Debates of Nov. 1st, 2002
House of Commons Hansard #20 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was treaties.
- Business of the House
- Tax Conventions Implementation Act, 2002
- Kyoto Protocol
- Canadian Broadcasting Corporation
- Queen's Jubilee Medal
- Public Service
- Louis Fournier
- Down's Syndrome
- Car Thefts
- Pierre-Luc Bergeron and Xavier Fugère
- Hazardous Materials
- René Lévesque
- St. John's Harbour
- Diabetes Awareness Month
- Arts and Culture
- Government Contracts
- Budget Surpluses
- Missile Defence Shield
- Government Spending
- Government Contracts
- Kyoto Protocol
- Aboriginal Affairs
- Grain Transportation
- Canadian Wheat Board
- Government Contracts
- Fisheries and Oceans
- École de médecine vétérinaire de Saint-Hyacinthe
- Official Languages
- Committees of the House
- Government Contracts
- Automobile Industry
- Airline Industry
- House of Commons
- Government Response to Petitions
- Committees of the House
- Income Tax Act
- Canada Evidence Act
- Labour Market Training Act
- Canada Water Export Prohibition Act
- Canadian Coast Guard
- Questions on the Order Paper
- Question No. 18
- Question No. 19
- Tax Conventions Implementation Act, 2002
Business of the House
The Deputy Speaker
Pursuant to the provisions of Standing Order 81, it is my duty to inform the House that the motion to be considered Monday during consideration of the business of supply is as follows:
That this House condemn the government for continuing to overstretch our military personnel; and call on the government to increase spending more than is currently planned, as the Canadian Forces need more money simply to continue operating in a sustainable way.
This motion stands under the name of the hon. member for Saint John. Copies are available at the table.
Tax Conventions Implementation Act, 2002
November 1st, 2002 / 10:10 a.m.
Maurizio Bevilacqua for the Minister of Finance
moved that Bill S-2, an act to implement an agreement, conventions and protocols concluded between Canada and Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion and to amend the enacted text of three tax treaties, be read the second time and referred to a committee.
Tax Conventions Implementation Act, 2002
Bryon Wilfert Parliamentary Secretary to the Minister of Finance
Mr. Speaker, I appreciate the opportunity to present Bill S-2, the Tax Conventions Implementation Act, 2002, for second reading today.
The bill relates to Canada's ongoing effort to update and modernize its network of income tax treaties with other countries, a network that happens to be one of the most extensive in any country of the world.
At present, Canada has tax treaties in place with over 75 countries. Passage of the bill will, of course, see the number increase. The bill would enact tax treaties that Canada has signed with seven countries. Of these seven treaties, three represent updates to existing tax treaty arrangements and four of the treaties establish bilateral tax arrangements with countries for the first time.
More specifically, the treaties with Kuwait, Moldova, Mongolia and the United Arab Emirates are all new treaties that have recently been signed. They are historic in the sense that they are the first comprehensive tax treaties ever concluded with these countries.
The new treaties will provide individuals and businesses, both in Canada and in the other countries concerned, with more predictable and equitable tax results in their cross-border dealings. What is more, our arrangements with Belgium, Italy and Norway are updated to ensure that our bilateral arrangements are consistent with current Canadian tax policy.
Before discussing these treaties any further, I want to take a few minutes to provide the House with a brief overview of the importance of tax treaties and why it is necessary for the bill to be passed.
Canada taxes both the worldwide income of Canadian residents and the Canadian source income of non-residents. Put another way, all income of Canadian residents, whether earned here or abroad, is subject to a tax in Canada, whereas as non-residents are generally only taxed here to the extent that they participate in the economic life of Canada or receive income from sources in Canada.
Bilateral tax treaties or, if one prefers, income tax conventions, are an integral part of our tax system. Basically, they are arrangements signed between countries that are primarily aimed to protect taxpayers from double taxation and to assist tax authorities in their efforts to prevent fiscal evasion.
Canada benefits significantly from having tax treaties in force with other countries. Our tax treaties, for example, assure us of how Canadians will be taxed abroad. At the same time they assure our treaty partners of how their residents will be treated here in Canada.
