Hon. Clément Gignac: My question is for the Government Representative in the Senate. Last week, the Toronto Star published an article about the Canada Pension Plan Investment Board. The article stated that this federal institution set up a network of more than 30 subsidiaries in the Cayman Islands, which is known as the tax haven capital of the world. According to the organization’s spokesperson, the purpose is to minimize taxes paid abroad solely to maximize annual returns for its 21 million Canadians contributors and beneficiaries.
Senator Gold, although this tax avoidance operation is still completely legal in 2023, is your government comfortable with this federal institution’s approach? Don’t you think this is unethical? Doesn’t it undermine Canada’s credibility within the OECD despite the Minister of Finance’s oft-repeated pledge to end the use of tax havens by financial institutions and multinational corporations?
Hon. Marc Gold (Government Representative in the Senate): Thank you for the question. The government agrees that corporations that do business in Canada must pay their fair share of taxes. A solid national tax base is essential to the strength and effectiveness of Canada’s social safety net. As far as the Canada Pension Plan is concerned, it is administered by an independent board of directors that operates at arm’s length from the government.
The Canada Pension Plan Investment Board’s board of directors establishes the investment policies in accordance with the board’s mandate. This involves investing funds in the best interest of the 20 million Canadian contributors and beneficiaries. The board of directors establishes the strategic direction and makes critical operational decisions. The board’s 2022 report indicated that the CPP was solid and that the resilience of the investment fund should build confidence in Canada.
If I could add something, the government has taken a certain number of measures to improve fairness within the Canadian economy, including the introduction of the temporary Canada Recovery Dividend for banks and insurance companies so that they pay a one-time 15% tax on taxable income above $1 billion for the 2021 tax year. That measure could bring in $4.05 billion over the next five years. The government also proposed to permanently increase the corporate income tax rate by 1.5% on the taxable income of life insurance groups above $100 million. I have a long list of measures that the government has taken to ensure that our system is fairer.
Senator Gignac: Thank you, Senator Gold. I understand that CPP Investments is independent of the political power, and I respect that.
In my opinion, Canadians have the right to know more about the nature of the investments that their retirement plan is making abroad. That would help us to validate not only the carbon footprint of those investments, but also their tax footprint and democratic footprint, given that they’re being made in many countries that don’t really respect the rules of law, human rights and tax fairness. Senator Gold, don’t you think it is time for the Minister of Finance to require CPP Investments and other public sector pension plans in Canada to provide more information and to be more transparent about their activities abroad?
Senator Gold: I thank the senator for his suggestion. I will bring it to the minister’s attention.
That being said, I’d simply like to point out that the Canada Pension Plan and the public sector pension plans are subject to their own acts of Parliament, which have been amended many times by various Parliaments.