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

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Madam Speaker, I am pleased to rise here today to speak to Bill S-3, which passed third reading in the other place on May 4, 2010.

The Bloc Québécois supports the bill because we believe that it is important to implement the tax conventions negotiated with Colombia, Greece and Turkey. The goal of these conventions is to avoid double taxation and promote the exchange of information.

Any time economic relations are established with another country, the individuals or businesses in question likely enjoy revenues in both countries. Accordingly, tax conventions are crucial in order to ensure the exchange of information so as to avoid double taxation.

Nevertheless, the Bloc Québécois does have some serious reservations about the bill that must examined in committee once it passes second reading.

First of all, we do not know how it will affect public finances. We heard a little bit about this earlier in other speeches, because Bill S-3 is 74 pages long and includes provisions that will have a direct impact on government revenues. The terms and conditions need to be thoroughly examined for a final assessment of this bill.

This type of review becomes even more necessary when the government is opening loopholes in the Income Tax Act to allow corporations that are not registered in Canada to avoid paying their fair share of taxes. Just look at Bill C-9 currently under review in committee. I will come back to that later on in my presentation.

The government must make a real commitment to fight tax evasion. The Conservative government, which waited until 2009 before signing its first agreement on information sharing, is showing blatant unwillingness to do anything about tax havens.

Signing bilateral agreements on information sharing is just the first step in fighting tax evasion since businesses have an incentive to declare their income: to avoid being taxed twice.

The government can do a number of things to truly fight tax evasion and simply sharing information is not enough. It has to stop concluding tax treaties with tax havens. It has to submit every international treaty it negotiates to the House of Commons and allow the representatives of the people to have their say.

In order to respect jurisdictions, it has to consult the provinces and Quebec before negotiating a treaty that affects their jurisdictions. I will come back to that later.

Earlier I spoke about the impact on the government's finances. Bill S-3 falls into line with the Conservative government's moves to cut corporate taxes. What impact will it have on the government's finances?

What impact will limiting the rate of income tax withheld at source have on the government's finances in the case of dividends from affiliates and the cases involving other dividends, interest and royalties?

This type of review becomes even more necessary when we consider that Bill C-9 to implement certain provisions of the budget confirms the Conservative government's desire to protect rich taxpayers at all costs, and among them we find the banks and big corporations.

With regard to tax loopholes, the government is talking out of both sides of its mouth. On one side, it says that it wants to go after tax havens and, on the other side, it is opening loopholes in the Income Tax Act to allow corporations that are not registered in Canada to avoid paying their fair share of taxes.

I would like to shed some light on the budget implementation measures in Bill C-9. This bill changes the definition of “taxable Canadian property” to exclude shares from certain private companies. This will have a number of implications.

Non-residents—which can include companies that are owned by Canadians but were incorporated abroad—that sell shares of Canadian companies are currently exempt from paying taxes under the Canadian Income Tax Act, without having to apply the tax relief measures provided for in the different tax conventions Canada has signed.

I want to put this into context. Before, when a non-resident sold a Canadian company in part or in full, Canadian tax authorities required the purchaser to hold back 10% to 25% of the total amount of the transaction, while they did their usual checks of the conventions between Canada and the country of the non-resident. Once these checks were complete, if there was a convention in force, the non-resident would pay taxes in their own country and would avoid double taxation.

With Bill C-9, the government will stop enforcing this holdback, whether or not there is a convention with the country in question. For example, a company in the Bahamas, which does not have a tax convention with Canada, could sell shares of a Canadian company without paying taxes in Canada. A number of these companies are owned by Canadians, who would therefore avoid paying taxes.

Furthermore, the non-resident is no longer required to wait for authorization from the tax authorities when selling a Canadian investment, pursuant to clause 116, and is therefore no longer required to produce a Canadian income tax return.

The government is opening the door wide to foreign investors, and this includes the technology sector. Companies registered in countries where the tax rate is low or non-existent will be able to purchase and resell Canadian companies and pay little or no taxes.