Tax treaties also impact on the Canadian economy, particularly because they help facilitate international trade and investment by removing tax impediments to cross-border dealings. This is significant because, as hon. members know, Canada's economy relies significantly on international trade. In fact, Canadian exports account for more than 40% of our annual GDP.
What is more, Canada's economic wealth depends on direct foreign investment to Canada as well as inflows of information, capital and technology. In other words, by eliminating tax impediments and by creating more predictable tax results for traders, investors and other taxpayers with international dealings, our tax treaties promote opportunities at home and in international trade and investment abroad.
Since Canada's economy is likely to become more intertwined in the world economy, eliminating administrative difficulties and unnecessary tax impediments with respect to cross-border dealings will remain important.
I would like to point out that there can be economic disadvantages for countries and taxpayers in the absence of cooperative tax arrangements with other countries.
Let me explain. The absence of a tax treaty makes the threat of double taxation a concern to taxpayers. Double taxation occurs when a taxpayer lives in one country and earns income in another. Without a tax treaty in place to set out the tax rules, income is at risk of being taxed in both countries. This situation produces unfair results and can have adverse economic impacts.
It is only natural that investors, traders and others with international dealings want to know how they will be taxed before they commit to doing business in a given country. For example, when considering doing business in Canada, investors and traders are anxious to know the tax implications associated with their activities both in Canada and abroad. They also want assurances that they will be treated fairly.
Tax treaties establish a mutual understanding of how the tax regime of one country will interface with that of another, thus helping to remove uncertainty about the tax implications associated with doing business, working or visiting abroad.
Such an understanding can be achieved by allocating the right to tax between the two countries together with incorporating measures that resolve disputes, eliminate double taxation and require notice to be given before the arrangement can be terminated. All these measures promote certainty and stability and help produce a better business climate.
Although tax treaties, including the ones enacted in this bill, help to facilitate trade, investment and other activities between Canada and its treaty partners, they are principally aimed at achieving two main objectives. First, they aim to encourage cooperation between tax authorities in Canada and in treaty countries. One form in which cooperation takes place is through the exchange of information related to taxes. There are good grounds for including provisions in tax treaties concerning cooperation between tax administrations.
In the first place, it is desirable to give administrative assistance for the purpose of ascertaining facts as to how the rules of a particular treaty are to be applied. Moreover, in view of the increasing internationalization of economic relations, countries have a growing interest in the reciprocal supply of information.
Cooperation is also promoted through the establishment of a so-called mutual agreement procedure for resolving difficulties arising out of the application of a particular tax treaty. The mutual agreement procedure acts as a mechanism through which Canadian tax authorities and their counterparts in the other country can resolve disputes and address unintended outcomes, such as double taxation of income.
This brings me to the other fundamental objective of tax treaties, namely to prevent double taxation. Relief from double taxation is so very necessary and deserves to be discussed in some detail. Having income taxed twice when the taxpayer lives in one country and earns income in another can be troubling unless relief from double taxation is offered. As I mentioned earlier, without a tax treaty both countries could claim tax on the income without providing the taxpayer with any measures of relief for the tax paid in the other country. To alleviate the potential of this happening, a tax treaty between two countries allocates taxing authority with respect to a given item of income in one of three ways: first, the income may be taxable exclusively in the country in which it arises; second, it may be taxable only in the country in which the taxpayer is resident; or, third, it may be taxable by both the source country and the residence country, with relief from double taxation provided in some form.
The treaties contained in the bill will confer an exclusive right to tax with respect to a number of items. The other country is thereby prevented from taxing those items and double taxation is avoided. As a rule, this exclusive right to tax is conferred on the state of residence. Put another way, where a certain country is granted an exclusive right to tax, the frequency with which taxpayers of one country are burdened by the requirement to file returns and pay tax in the other country when they are not meaningful participants in the economic life of that country, or where it would be a nuisance for them to do so, is reduced.
For example, if a Canadian resident employed by a Canadian company is sent on a short term assignment, say for three months, to any one of seven treaty countries in the bill, Canada has the exclusive right to tax that person's employment income. However in the case of most items of income and capital, the right to tax is shared, although for certain types of income, such as dividends and interest, the amount of tax that may be imposed in the state of source is limited.
Under any of the seven tax treaties contained in this bill, where a shared right exists to tax an item of income of a taxpayer, there also exists an obligation on the part of the country in which the taxpayer is a resident to eliminate any double taxation.
