Bill S-3 (Historical)

Tax Conventions Implementation Act, 2010

An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

This enactment implements the most recent tax treaties that Canada has concluded with Colombia, Greece and Turkey.
The treaties implemented reflect efforts to expand Canada’s tax treaty network. Those treaties are generally patterned on the Model Double Taxation Convention prepared by the Organisation for Economic Co-operation and Development.
Tax treaties have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Since a tax treaty contains taxation rules that are different from the provisions of the Income Tax Act, it becomes effective only after being given precedence over domestic legislation by an Act of Parliament such as this one. Finally, for each of those tax treaties to become effective, it must be ratified after the enactment of this Act.

Tax Conventions Implementation Act, 2010

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I thought we were talking about Bill S-3, so I will ask the member a question about the bill. I asked the parliamentary secretary whether he could tell me how much money had been recovered by Revenue Canada from tax havens and he was unable to tell me.

That just speaks to the fact that the government has not provided a briefing session, which it should have with this bill. It should have been able to tell us the number of people who are involved in this measure and how much has been recovered in abated taxes.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, it is precisely because Canada has not done enough homework on the issue of tax avoidance and tax shelters that this type of bill is so incomplete. That work has to be done because a lot of companies report their overall situation. A lot of companies operating in Canada making huge profits here are using all sorts of techniques to never pay a cent in taxes. That is why we have to work on that as well. Otherwise it falls on the backs of ordinary working Canadians.

That is why, since the signature of the North American Free Trade Agreement, the wealth and productivity of Canada has gone up and the income of the middle class has gone down.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Madam Speaker, I appreciate the chance this morning to follow the comments of my colleague from Outremont and to challenge the government on some of the initiatives we find ourselves having to deal with these days in the House, particularly at a time when hundreds of thousands of people across the country still do not feel the recession is over.

The finance minister stands regularly in this place, particularly in response to questions from some of us who are concerned that the impact of this recession is not only not stopping, but continues to grow in both breadth and depth. We continue to discuss and move forward on trade agreements with other countries when we have not righted our own domestic economy. If we, at the end of the day, decide that it is in the best interests of Canada to do those trade agreements, we can negotiate from a position of understanding what is best for us and from a position of strength.

A number of reports done in the last week or two have given me cause to pause with regard to where we need to go in light of our economy. The recession has created situations and conditions for people in the country that we have not seen for a long. It is important, in the context and in light of some of the discussions we are having on free trade agreements, taxation and trading with Colombia, that people know what is going on.

Hundreds of thousands of people across the country have lost their jobs. Around 50% have been able to qualify for employment insurance, but that 50%, now that the recession continues to roll on, are either falling off EI or are at a point where they will no longer qualify for EI. The jobs are not out there to give them back the income they had before the recession started. Some of them are finding jobs, but they primarily tend to be jobs in the service sector. Those jobs pay minimum wage or maybe a couple of dollars above that. It is simply not enough to pay the mortgage, to continue to pay for the cost of education for their children, to feed themselves in a way that speaks to good nutrition and health and to participate in a fulsome way, in a healthy way, in their communities.

For example, the Citizens for Public Justice released a study that it did over the last couple of months called “Bearing the Brunt”. I am talking exactly about this reality. People who do not qualify for EI cannot find jobs or take on jobs that do not pay them enough to reach the cost of living. People have fallen off EI and cannot find jobs. People who never qualified for EI in the first place and those who were poor before the recession every began find themselves relying on the good graces of their municipalities or provinces under the social assistance programs. More and more they are losing hope in being able to cope. The Citizens for Public Justice was very clear about some of the facts and statistics. We should look to that group and consider it in the light of anything that we do these days where the economy is concerned.

The poverty rate, for example, was 11.7% in 2009, an increase of over 900,000 Canadians from 3 million in 2007. That is 3.9 million Canadians living in poverty, while we discuss trade agreements and the ramifications for us in terms of taxation in our country.

The child poverty rate likely increased to 12% in 2009, an increase of 160,000 children compared to 2007. The number of poor children has thus risen from 637,000 children in 2007 to at least 797,000 children in 2009.

The unemployment rate rose from 6.3% in October 2008 to 8.6% in October 2009, and 153,600 jobs were lost by parents of small children during the recession.

This report goes on to say, in its analysis, that after the last recession, it took eight years to get us back to the unemployment rate that was present before the recession started, and that it took us 12 years to get the poverty rate back down to the rate that it was before the recession started.