Regarding tax havens, the Bloc Québécois urges the government to stop talking and start acting, instead of proposing pseudo-solutions made up of empty words. The Bloc Québécois has been proposing concrete solutions since 2005 to do away with access to tax havens like Barbados and to eliminate the double deduction of interest.

Why would a company not pay taxes on profits brought back to Canada after having declared them in a tax haven like Barbados, for example? This type of special treatment does not have a place in our society. Companies, like citizens, must pay their share of the tax burden. That is why we must prevent companies from using tax havens by abolishing the section in the Income Tax Act that makes this possible.

In order to truly fight tax evasion, the government could take action on a number of fronts. It must stop signing tax treaties with tax havens.

On four occasions the Bloc Québécois has introduced a treaty bill to modernize the entire process for concluding international treaties. Our treaty bill was designed to build transparency and democracy into the process of negotiating and concluding international treaties.

Moreover, the bill required that the federal government respect the provinces' jurisdictions, including Quebec's. The bill provided for five important changes: all treaties were to be put before the House of Commons, the House was to approve important treaties, a parliamentary committee was to consult civil society before Parliament voted on important treaties, treaties were to be published in the Canada Gazette and on the Department of Foreign Affairs website and the government was to consult with the provinces before negotiating a treaty in an area of provincial jurisdiction.

The treaty bill came to a vote only once, on September 28, 2005. I would like to point out that all the federalist parties in the House voted against it.

The clause on consulting Quebec and the provinces was nothing revolutionary. When the federal government, in an international forum, discusses a treaty that would impact the provinces, it consults the provinces beforehand.

The Bloc Québécois will still support the bill despite our reservations. As for respecting the Quebec nation, which was recognized here in the House, the Conservative government has yet to deliver the goods.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I find the Conservatives' strategy of cramming several bills into one very curious. They did the same thing with Bill C-9. They put all sorts of things in that bill, but of course it was inappropriate and showed a complete lack of respect for Parliament.

Bill S-3 has to do with Greece and Turkey, two countries that have rather advanced tax systems, and Colombia, where the drug industry rakes in about $90 billion a year in revenues. We know that that industry has close ties to the government.

Does the member believe that it is inappropriate to combine two countries that have relatively advanced tax systems with a country whose government is linked not only to paramilitary groups, of course, but also to the drug industry, which rakes in tens of billions of dollars?

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I thank my hon. NDP colleague for his question. Clearly Colombia is a country that poses a problem. In fact, we firmly oppose the free trade bill that was introduced in the House. The bill we are currently debating has to do with tax arrangements, which have a less significant social impact on the countries in question.

The purpose of the bill is to avoid double taxation, which is commendable. However, the potential loss of government revenues must be confirmed. Bill S-3 merely aims to correct tax revenues, which is why we agree with it in principle, since it will clarify the corporate tax situation.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Madam Speaker, I would like to congratulate my colleague from Alfred-Pellan. His speech about Bill S-3 was very clear.

Still, I would like to ask him if the government was motivated to propose this bill by an old-fashioned notion of globalization. Going back 20 or 25 years, everyone thought that neo-liberalism would bring prosperity to the whole world. Now we know that it is bringing prosperity only to very rich countries like the United States. Other countries are trying to act as though they are as rich as the Americans, but the fact is that it will benefit others, not us.

We seem to be just keeping our heads above water in a system that is alien to us. In many countries, people are abandoning neo-liberalism and that style of capitalism in favour of a more traditional kind of globalization.

Would we not be better off working toward a form of capitalism that puts people first, that values cooperation, that gives people around the world an opportunity to be happy and equal? This bill promotes inequality. I think that my colleague from Alfred-Pellan was touching on this in his speech, but I would like him to comment further.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Madam Speaker, I thank my colleague for that vast question, which encompasses the responsibilities of all humanity.

