National Assembly committee wants to hear from banks at tax haven hearings

Quebec — Tax havens are depriving Quebecers of at least $1.5 billion a year, said Québec solidaire MNA Amir Khadir on the opening day of parliamentary hearings on the worldwide phenomenon.

The National Assembly’s public finances committee decided last June to dedicate several days this fall to the study of tax havens. It invited administrators from Revenue Quebec, deputy ministers and all of the major banks to come and explain the extent of the problem.

The banks did not respond to the invitation.

On Wednesday, MNAs from the four political parties who sit on the committee said it was imperative that banks, such as the Royal Bank of Canada, Bank of Montreal, CIBC and Caisse Desjardins, come and testify. The Parti Québécois and Québec solidaire went as far as to propose that the committee send them a subpoena.

“Banks in Quebec, in Canada have to explain how they are co-operating and collaborating to maintain the vast fiscal evasion system,” Khadir said, adding he based his calculations on International Monetary Fund figures. “We are cutting in essential, important, critical services for our children, our elderly. Our public institutions are in ruins because we don’t have money and these guys are hiding the money. They’re not doing their fair share.”

It wouldn’t be the first time the National Assembly uses its constitutional power to subpoena. In 2011, the parliamentary agriculture committee ordered the Financière Agricole, the government agency responsible for facilitating investments and protecting Quebec’s farms, to come and explain a pork, beef and grain crisis that led to the closures of several farming businesses in the province.

Committee president and Liberal MNA Raymond Bernier said he will reiterate his invitation to the banks. “It is not my desire to subpoena, because the objective is a positive one, to hear suggestions and recommendations. It is not to accuse anyone,” he said.

But if push comes to shove, Bernier said he will consider using his power. Under the first paragraph of section 55 of the Act respecting the National Assembly, refusing to comply with an order of a parliamentary committee constitutes a breach of the Assembly’s privileges. PQ finance critic Nicolas Marceau said a breach would lead to legal proceedings.

André Chapleau, a spokesperson for Caisse Desjardins, told the Montreal Gazette the financial institution will not appear before the National Assembly committee because it is not involved in tax havens.

Denis Dubé from RBC said the bank will be represented at the hearings by the Canadian Bankers Association, which represents most of Canada’s big banks.

“Currently, there is international momentum on this question of fiscal evasion,” Marceau insisted, adding the banks’ refusal to co-operate with the committee was sending an “ambiguous” message. “Since two, three years (ago) we can say that big international organizations have taken the bull by the horns and produced research, whether it be at the Organization for Economic Co-operation and Development, the G-7, the G-20 … multilateral actions are necessary. This problem will not be solved unilaterally.”

Still, there are some things Quebec can do, Revenue Quebec president Gilles Paquin told the committee.

“The key is information. We need to invest to learn more about the different types of stratagems,” he said, adding Revenue Quebec spends more than $15 million a year fighting tax evasion.

Paquin said thanks to the media, the number of people who provide Revenue Quebec with information every year has exploded, from 588 voluntary disclosures in 2013 to 1,538 two years later. It has allowed the agency to recover $387 million in 2015.

He said bank secrecy is still a major obstacle.

Marceau said the United States Congress enacted in 2010 the Foreign Account Tax Compliance Act to make it more difficult for Americans to have offshore financial assets. He suggested Quebec could take a page from that law.

The National Assembly committee said it was told that in 2011, about 24 per cent of Canadian outward foreign direct investment was located in tax havens. Canadians reportedly have $170 billion in those havens, which, for the Canada Revenue Agency, means a loss of revenues between $5 and $8 billion each year.