The question that we have to ask, how long is it going to take us to get to a place where some of our fellow citizens, our neighbours and family members who are out there looking for jobs, who want to do nothing else but simply take care of themselves and their families, can comfortably do that again? Why is it that we are not focusing on that here as we discuss this with each other in this House?

The report also goes on to give a very alarming statistic, particularly when we consider the impact that it will have, not only on individual persons and families but on the financial system as a whole. Consumer bankruptcies increased by 36.4% between the end of the third quarter of 2008 and the end of the third quarter of 2009.

A few months ago, as the recession was in full swing, I listened to an economist in my own community talk about trade and the economy. He said that the recession would come at us in waves and that the last wave would be when those people who have lost their jobs, who fall off EI or no longer qualify for EI, find themselves on welfare and begin to use all of the credit available to them, if they have not already used it up, maxing out their credit cards and lines of credit, and selling off all their assets, because that is the only way to qualify for social assistance in this country, and then they begin to default on those loans.

That will have a big impact on the families themselves, as their credit ratings disappear, as they no longer have access to any discretionary money that might be available to them, even if they have to borrow it, as they no longer are able to even rely upon the good graces of their families because they find themselves in the same situation. When we put that together with the impact that it will have on the financial system, as these hundreds of thousands of people begin to struggle and to default on their loans, it will also have an impact on the economy of this country.

Again, I put this to the House. The government brings forward pieces of legislation into this House that talk about further trade with other countries that we are probably, according to the treasurer, in better shape than, but who are struggling with the same kinds of issues in their own jurisdictions. Why we are so aggressively chasing free trade agreements and all that goes with them at a time when we should actually be circling the wagons, taking a look at what has gone wrong with our own economy, and trying to do something about that?

Anybody who thinks that there is not something wrong with our own economy is not listening to some of those who are reporting these days on the impact that it is having on those among us who are most at risk and most marginalized.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, I listened very carefully to my hon. colleague and I agree with everything he said.

I want to put a question to him with respect to trade that he was referring to and he made a valid point.

However, the other day we heard testimony in the international trade committee how, for example, there is one province in Colombia which is a coal producing province, employs over 10,000 people, and it just purchased from Canada, I believe it was last year, about $60 million worth of equipment that it needs to do its work.

We also heard that one of Colombia's largest industries, the flour industry, employs approximately 200,000 people, of which 60%, meaning about 120,000, are women. They have found decent work to support their families and move out of the misery that has been talked about.

If we stay away as Canadians and do not help them, do not show them how to prevent tax avoidance and tax evasion as Bill S-3 is outlining, are we really doing them any good or should we step in and say, like other countries in the past, with their problems we are going to teach them the Canadian way? What does the member have to say about that?

[Tony Martin, NDP, Sault Ste. Marie, ON]

Madam Speaker, I would say to the member respectfully, just as I believe wholeheartedly that we as Canadians have the answers to our own challenges and problems, that the people of Colombia should be allowed that opportunity as well.

I do not think anyone can deny it, there are some very real concerns with Colombia and any kind of free trade agreement with Canada. I am talking regularly with steelworkers in my own community who tell me about colleagues and other steelworkers in Colombia trying to negotiate agreements with companies who are being actually shot and killed probably as we speak.

In speaking to human rights workers, Jesuits, church people who are in the Colombia area and working with groups of workers and civil society there, they are saying that there is no freedom to organize and to demand an economy that serves the local populace first. Then, if there is anything left over and any real good argument for entering into trade agreements with other countries, then Colombia should actually perhaps do that.

I suggest that we send a message to Colombia that it get its act in order, that it take care of the very grievous human rights situations and realities that are happening there, that we know are happening down there which we are hearing about every day. We ourselves should spend some time and energy reorganizing and restructuring our own economy so that everyone continues to benefit from it again. Then perhaps we can begin to look at what we can do in relationship to the rest of the world.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I want to thank the member for his presentation today on Bill S-3.

Clearly, the government could have helped itself out a lot if it had had a briefing session for interested MPs in advance of introducing the bill or in advance of it being debated today.

For example, I asked the minister, what was the amount of money that has avoided taxes that has been collected as a result of all the existing 80-plus treaties that have been in effect for a number of years? We would think that he would be able to provide that answer. We do not introduce bills into the House, or we should not in any event, without costing them in advance.

I also wanted to know how many people this applied to. How many people will be affected by each one of these treaties in the affected countries? I do not believe he has that information either.

Would the member agree that the government has dropped the ball once again in the legislative process and should have had a more conciliatory approach?