In terms of globalization, we could all aim for a healthy balance for all peoples. But the bill that is before us addresses only a small part of the overall problem.

We have to think about the end result of the bill, because taxation in the three countries in question is lower than in Canada. In fact, Bill C-9, which I see as related, allows companies registered in foreign countries to pay tax only in the country where they are registered. That is why I talked earlier about Canada's potential loss of revenue, which needs to be assessed.

If we look at the end result of this bill, I think we will see that these countries may ultimately achieve a net gain. Because taxation is lower there, many companies registered there will benefit in terms of their domestic revenue.

These countries will have to manage this revenue well if they really want to improve their people's welfare.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I commend my colleague, whom I am very fond of and who makes a solid contribution here in Parliament. I believe that what he is saying here today is important.

The principle behind tax treaties with other countries is that we have the highest possible standards for taxation information. Yet we know very well that Colombia, where the drug industry has ties with the government, cannot have the same standards.

Does the member find it contradictory and hypocritical that the government, which claims to be implementing these tax treaties with countries that have the highest possible standards, is trying to sign a treaty with a regime linked to drug traffickers?

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Madam Speaker, I would once again like to thank my colleague. He always asks good questions. By carefully examining the issue, we can improve our understanding of the bill being studied.

It seems obvious to me that this bill amounts to de facto recognition of that country. Therefore, we do not have a choice. Colombia, which is one of the three countries in question, is part of the agreement and could benefit from clarification in terms of revenues.

However, this will not prevent us from strongly criticizing the lack of respect for human rights that prevails in Colombia. It is exactly for that reason that there were many discussions during examination of the bill on free trade with that country. We would like to impose stricter rules on that country in order to ensure greater respect for human rights.

[The Acting Speaker, NDP, Denise Savoie]

The hon. member for Burnaby—New Westminster has time for just one quick question because there is less than a minute left.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, would my colleague be willing to split this bill into two parts? One part would deal with Greece and Turkey, which do not pose a problem in terms of taxation and human rights, and the other would deal with Colombia which, naturally—

[The Acting Speaker, NDP, Denise Savoie]

Order, please. I must allow the hon. member to answer the question.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Madam Speaker, very quickly, with respect to the agreements already covered by Bill S-3, they are tax treaties that have already been negotiated and Parliament does not have the authority to amend the bill or even to split it. I believe we must accept it as is or reject it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I rise to speak to Bill S-3.

As my colleague from Outremont mentioned earlier in the House, we have great difficulties with the way the government is approaching legislation generally.

There are principles in this place that have been well established for generations and have been respected generally by all parties. What we have seen over the last few years, but particularly in the last few months, is a throwing out of those conventions of appreciation for democratic debate and respect for this place, respect for Parliament itself. We are seeing this illustrated once again by Bill S-3.

The first issue is the fact that the bill comes from the Senate. We must remember that the Conservatives, prior to the last election, promised that it would bring democracy to the Senate but they have appointed Conservative associates to the Senate. The Senate is now a legislative place with largely Conservative appointees.

Canadians do not want to see the perpetuation of a fundamentally anti-democratic system imposed on Canadian democracy and yet we are now seeing bills pushed through the Senate, where there are a bunch of Conservative Party appointees, who are responsible to nobody but the Prime Minister himself, creating this legislation and bringing it into the House of Commons. If that is not a fundamental rejection of the democratic principles on which this country is founded, I do not know what is.

When we couple that with prorogation, a refusal to table in this Parliament documents that should be, as the Speaker has ruled in the past, tabled in Parliament, we see a systematic obstruction of the democratic principles in Canada that have served Canada so very well. We now have a bill referred from the Senate.

The second principle that is being violated by the bill is the fact that the government has cleverly tried to insert a poison pill. The bill itself is a rather anodyne bill, a tax treaty bill that deals with Greece and Turkey.

