medium-sized businesses, if you can get a better rate in Barbados?

It is not surprising that $71 billion from Canada ended up in Barbados in 2014. That was handed over on a silver platter. It is not difficult to come up with such strategies, and they are completely legal.

It is all well and good for the government to say that it will invest $450 million to go after cheaters, since everyone acknowledges that tax evasion is illegal, but all of that money will do nothing to prevent perfectly legal activities. How can we prosecute someone whose actions are legal?

This is a serious problem. I thank my colleague for raising this issue. It is not a new one, but it is still very important.

Earlier I said that tax evasion was simple. I do not want to encourage Canadians to engage in it, but I just want to make my point to parliamentarians.

Imagine that there is a company here in Canada with a subsidiary in Barbados. Obviously, the company hires a consultant to make things easier. There are consultants on every street corner in Barbados, and some in Canada too. The company hires a consultant who starts a company in Barbados in accordance with that country's laws. That company becomes a subsidiary of the Canadian company, which then becomes a multinational corporation. It is not difficult to conduct all of the business in Canada and then have the subsidiary in Barbados issue an invoice for $5 million, for example, for expert or advisory services, even if no services were rendered. The subsidiary will bill $5 million, which will be paid. Then, the company owner will declare in Canada that the year was somewhat but not overly profitable. In Barbados, the subsidiary will declare profits of $5 million or $4.5 million. The subsidiary will then be taxed in Barbados, according to that country's tax rate for multinational corporations. Obviously, if business is really being done in Barbados, that is legitimate. It is legitimate to have companies throughout the world, in Barbados or elsewhere. However, these corporations are not even taxed at such low rate in Barbados. It is therefore quite obvious that there is a problem.

Just last Monday, the Minister of National Revenue responded to journalists by saying that what the government also wants to work on is trying to make what is immoral illegal.

She also said that if any changes need to be made to the legislation, they will be made.

According to her, the trap is set.

It seems pretty clear that something can be done in the case of Barbados. That is what my colleague from Joliette is proposing today. Solutions are within our reach, for this is not the only possible solution. However, it is quite clear that the minister and the members of the other parties really need to take a serious look at this matter and the problem of Barbados. This situation could be resolved, although it is far from simple.

As everyone knows, the NDP has always fought for greater tax fairness to ensure that our fellow citizens and our businesses pay their fair share. We are pretty fortunate in Canada. Our country delivers important services to Canadians, but someone has to pay for those services. Things like health care and education come to mind, for example.

As more and more individuals and businesses try to avoid their tax obligations, our base will shrink progressively, and it will become harder and harder to pay for the services people expect.

I can guarantee that when the people and the CEOs who engage in these immoral but legal practices have a health problem, they will not go to a hospital in Barbados. They will go to a hospital here in Canada. They will use our health care services. The first thing they will do is come here to take advantage of our good services, but the first thing they will do when they leave the hospital is continue to avoid paying their fair share for the services they received.

It is time to legislate a solution. My colleague from Victoria proposed a solution in the previous Parliament, and it still makes sense: it addressed the economic substance of a transaction. People would have to prove that there is real economic substance for a transaction, not just tax reasons. That is one solution, and there are other legislative solutions.

Yes, the agency needs more resources. We do not oppose that. It is a good solution, but it does not solve the problem, which is purely a legal one.

We need tougher penalties and no more amnesty. That is another solution that still makes sense. When the agency finds that certain taxpayers have engaged in illegal activity, they should not be granted amnesty so they can avoid penalties and legal action.

Lastly, there is no denying that international co-operation is extremely important here. I look forward to hearing the rest of the debate.

Pierre-Luc Dusseault

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