There is another aspect of tax treaties that I want to discuss, and that is the importance of withholding taxes. The bill provides for several withholding tax rate reductions. Withholding taxes are a common feature in international taxation. In Canada's case they are levied on certain payments that Canadian residents make to non-residents. These payments include interest, dividends and royalties for example. Withholding taxes are levied on the gross amounts paid to non-residents and represent their final obligations with respect to Canadian income tax.
Without tax treaties, Canada usually taxes this income at a rate of 25% which is the rate set out under our domestic law or more precisely under the Income Tax Act. Canada's tax treaties establish limits on the amount of withholding tax that can be levied in respect of certain payments. In all cases where the maximum rates of withholding tax are set out in Canadian tax treaties they are always established at a rate lower than the 25% provided under our domestic law.
The tax treaties in the bill would all provide for certain reductions in the withholding tax rates. For example, each treaty provides for a maximum rate of withholding tax of 15% on portfolio dividends paid to non-residents. The maximum withholding tax rate for dividends paid by subsidiaries to their parent companies is reduced to a rate of 5% in all cases.
Withholding rate reductions also apply to royalty, interest and pension payments. Each treaty in the bill caps the maximum withholding tax rate on interest and royalty payments to 10%.
What is more, the treaties with Norway, the United Arab Emirates and Belgium specifically provide that no withholding tax can be levied in respect of royalty payments for the use of computer software, patents and know how.
In addition, with respect to periodic pension payments, the maximum rate of withholding tax is set at 15% for all countries except Belgium and the United Arab Emirates where no cap has been established.
These treaties also implement other measures which ensure that the tax consequences for certain transactions are in line with Canadian tax policy. Unfortunately, time does not permit me to go into detail about all these measures today.
In closing I want to point out that the bill is important, but albeit routine legislation. As I stated at the beginning of my remarks, the bill relates to Canada's ongoing efforts to modernize and to expand its network of tax treaties with other countries. The key word here is ongoing, for Canada is already in the midst of negotiations with other countries to implement more tax treaties. I encourage all hon. members to support the bill and to pass it without delay.
Tax Conventions Implementation Act, 2002
Rahim Jaffer Edmonton—Strathcona, AB
Mr. Speaker, it gives me great pleasure to rise in the House to talk about Bill S-2, an act to implement tax freebies with Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
Let me preface my remarks on the bill and the fact that the opposition will be supporting it by saying that there are some concerns the bill allows us to raise in the context of the direction we should take when it comes to taxation and the way the bill was introduced in the House.
We in the opposition always have had concerns with bills that are introduced through the Senate and then come to the House. We feel that the Senate, being unelected, lacks the legitimacy to address legislation prior to the House of Commons. More and more we find the government going that route to introduce bills relating to tax policy, and we have seen a few over the history of this government. Bills should be brought to the House so we can debate the merits first and then pass them on to the other place.
The parliamentary secretary talked about the importance of tax treaties and I would agree with him. He cited specifically that tax treaties tend to promote certainty, stability and cooperation among countries with which we engage in tax treaties. I would agree with that and so does the opposition.
However, I would take it one step further, especially as we start to enter into these forms of tax treaties. If the legislation had been introduced in the right place and had been given fair debate, Canadians and the House would have had the opportunity to compare our jurisdiction of taxes with those of other countries and see how we could create a more competitive environment to attract more business. We could also see if we were on par with other countries around the world.
It is no secret that Canada has one of the highest tax rates of industrialized nations, namely within the G-8 countries. That puts us at a great disadvantage when it comes to competing in the global economy we find ourselves in today.
I would go further than the parliamentary secretary and say that tax treaties would not only promote certainty and stability, but hopefully, by reducing overall taxes, would create a more competitive and attractive environment for businesses and people to consider Canada as a place to locate. Also, we would have a fairer tax system if we collected more taxes at home rather than the other way around. With tax rates being so high compared to those of other places, we lose our competitive disadvantage.
I would challenge the parliamentary secretary and the government to take it upon themselves to compare our tax system with those of other countries.