Although concerns were raised earlier today in the House by a Liberal member, I do not think anyone in this place would have any strong differences with Greek fiscal policy or Turkish fiscal policy. We understand that their democracies are relatively advanced systems. Instead of submitting Greece and Turkey to a parliamentary vote, the government deliberately inserted the poison pill of the Colombian regime into the bill. Rather than respecting parliamentary debate and have two separate bills, the government deliberately tried to muddy the water and insert a poison pill. It is absolutely ridiculous and it shows the complete lack of respect that the Conservative government has for democracy.

Although we have no objections to the Greek and Turkish treaties on fiscal management, the tax treaties themselves, we will have to move in committee to split the bill so we can consider the case of Colombia. It is pretty appalling that the Conservatives would do this, but I do not think Canadians are surprised by anything the Conservative government does any more. It simply has no respect for democratic traditions, period.

The backgrounder for Bill S-3 put out by the Minister of Finance is very clear. I will quote it because it is a pretty strong illustration of how the government proceeds. What it says in the backgrounder, which is supposed to speak to all of these tax bills that are brought forward, is that Canada “will conclude no new tax treaty, or update an existing tax treaty, unless the treaty partner country agrees to abide by the highest international standards of tax information exchange”.

Anyone who knows anything about Colombia and the Colombian industry would know that Columbia is the producer of about 90% of the world's illicit cocaine industry. We are talking about a $90 billion a year industry, produced by drug lords, produced by paramilitary gangs connected to the government, produced by guerillas, produced by all sectors. There is no taxation system around this massive industry in Colombia. Therefore, the highest possible standards of fiscal probity cannot be maintained in what is a narco-economy.

The Conservatives and Liberals have admitted to this in the past. They have said that this trade agreement has been condemned by every major human rights organization around the world, particularly in Canada, every major civil society group, every major labour union in Canada and almost all of the Colombian trade unions except those directly affiliated with the Colombian government or under the thumb of the Colombian government. The Conservatives say that we need this treaty because it will eliminate the narco-economy. They know this is significantly the largest industry in Colombia and is not part of the tax foundation, the so-called prudent fiscal management of the Colombian government.

Therefore, getting back to the backgrounder which says “agreeing to abide by the highest international standards”, Colombia has already failed those standards even before the treaty was signed. Even before it was brought to the House, it had manifestly failed with a $90 billion a year narco-economy, not subject to taxation laws. Yet the Conservatives have the nerve to throw in this failed narco-economy, failed fiscal framework into a bill that affects Greece and Turkey.

We have to hand it to the Conservatives. The Colombia regime has been described as Hell's Angels with a public relations firm. Nowhere is it clearer than that when we look at the Conservative government trying to endorse Colombian fiscal policy with a $90 billion a year cocaine industry, an illicit industry outside if that fiscal framework.

Conservatives will say that this has nothing to do with the government. Anyone who is actually following the debate around why the United States Congress has refused to ratify a free trade agreement with Colombia, why the European Union is refusing to ratify a free trade agreement with Colombia, why EFTA is refusing to ratify an agreement with Colombia, anyone who does the due diligence, does the homework as a member of Parliament, and certainly the 37 members of the NDP have done their homework, their research and have actually found out what goes on in Colombia, would know that the Defense Intelligence Agency in the United States very clearly identified the Colombian president as being affiliated with drug lords.

In fact, in its document, which was released under access to information just a few years ago, it stated very clearly that President Uribe had risen to power through his connections to the Medellin drug cartel and was a close personal friend of Pablo Escobar. They are a notorious drug lord and a notorious drug cartel and the president is in their pocket.

Why would the Conservatives want to cozy up to a regime like that? Perhaps someone might say, that this was before, that he rose to power with the drug lords and the drug cartels, but now he is a nice guy. They might say that he has a good public relations firm, that we should treat him royally, that we should sign privileged trade agreements with him and that we should pretend the fiscal framework he runs is of the highest international standards.