[Tony Martin, NDP, Sault Ste. Marie, ON]

Madam Speaker, of course I agree that all parties should be brought into discussions about new initiatives that are brought to the House. However, the government has a track record of not respecting that way of doing business.

I suggest to the member, to take it even further, that we should all be engaged, led by the government, in a discussion about our own domestic economy and how it is that we are going to right it so that once again, as it did years ago, it serves all of the people who are Canadian citizens, who call Canada home, who come here perhaps to make a new living for themselves, and reflects the real wealth that is being generated every day.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, before I discuss Bill S-3, I feel it is my obligation to clarify something. The member for Outremont used the word “threat”. Let me put it on the record that it was not a threat. What I was saying to the member, because he refused to answer the question, was that in all fairness the taxpayers of his constituency deserve to know what happens in this honourable chamber because members, myself included, cannot say one thing here and then go back to their ridings and say another, not in the 21st century.

I refuse to engage with the member for Outremont with the vocabulary he used. I will use one word, “belligerent”. I use it only to outline to the audience and Canadians that I will not engage in that vocabulary. I say he lowered himself today because I did not attack him. I simply tried to tie the two together with Bill S-3 when he kept referring to Colombian human rights violations.

I will repeat it for the record. I asked if the NDP was going to base its support for Bill S-3 on human rights violations? The countries today that are moving forward, and I will be supporting this bill, include Turkey along with Colombia and Greece. I simply asked him the question. Today, a member of the European community, Cyprus, is occupied illegally, 30% of its territory, by Turkish forces. There are 1,600 people who still cannot be traced and are unaccounted for. Refugees, both Greek Cypriots and Turkish Cypriots, want their properties back. I simply asked the member, if we compare that, what does he think about that? Instead of responding, he simply attacked me. I wanted to clarify that for the record.

I was saddened when he talked about not bringing our ways here. I too am proud of the Canadian record on peacemaking and peacekeeping. My father is a veteran of the second world war and I believe very much in what Canada has done. I have supported it over the years and, yes, even the Afghanistan issue and its problems, as a former chair of the defence committee. That is what we are doing here, trying to solve these problems.

I was saddened when he said that. To quote him, he said he was a proud Canadian. I do not know what he was referring to, but I do not know what it is going to take. Is it going to take my grandfather, John Cannis, who arrived on these shores 105 years ago? Is it going to take my father's generation that came after the war? Is it going to take my generation? Is it going to take my kids' generation? Is it going to take my three grandchildren's generation before I belong or anybody else? I ask the member to reflect on the words.

Now, to the issue today, Bill S-3. I proudly say that I am of the race of Solon. I am of the race of Pericles, Socrates, Hippocrates, Alexander the Great of Macedonia in Greece, but I also am the product of Sir John A. Macdonald, Cartier, Laurier, Pearson and Trudeau. That is why I have the privilege of standing in this honourable House. I say to the members of the Bloc that I believe in a strong and united country, unlike them.

Today we are here to discuss Bill S-3. The member for Eglinton—Lawrence described it when he talked about nation building. The issues of double taxation, tax avoidance and tax evasion are issues that have been on the table for as long as I have been a parliamentarian, which is since October 1993.

I will refer to my former colleague from Ahuntsic, Eleni Bakopanos, and myself. Every time we found ourselves with Greek representatives, we brought this issue to the table. It was not that Canada was not willing. It was the other side more so. There were obstacles but we were moving forward. We were ready in or around 2003 to finally put this agreement in place with Greece in terms of double taxation so that seniors who may choose to move back to Greece or other people could be fairly treated on the tax side.

Then, of course, there was the election of 2004. I am pleased that this government, and I cannot say “this government” because the bill was introduced in the Senate.

I am just wondering why the bill was not introduced in this hon. chamber, the House of Commons. I am glad that it was introduced.

For the record, the bill states that it is:

An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

That is what it is all about. That is what the member for Eglinton—Lawrence talked about. That is what we are trying to do.

In his speech, Senator Wilfred Moore said:

As the global economy grew more integrated, a treaty on international taxation was sought to deal with the problems of double taxation and tax evasion.

The OECD began to address these issues in the 1950s, eventually creating the model tax convention. Since then, more than 3,000 tax treaties have been put in place worldwide.

This is yet another step in trying to find some continuity, some consistency and more so some fairness. We as citizens, and I include myself, demand that the system offer us certain services, whether that be health care, education, pensions, et cetera.

In order for those systems to be sustained, there has to be infusion of money into the system. That is why it has been said that too much tax relief is not good. Where would the money come from to address the infrastructure needs, to address climate change, to put money into post-secondary education and the health system? I ask each and every Canadian, how would we sustain that?