As was mentioned, the purpose of the bill is to ratify tax conventions agreed upon between Canada and the particular countries I mentioned. These agreements were set out to avoid double taxation between the representative nations and to establish a cooperative framework to prevent fiscal evasion. The Canadian Alliance has traditionally encouraged all measures to further equalize and liberalize foreign trade and investment. In this regard Bill S-2 is a positive measure. Nonetheless it was introduced in the Senate instead of the House of Commons.
When it comes to economic and fiscal themes, I would like to put on the record our party policy. The Canadian Alliance supports securing access to international markets through the negotiation of trade agreements. Our trade agenda would focus on diversifying both the products we sell abroad and the markets into which we sell these products. We would vigorously pursue the reduction of international trade barriers, tariffs and subsidies. We would work with international organizations that have relevant expertise to ensure the concerns of Canadians about labour practices, environmental protection and human rights are reflected.
We know that is done and reviewed on an ongoing basis, not only when it comes to tax policies, but on other facets as we engage in forming treaties and agreements with other countries. It is important that Canadians take some of our values and compare them with those around the world and share some of our experiences with countries that have challenges in some of the areas I mentioned. Hopefully we can influence some to change their ways or improve in certain areas. On the flip side, maybe we can learn from some of them.
Tax conventions, such as the ones to be implemented with Bill S-2, seek to arrange an agreement under which each government agrees to limit or modify the application of its domestic taxes to attempt to avoid double taxation. The parliamentary secretary spoke in detail about this issue.
The tax treaties that would be implemented by the bill reflect efforts to update and expand Canada's network of tax treaties so as to obtain results in conformity with current Canadian tax policy. These treaties are generally patterned on the model double taxation convention prepared by the Organization for Economic Co-operation and Development.
Obviously, as the parliamentary secretary said, this is so that we do not have Canadians taxed on the same income or revenue for themselves doubly, whether in the country they currently reside in or work in and here at home.
Parts 1 to 4 of this enactment would implement tax treaties with Kuwait, Mongolia, the United Arab Emirates and Moldova. Parts 5 to 7 of this enactment would implement the most recent tax treaties with Norway, Belgium and Italy. Parts 8 to 10 of this enactment would correct the English version of tax treaties with Vietnam, Portugal and Senegal which already have been enacted.
To conclude, notwithstanding the fact that the bill was introduced in the Senate, which is unelected and lacks the legitimacy to address legislation prior to the House of Commons, the Canadian Alliance will be supporting Bill S-2 as an initiative to expedite tax procedures for Canadians abroad, reduce tax evasion and focus CCRA resources on collecting taxes from Canadians living in Canada.
Tax Conventions Implementation Act, 2002
Yvan Loubier Saint-Hyacinthe—Bagot, QC
Mr. Speaker, I am caught off guard. I expected more comments, and comments in greater depth, from my colleagues in the Canadian Alliance, particularly where taxation matters are concerned, but I can say this.
We in the Bloc Quebecois have been reflecting for years now on tax conventions and tax reform. These tax conventions and the signing of numerous conventions between Canada and a number of other countries must be incorporated into the broader framework of tax reform.
I would remind hon. members that the need for federal tax reform has been debated here since the 1993 election. As part of this reform, we have also talked about ensuring that the Canadian taxation system no longer contained loopholes allowing corporations and individuals, more specifically individuals with very high incomes, to avoid paying tax, and in fact to commit out and out fraud.
Those listening have seen our emphasis since 1994, particularly on the issue of money laundering. Since that time, the former finance minister, who is also the member for LaSalle—Émard and a candidate for the leadership of the Liberal Party of Canada and the job of prime minister, has remained silent about our demands for taxation reform to close the loopholes and to ensure the integrity of federal public finances.
Even the Auditor General joined in with us in reminding the former finance minister and the current finance minister that everything possible had to be done to ensure the safety of the federal tax base, which has been jeopardized year after year by the government's lax attitude to tax loopholes, in particular through certain tax conventions with countries considered to be tax havens.
It is the same thing for the OECD. My colleague from the Canadian Alliance mentioned this earlier. Not only did the OECD identify problems of double taxation, but it also pointed out that there were tax treaties concluded between countries and other accords, including tax conventions, that might be detrimental to the operation of the regulatory mechanisms for liberalizing international financial markets.