However, we know the story does not end there. We know his connections with those murderous paramilitary thugs who kill dozens of people every year, who kill aboriginal Colombians or chase them off their land, with more forced violence displacements than anywhere else on the planet, who kill more labour activists than anywhere else on the planet. We see the forced displacement of Afro-Colombians, more than anywhere else. The Colombian Association of Jurists talks about the repeated and ongoing sexual torture, sexual assault and killing of Colombian women.

These are all present day circumstances that Conservatives tell us to disregard. They tell us that he is a nice guy, that he shook their hands so he must be great. They want us to forget about the past, forget about the drug cartels, forget about Pablo Escobar, forget about the killings and brutal rapes of children and women in Colombia. They want us to endorse his regime. They want us to think that he has excellent international standards on tax information and fiscal exchange, even when he does not.

The Conservatives are trying to make that argument, but this corner of the House has done its due diligence. We have done the work to find out what is going on behind this bloody, murderous regime, the secret police, the murderous paramilitary thugs and the Colombian military. They kill hundreds of innocent people every year under this horrifying rubric of false positives.

We know full well what is involved in this. That is why we will move to separate out Greece and Turkey, which meet those excellent standards, those standards that do not exist in Colombia. We should not say that this treaty-partner country agrees to abide by the highest international standards of tax information when it clearly does not, with a $90 billion illicit cocaine industry. At the same time, we should not allow the government to make another promise that it will break. It promised to clean up human rights abuses and it did not.

We will look to break the bill into two halves: one to deal with Greece and Turkey, the other with Colombia.

[The Acting Speaker, NDP, Denise Savoie]

I regret to interrupt the hon. member. He will have approximately seven minutes when the debate resumes.

We will now move on to statements by members. The hon. member for Newmarket—Aurora.

The House resumed consideration of the motion that Bill S-3, 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, be read the second time and referred to a committee.

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

Mr. Speaker, I am pleased to speak today to Bill S-3, which originates in the Senate. Interestingly enough, there are a considerable number of bills that are coming to us from the Senate this year. This 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.

The bill relates to Canada's continuing efforts to update and modernize its income tax treaties with other countries. At present, Canada has tax treaties in place with 87 countries, a figure that was mentioned by one of the speakers earlier today. The bill would implement three new treaties that Canada has signed with Colombia, Greece and Turkey.

It has been pointed out by several speakers today that we are in a reactive position in this House. We are not in a position to amend these agreements. These agreements have been negotiated like a trade agreement would be negotiated between the two countries. The agreements are signed, and then put into legislation and brought before the House.

At this point I would like to make the observation that I believe the government, had it been smart in this situation, would have split these treaties into three separate bills rather than putting all three treaties into one bill. Bill S-3 should really have been written as relating to only one of the treaties. We then would have had three bills to deal with and that would have made matters easier for all of the members here in the House, but that is not the case so we will have some difficulties with the bill once we send it to committee.

I would also like to mention that the bill, as well as many others, is going around the block for the second time. It had already made it through the Senate last year, before the Prime Minister prorogued the House, and we are back doing it again only a year later.

Another point is that the bill does not represent any new or significant change in policy. The tax treaties covered by the bill are patterned on the OECD Model Tax Convention, which is accepted by most countries around the world. As a matter of fact, I believe I read that there are several hundred of these treaties in existence. Because it is an OECD model, other countries adopt the model and simply negotiate with their group of partners.

What the agreement does is avoid double taxation, which we can all agree is an admirable goal. It also is designed to prevent international tax avoidance and evasion, and that is another extremely important area, although I have to question just how effective these agreements are in terms of dealing with tax avoidance and evasion.

For example, given that we have had 87 of these treaties going back now for a good number of years, since I believe the 1970s, one would think that someone would have done an audit of the treaties and could at least present us with some facts and figures as to how effective they are. It does not make any sense to me that we would have signed 87 treaties, and we are proposing another dozen to be signed and more to be negotiated, when we cannot quantify and qualify how effective the previous 87 have been.

