They’re calling Finance Minister Bill Morneau a hypocrite.
“This finance minister used a loophole to keep himself invested in a financial company which he regulates … all the while going across the country calling honest plumbers and farmers tax cheats,” the Conservative finance critic, Pierre Poilievre said Tuesday in the House of Commons.
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His colleague, British Columbia MP Mark Strahl, was similarly scathing.
“The same finance minister who called farmers and plumbers tax cheats for using what he calls loopholes used an ethical loophole to keep his stocks,” he said during question period.
The Conservatives zeroed in Tuesday on two revelations regarding Morneau’s substantial personal wealth: that he still owned his shares in his family’s business Morneau Shepell, and that those shares, worth more than $40 million, are held in a numbered company he set up in Alberta.
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Meanwhile, Morneau was travelling the country trumpeting his government’s tax reform proposals — which include closing loopholes he and Prime Minister Justin Trudeau have said will make the system more fair by making the richest Canadians pay their “fair share” of taxes.
Morneau’s family business is a human resources and pension management firm his father started and which he is now responsible for regulating as the minister of finance.
Until yesterday, it was unclear what the finance minister had done with his numerous shares in the company in an effort to avoid a conflict of interest – real, potential or perceived.
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Then it came out: his shares are sitting in a holding company in Alberta of which his wife is listed as director and the shareholders are listed as another numbered company, that one based in Ontario and owned 100 per cent by Morneau. The Alberta company was first registered in 2005.
“Instead of selling millions in Morneau Shepell shares, or even putting them in a blind trust, the finance minister chose to stuff them into a numbered company,” NDP House leader Nathan Cullen said Tuesday.
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According to the ethics commissioner, holding the shares and their earnings in the company is in line with a strict reading of the law governing public office holders and their conflicts of interest – though she has, on several occasions, highlighted the fact it is a loophole and encouraged MPs to close it.
In 2015, Morneau said he expected he’d have to place those holdings into a blind trust but it was revealed this week that Dawson advised him that wasn’t required because the shares were indirectly held through private companies — also owned by Morneau.
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Even though Bill Morneau the physical person doesn’t own his shares anymore, as they are held in a corporation, he owns that corporation. The distinction is small but in line with the letter of the law regulating ministers owning shares in a company.
“It seems he has been following the law and requirements, but there is the question – is that good enough? Especially for a finance minister there should be a higher standard,” asked Dennis Howlett, executive director of Canadians for Tax Fairness.
“Morneau would be well advised to try and ensure there’s no appearance of conflict even if he’s done what he needs to abide by the law of the conflict of interest.”
The fact Morneau’s holding company is set up in Alberta – as opposed to Ontario, where the minister was born and raised and now lives with his family – also raises questions, considering the province’s competitive corporate tax scheme.
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Alberta has one of the lowest provincial net business tax burdens among Canadian provinces, according to a 2016 report from The Conference Board of Canada that analyzed data through 2011.
At the time, Alberta’s provincial net business tax burden was the third lowest across the country, with only Saskatchewan and New Brunswick holding lower corporate tax rates, the study found.
Since the Alberta NDP took over the provincial legislature in 2015, the party has moved to close the gap, increasing the corporate tax rate.
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Global News asked Morneau’s office why he chose to incorporate in Alberta. His spokesman did not respond directly to the question, instead saying Morneau “has shared all the details with the ethics commissioner, and continues to work with her to ensure all the rules are followed.”
Conservative MPs spent much of Tuesday demanding Trudeau explain when he found out Morneau was still managing his own financial fortune while simultaneously regulating the industry; but Trudeau dodged all their questions, defending his finance minister.
“He worked with the ethics commissioner, followed her recommendations and advice, and has continued to,” Trudeau said.
“When she gives advice to do something or to behave a certain way, we do that.”
— With files from Global National’s Vassy Kapelos and The Canadian Press
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