About two years ago, the OECD also joined in with the Bloc Quebecois in demanding—OECD members are not members of the Bloc Quebecois, but they are as able as we are to do some good analyses—that some tax conventions signed by countries considered to be tax havens, which encourage harmful tax practices, be denounced. This is a lead in to Bill S-2.
First of all, I would like to say that we will support the bill, with the reservations I mentioned earlier about tax reform. Naturally, the corporate tax rates in Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy are fairly similar to Canadian tax rates. Therefore, any tax convention signed with these countries to deal with the issue of double taxation makes a lot of sense.
Let me explain what a tax convention is. It is a set of rules which two countries adopt to ensure fair treatment of the business income of subsidiaries of Canadian corporations operating abroad, compared to how that income would have been treated in Canada.
The purpose is to prevent a Canadian business, with a subsidiary in the United States for example, operating in the United States and being taxed in the United States, from also being required to pay tax in Canada. It would be absurd. It would be totally unfair and it could jeopardize the profitability of Canadian businesses. Where the taxation and corporate tax rates are comparable, there is no tax equity problem. However, signing tax conventions with countries whose tax rates are not comparable to those in Canada does create a problem.
In such cases, there is a problem because it introduces a bias in the investments of Candian businesses abroad, favouring countries with low tax rates that have signed tax treaties with Canada.
We have condemned this situation for years now. There were, and there still are, certain tax treaties signed between Canada and the United States that have no justification, that are flagrant injustices and that bias Canadian investors' decisions abroad.
The vast majority of tax treaties are fine, because Canadian taxation rates and those of these other countries are relatively comparable. So, taxing and returning revenue from Canadian businesses abroad poses no problems in terms of fairness when compared to Canadian businesses operating in Canada.
However, if we take the example of Barbados, where the tax rates hover around 1.5% for corporate profits and capital gains, and compare it to our rate of 28% or 29%, it becomes clear that there is a flagrant imbalance.
It becomes clear that there is a bias at work that favours Canadian investment in Barbados. The tax treaty between Canada and Barbados creates both direct and indirect investment in Barbados. This is not a simple bias.
There is a total of $257 billion of direct Canadian investment abroad, approximately. Of this amount, Barbados ranks third in terms of Canadian investment abroad, with $16.8 billion in direct Canadian investment; that is more direct Canadian investment than Japan, France and Mexico combined.
When a little country such as Barbados, with 270,000 residents, ranks third in terms of direct Canadian investments abroad, it begs the question: why? We are not the only ones asking this question. The former Auditor General, Mr. Desautels, asked this question for years. The OECD has also asked why. Specifically, its Financial Action Task Force on Money Laundering, the FATF, has asked the same type of question that we have been asking for years.
What is it that promotes this bias? The tax treaty between Canada and Barbados. We need to look more closely into this type of situation. We have been asking the Minister of Finance and the government to reassess tax treaties, particularly those signed with countries that are considered tax havens for good reason. We have done so because we must ensure that when we talk about the free market, when we talk about the movement of funds, when we talk about direct and indirect Canadian investments abroad, we have to see what produces these biases, problems and barriers for these investments.
In the case of Barbados, there are no barriers; indeed, it is the exact opposite. We are encouraging Canadian investment in Barbados, which is considered to be the number one tax haven, where the tax rate is incredibly low, if not non-existent in some cases, compared to corporate taxes in Canada. We are promoting cashflow out of Canada to Barbados. We find it fair that corporate profits are taxed at 1.5% and returned to Canada, where Canadian businesses operating on Canadian soil have to pay 28%. It just does not work. It makes absolutely no sense.
How can we encourage this type of system? Even the FATF, the OECD group, compiles a list of countries considered to be tax havens and also considered to have taxation practices that are harmful to all of the world. For three of the four years that the FATF, this OECD group, has published the names of the countries at fault, Barbados has always been on the list. There are others, but Barbados has always been on the list.
Others have made improvements with regard to bank secrecy. It is no longer as strict as it used to be in several countries that previously were adamant about it, regardless of who the investors or depositors were. A degree of flexibility has been introduced first to ensure that the money laundering networks of international criminal groups and terrorist groups do not benefit from tax conventions or from these countries being recognized by the United Nations organization.