Clearly, the government must have some sort of information as to how effective these treaties are because it keeps signing them. That is why I asked the parliamentary secretary, when he introduced and spoke to the bill in the House earlier today, if he could present information as to how much tax has been recovered through Revenue Canada based on evasion and avoidance in other countries covered by these agreements.

He admitted that he did not have that information. I believe that he has undertaken to try to get the information, but once again I cannot guarantee that that will ever happen.

A lot of this could have been avoided if the government had set up briefings, as the ministers of the Manitoba government did, under Conservative governments and under the NDP government. To be fair not all ministers were good at it. I should not say good at it, but not all ministers actually did it. I can recall several Conservative ministers, as well as NDP ministers, who were just excellent at calling together the opposition members, or any members who wanted to attend a briefing, to explain the bill to them.

It has worked. I think that almost every minister who has done this will claim that it is money in the bank and is a very smart way to proceed. If the adversarial process is cut out and any interested members of Parliament are brought into a briefing so that they can find out about a bill, it would save a lot of time in debate. At least the information we are dealing with would be consistent and everyone would have accurate information.

I would really like to ask those questions. I would also like to ask, how many people take advantage of these treaties? How many people are affected by the treaties? Are we negotiating an international treaty for one or two cases a year, or are we negotiating an international treaty for hundreds and hundreds of cases in a year? Unless we can do an audit of the process to prove that we are actually gaining something, then why would we be negotiating these treaties?

Another question I would have is, are these treaties consistent? The argument is that they are based on the OECD wording, but they are negotiated between two countries. I have checked two of the treaties, and I do not believe they are entirely consistent with one another. Yes, they follow an OECD model and pattern, but it seems to me that there may be differences between the treaties.

We are being given this bill and are expected to deal with it as summarily as possible, but we are missing information. We do not have the government putting up any speakers, as with quite a number of bills right now, so we do not get to ask the government members any questions about the issues.

It is little wonder that we end up being very reluctant to send these bills forward. We end up being very suspicious about the intent of the bills, even though there may not be any sinister movement or ideas behind the bills. We have to question them, and it slows up getting them to committee in the first place. Then it slows them up in committee once they get there.

I think the government could streamline its processes better and would get more results by having briefings in advance of bills like this, especially bills that may, in fact, have a number of serious questions attached to them.

In 1971 the federal government undertook a review and overhaul of Canada's taxation system. That would be during the first Liberal government of Pierre Trudeau, I believe. The Liberals reviewed and overhauled Canada's tax system. Among other initiatives the review involved the expansion of the network of tax treaties with other countries.

Interestingly enough, we were looking at tax avoidance way back in the 1970s. I believe one of the earlier speakers talked about $6 billion, and that is probably a conservative figure, in tax havens around the world. Clearly, there is a lot of work that has to be done, cracking open these tax havens.

I know the Bloc members are extremely interested in the tax haven issue and they have talked about it, certainly in relation to the throne speech and other pieces of information. My time is not unlimited and I have a lot to talk about.

We have all these governments over many years making declarations that they will cut down on tax havens and close the loopholes. How many times have we heard governments say they will do this? They have the entire power of the state behind them to do it, and they are spectacularly unsuccessful. Just to show how important a single person can be in this world, in the last year an employee of a bank in Switzerland, a little guy, took a backup tape containing the names of thousands of people, German citizens, Canadian citizens, citizens from other countries, who were avoiding taxes on undeclared income in these banks. I do not know what his motives were exactly, but whatever they were, he sold the tape, and the German government bought the records that dealt with their own citizens. He may have sold it to other countries too. The ripple effect was that Canadian taxpayers were rushing for the exits to take advantage of the tax amnesty offered by this government to voluntarily declare their undeclared income.