I agree with Senator Moore's proposal in the way he describes it. I want to put more of his speech on the record of this hon. chamber and for Canadians to hear. He also said the following:

It is important to remind honourable senators that while we have been impacted by a global recession, Canada has weathered the recession better than any other countries and we are well placed going into a recovery. Our fiscal standing is the healthiest in the G7; our housing markets avoided the problems seen in other countries; and our banks and financial system are the strongest in the world.

He is absolutely correct. He went on to say:

I would like to inform the chamber that I have passed on these compliments to the Right Honourable Jean Chrétien, the man responsible for protecting the economy and Canadians from this recession.

In all fairness, the facts and the truth must be told. In 1993 when the Liberals assumed government, we inherited, unofficially, a bankrupt country. The debt was out of control. The deficit was just over $43 billion. There was over 12% unemployment. Students were disillusioned. They did not know if there would be any jobs for them after they graduated.

The International Monetary Fund was ready to step in. The bond market was ready in our country. What did we do? We said to Canadians that we would have to do a program review. Today they call it an austerity program, which is fairly true. We had to make adjustments. We had to make cuts, simply put.

Today when the government stands up and says we had to make cuts, let me remind the government members that their people at the time, Ray Speaker for example, stood up in this hon. House and said, “You did not cut enough.” When they stand up today and say, “Look at what you guys did”, let me remind them that it was Conservative provincial governments that were cutting first before the federal government did. Nevertheless, we have to move beyond that.

We implemented an austerity program. We started trimming the fat, as they say, in terms of laying off civil servants or terminating their employment, and adjusting how things were done. We tried to streamline with one-stop shopping concepts, so that services were not duplicated. In a short four and a half years, we balanced the books without raising taxes. Then surpluses came. Those are facts that nobody can deny.

We asked Canadians where they would like us to invest the surpluses. They said there were three areas--

[An hon. member]

Corruption.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, I am disappointed that my friend said “corruption”.

They paid Jimmy Hart $50,000 to get rid of him. I do not want to get into this gutter talk, but I can if the member chooses to. He is a new member today. He is a former reporter, and I would like to believe that he was a good reporter, but maybe he was not a fair reporter and he should have reported both sides of the story. I would like to challenge him, for example, on the gun registry. Every time those members stand up they say it is $1 billion or $2 billion. They cannot even make up their minds how much it is, but truth be told that is not the amount. Why do they not ask the various police associations?

I would be more than happy to take on my colleague, the Minister of International Trade. I am very disappointed actually because he knows that I have stood to support the government's initiatives, especially on Colombia. I was not going in the direction today of trying to distort or defame in any way. I was simply pointing out the facts. I must say to the hon. gentleman, for whom I have great respect, that I am hurt. Nevertheless, I am going to move on.

We overcame that difficulty. We did it in a balanced way. Those are words that the Conservative government is using today. We put one-third into the programs that Canadians wanted, health care, pensions, and post-secondary education. We put one-third into personal and corporate tax reduction. We put one-third--

[James Bezan, Conservative, Selkirk—Interlake, MB]

Madam Speaker, on a point of order, I was quite enjoying the hon. member's intervention, but I must say that he is not relevant to the bill.

I want to quote O'Brien and Bosc, chapter 16, page 744, where it states:

Central to the second reading stage is a general debate on the principle of a bill. Although the Standing Orders make no specific reference to this practice, it is deeply rooted in the procedural tradition of this House. Accordingly, debate must focus on the principle of the bill and not on its individual provisions.

The relevance here is the other thing I am really concerned about. Regarding the rule of relevance, I quote from O'Brien and Bosc, page 623, chapter 13:

A just regard to the privileges and dignity of Parliament demands that its time should not be wasted in idle and fruitless discussion; and consequently every member, who addresses the house, should endeavour to confine himself [or herself] as closely as possible to the question under consideration.

Madam Speaker, I have heard a number of speeches today that were not at all relevant to Bill S-3. I would ask that you ask the member to make sure that his comments are specific to the bill that is before us.

[The Acting Speaker, NDP, Denise Savoie]

I thank the hon. member for reminding the House of the purpose of second reading debate. It is to examine the principles of the bill. I urge all members to come back to the point.