Second, some tax practices, although above board, hurt others because they introduce a great deal of bias or distortion due to the imbalance in tax rates. Such practices must be rectified. Barbados has never had to make such corrections, and yet we still have a tax convention with that country, which hurts direct foreign investment. It would appear the government sees nothing wrong with this kind of tax convention.
As I said earlier, we are not opposed to tax conventions. They are a logical thing. We cannot have double taxation because it would be damaging to Canadian companies doing business abroad. But this does not mean we should sign tax conventions with countries considered to be tax havens with damaging practices, especially countries such as Barbados which, like the OECD, we have been condemning since 1994. This does not make sense. As if it were not bad enough that we have a tax convention with Barbados, the federal government is promoting this tax haven on its website. This leaves some of my colleagues completely speechless. I invite them to visit the web site of the Department of Foreign Affairs and International Trade. They will find a rather romantic description of tax havens, particularly Barbados, and ways to avoid paying federal taxes by investing money abroad in what is called the offshore financial sector.
On the Foreign Affairs and International Trade website, in the brochure entitled “Barbados: A Guide for Canadian Exporters”, we read, and I quote:
The offshore financial sector—
—referring to tax evasion in tax havens—
continues to grow and is becoming increasingly important to the economy as a source of foreign exchange and employment. The Canadian business community and banking sector is especially active in Barbados.
By the way, the five major Canadian banks have a total of 50 branches in Barbados. I have been asking the Canadian Bankers Association since 1993 what they are doing with 50 branches in Barbados. I have been asking where their revenues come from, what their activities are, and whether they are not at risk of having a fast one pulled on them, say by being involuntarily involved in money laundering by organized crime groups, drug traffickers in particular, and terrorist groups. Since 1993, I have not managed to get an answer.
I continue quoting from the document posted on the Foreign Affairs and International Trade website:
A Double Taxation Treaty exists with Canada—
This is a tax treaty like the ones brought before us this morning through Bill S-2. I continue:
—and the two Governments have recently signed a Foreign Investment Protection Agreement.Tax treaties with Canada and the United States have been important to the development of this industry.
We are talking about offshore banking here.
And yet we have across the way a government that will come after any of us if we owe the taxman so much as a penny. The Canadian tax system literally hunts down anyone who owes it $10. It is merciless. Taxpayers must pay up.
If we owe $100, we must pay $100, or they will come after us. We face penalties, are charged interest, hunted down. However, the same government promotes foreign investments in countries that are considered to be tax havens, countries like Barbados that the OECD condemned for having tax practices detrimental to countries with regular tax systems.
The federal government promotes investments in such countries but, at the same time, it tells Canadian taxpayers that they must pay every penny that they owe in taxes. This is a rather strange way of doing things. It is shameful on the part of a government to tax people to death and to even talk about adding another tax to fund health care, when federal surpluses have totalled several billions of dollars over the past three years. The government is talking about adding a new tax to fund health care while promoting tax avoidance for Canada's richest taxpayers, through countries such as Barbados.
Is it not bad enough to ask us to tighten our belt, to keep paying over and over and, at the same time, to use federal websites for propaganda encouraging the rich not to pay taxes here, but instead to safely invest their millions and billions elsewhere? I remind those who are listening to us that Barbados is the third most popular destination abroad for direct investments by Canadians. This tax scheme encourages wealthy Canadians to avoid paying taxes to the federal government.
This raises ethical issues. I mentioned federal websites, but there is also CanadExport , a publication of the Department of Foreign Affairs and International Trade which promotes international trade, provides progress reports on that activity, includes news on the financial sector for goods and services, and so on.
In an article recently published in CanadExport , it was mentioned that the government wanted to “demystify tax havens”. Again, this is a publication from the federal government which, on the one hand, tells us that we must pay all our taxes and, on the other hand, promotes tax havens for Canada's richest taxpayers, so that they do not have to pay their due to Revenue Canada.
It does not make sense to ask those of us who stay in the country to foot the whole tax bill. It does not make sense to cut employment benefits again and again as has happened since 1995, to reduce health and education transfers and ask us to further tighten our belt because the government cannot afford to do more. On the other hand, however, the government encourages wealthy taxpayers to take their money out of Canada to avoid paying income tax to Revenue Canada. I wonder if Canadians realize or can figure out how much those rich taxpayers save in income tax by investing in Barbados, for example. Do they realize that these businesses can also save money through direct investments in Barbados and other countries considered to be tax havens? Are people aware that this money which is not coming into the federal coffers means that the federal government will have that much less to spend on health, education or the fight against poverty?