The moral of the story is that Canadian citizens are free to seek out and invest in tax havens in other parts of the world, not pay taxes on their capital gains, on the interest they get on this money, and the worst that happens to them is that they can simply walk into the nearest Canada Revenue Agency office and make a voluntary declaration. It is called an amnesty. If they do that, they do not even get a slap on the wrist. They simply pay the taxes and I suppose they are told to behave themselves in the future. If they do not voluntarily declare, they would be in trouble if they get caught, which is why so many of them have been voluntarily declaring.

This is an example of one little guy, one worker in a bank, stealing a tape for whatever reason and selling it to the government and essentially setting off a firestorm of activity. I believe there are also movements afoot now under the Obama administration, predicated more on the terrorism issue than the whole idea of trying to collect taxes from tax evaders. The reason the Americans are putting pressure on the Swiss banking system and other banks that hide information and keep it private is that they want to uncover moneys that are being stored in these facilities by terrorists. That is the motivation.

However, the Americans were happy to avoid doing that all these years. The Swiss system got rich over the years by taking money from drug cartels, arms dealers and all sorts of unsavoury organizations and people. In fact, drugs dealers and arms dealers who put millions and probably billions of dollars into Swiss banks over the years in many cases were actually getting zero interest on their money. That is the explanation why Swiss banks are able to lend out the money. Back in 1987 when Canada's interest rates were in the 18% range and we could buy GICs at the Royal Bank, or treasury bills, at 18% or 20% for a month, we could get money from Switzerland for 6% from Swiss banks.

I am told that many of the people involved in dirty money essentially put that money there and expect nothing. They are just happy to have the money protected and to have the veil of secrecy and privacy at their disposal.

They will put millions and millions of dollars in a Swiss bank with no interest, none whatsoever. Of course that is why the bank can turn around and lend it out at low rates.

This system lasted for many years but it is about time we, as a group of countries, started to crack down on people who try to avoid paying taxes.

I turned on CPAC last night and saw Mr. Snowdy talking about Rahim Jaffer, former MP, and how he was alleged to be setting up accounts in a bank in Belize. Belize is not on our list of countries that have treaties like this, but the question I would have is this. Are people like that, who are trying to plan out their careers in tax evasion, looking at our list? Are they looking at the list of countries where we have these tax treaties and trying to avoid the tax treaties?

Of the 80-plus countries we have on the list, where we have tax treaties, we have Algeria, Argentina, Armenia, Australia, Austria and then we have Barbados. I looked through the list of countries and I do not see any that come across as tax shelters until I get to Barbados under the Bs.

There we have a case where we have one of these tax treaties in place. We had the Bloc critic speaking this morning, and by the way he apologized for Lichtenstein. He and I checked it because it was not on my list. He admitted that it in fact is not on the list.

He explained in very good detail about the tax haven situation with regard to Barbados, I believe. He was explaining that the OECD has a tool to detect tax havens. He said there are four criteria that it uses to be able to tell whether a country is a tax haven: the taxes of a country were either low or zero, there was no transparency, there were no filings to be made, there was no due diligence and there was no economic activity. I believe he was describing a situation where we had an increase in Canadian investment in Bermuda, Barbados and the Cayman Islands from $30 billion up to $90 billion, and these are countries where we do not have these tax agreements.

There is a grey list and I believe Belize is on the grey list.

I have no idea why Mr. Jaffer would have chosen Belize, because Belize is not necessarily even one of the countries on the best-tax-haven list, but still we certainly do not have a treaty with it.

Grenada is on the list. Just several weeks ago there was a report in the press about Grenada and how in the last two or three years there was a spectacular tax evasion scheme going on using a Grenadian bank. I believe an American or Canadian citizen went to Grenada and set up the bank, and it was just a front. It was a rented office. There was no real bank there at all. Millions and millions of dollars were being bilked from North Americans.

So there is obviously more at play here than what is involved in these tax treaties. Before we go around signing another 80 of these treaties, we should find out just what we have gained by signing the 80 we have right now.