However, as the hon. member probably knows, the Speaker allows a fair amount of latitude at second reading to get to that point, and I am sure the hon. member will make his way there.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, you can be assured that I will. I do not know if the member was here earlier, but I have been referring to nothing but Bill S-3. I have talked about how we promoted the issue of double taxation specifically with Greece given my Greek background. I am moving into various examples to draw a parallel, but maybe what has happened is I hit a soft spot because the Reform Party, now known as the Conservative Party, is trying to fool Canadians again by not allowing me to put the facts on the table. If the Conservatives believe in the democratic process, I ask the member not to interrupt again.

Of course tax avoidance and tax evasion create problems within any society. We look at the United Kingdom which just formed a coalition government, something which the Conservative Party condemned not too long ago. The first thing that coalition government is doing is it is looking at austerity programs simply because adjustments are needed. Obviously the tax revenue is not there to sustain the standard of living or programs.

Bill S-3 addresses this to make us competitive so there is more revenue coming into the treasury. It means people no matter whether they work inside or outside Canada will be treated fairly from a tax point of view. Canadian citizens, should they decide to move to Turkey, Greece or Colombia or other countries we have agreements with, or buy a summer home in Trinidad or wherever, will be treated fairly. In Florida there are a lot of Canadian snowbirds. Why should they not be treated fairly? That is what part of Bill S-3 is doing.

If I am off topic, Madam Speaker, please let me know. I believe I am trying to explain the whole process. Maybe my Conservative friends do not like to hear about it, but unfortunately the truth must be told.

The rules as set out by the OECD's model tax convention is a process where there is fairness, more so continuity in this model. What I was saying to my counterparts in Greece is they have to treat it fairly both here in Canada and in Greece.

For the last little while, Madam Speaker, Greece has gone through some unfortunate problems. The newspapers are reporting that Greece has a problem. Greece finds itself in the same position today that Canada found itself in 1992-93 where we were unofficially a bankrupt country. The IMF was going to step in. This is what is being talked about in Greece. We were not asked to sell the CN Tower, Niagara Falls, or some of the Thousand Islands in the St. Lawrence near Kingston. I do not know why anyone is asking these idiotic, silly and stupid things of Greece that the media suggested.

I believe in co-operation. The message I sent to the people in Greece is that everybody has to participate in this unfortunate economic situation in which they find themselves. I was saddened by the demonstrations and loss of lives.

Back to tax avoidance and tax evasion. The government in the last election promised that it would not touch income trusts and the government put it in writing. What did it do right after the election? It reneged on its written agreement. All of a sudden, Conservatives said there was a leakage and they needed the revenue of about $300 million. As the member for Eglinton—Lawrence pointed out earlier, it cost Canadians over $30 billion. There were two areas that primarily concerned me. One was the downward adjustment of seniors who had planned for their retirement years and then all of sudden x amount of money was taken out of their monthly revenue. That was unfair. The Prime Minister and his party misled Canadians before the election. People supported him because he told them he was not going to touch income trusts.

There is something else which also concerns me on the taxing side.

There is a provision in that area that gave Canadian companies and all other companies the opportunity to borrow money, should they wish to expand and acquire other companies, et cetera, and they could deduct the cost of that borrowing.

All of a sudden the government has put Canadian companies at a disadvantage. Canadian companies can no longer do that, but other companies around the world can. That is why there is an increase in foreign companies buying Canadian companies, thereby weakening the Canadian economy and Canadian sovereignty. That is what I cannot stand. I brought in a specific motion to have the government change that, but the government voted it down.

When we talk about sustainability for what we love here about Canada, the government has weakened that sustainability. Corporations that need to generate revenue, so they can pay taxes, so we can put money into the health system, have been weakened.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Madam Speaker, I want to go back to one of the comments the member made. He stated that the Liberals did not raise any taxes and when they took office they had a huge deficit. The Liberals were elected on their promise to get rid of the GST. They also said that they were going to tear up the free trade deal with the United States. Those two things alone are probably why they got out of deficit. They also took $25 billion from the provinces, and that is how they balanced the budget.

When the member goes on about his government not really raising taxes, I just want to correct the record. In a way they did because they were going to get rid of the GST. That was a promise they were elected on. They also were elected on a red book that said they were going to have a child care program, which they never did have.

I am just wondering if the member recalls any of that.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, I am so pleased the minister asked me that question. I would be more than happy to put the red book before the public with respect to the GST and other issues.

If she had listened to my speech, she would have heard me talk about a nation needing revenue to carry out its responsibilities, and part of that revenue would come from the GST. The red book said that we would scrap the GST and replace it with an equal revenue-generating tax. A house, a business and a country cannot be run without revenue.

I challenge the member publicly. If I am wrong, I will resign. If I am right, she will resign. Will she take me up on the challenge?