We would not need new taxes, as proposed by senators in the other place. They are talking about a special $5 billion tax. If the federal government did not encourage people to invest their money abroad to avoid income tax, it would have enough money in its coffers to provide adequate funding for health, education and social assistance. This is absolutely clear.
How can the government pawn such nonsense and inequities off on us? How can there be two classes of citizens in this country? One which is crushed by income tax and poverty and the other which is spared taxes and is encouraged by the federal government, through numerous brochures and its website, to invest its money abroad?
The brilliant analyses of senior Department of Finance officials also facilitates this. “Want to know how to invest in Barbados? To save tax money? No problem. We will explain the whole tax haven situation. Want to jeopardize the entire federal tax base? No problem. We, federal public servants that we are, will help you invest your millions, even billions, of dollars in other countries so as to jeopardize the entire federal tax base”.
The Auditor General has been speaking out against these practices for years. The Auditor General has also criticized the lack of specialized staff at the Canada Customs and Revenue Agency and the Department of Finance to keep an eye on these tax conventions and the exodus of rich Canadians' assets to other countries. There is no control over this.
Hon. members will recall the transfer to the United States, several years ago, of two family trusts worth over $2 billion. This wealthy Canadian family was told it could make this transfer without paying any taxes to Canada. Remember?
There have certainly been other similar instances. There have probably been a number of cases of preferential treatment for wealthy taxpayers. There is something called a Department of Finance advance ruling that enables the wealthy to seek the opinion of senior departmental officials and then to invest, or carry out certain other operations, in another country without paying a cent of income tax.
There have likely been dozens of such instances of federal taxes evasion resulting in lost federal revenues, and thus the slashes to federal contributions to health and education carried out by the former Minister of Finance, the hon. member for LaSalle—Émard, and Prime Ministerial hopeful. These cuts might have been a little less drastic if his wealthy friends had paid what they should have to Revenue Canada.
While we are on the subject of the transfer of those family trusts worth $2 billion, is there anyone at the Department of Finance or the CCRA who can tell me what has become of them? The ten year term for these family trusts ended last year, I believe. Up until last year, the trustees did not have the right to cash in their trusts, in other words, sell their assets for profit, without paying tax to the CCRA, even if they were in the United States.
Is there currently any sufficiently specialized public official who has followed these two family trusts that were transferred to the United States and who could tell me if the trustees sold off their assets for a profit? Is it possible to find out if the trustee sold these assets off last year, after the deadline, or before the date that allowed the CCRA to collect its share of the capital in the form of taxes? Can anyone provide this information?
No, there is no such person. Do hon. members know why? Because, as the Auditor General has pointed out for years now, there is a lack of specialized resources at the Department of Finance and the CCRA to track the movement of capital from Canadian investors.
We no longer have enough specialists to properly manage the countless tax treaties and advance rulings handed down by senior officials when it comes to the investment of Canadian capital abroad.
I will conclude on the other aspect of the issue. Since 1994, we have been asking the Minister of Finance and the government to review these tax treaties and any practices that could be harmful in terms of the flight of Canadian capital abroad. The government keeps turning a deaf ear.
On occasion, as I asked questions to the former Minister of Finance and member for LaSalle—Émard, who wants to become the leader of the Liberal Party of Canada and Prime Minister to boot, about the fact that he was not taking any action on tax reform or on the termination of certain tax treaties, I could not help but wonder if he was not both judge and defendant in such instances and if it will not be even worse when he is the Prime Minister.
The former Minister of Finance and member for LaSalle—Émard also owns a shipping company that operates in waters bordering countries recognized as tax havens, like Barbados. I think that it would be very difficult for someone wanting to become the Prime Minister, let alone once he has become the Prime Minister, not to respond to our criticism of the tax treaty between Canada and Barbados, which the OECD also condemns.
Will the next Prime Minister have more courage than the former Minister of Finance, even if he has interests in boundary waters in the Caribbean, in Barbados in particular? Will he have the courage to terminate the tax treaty between Canada and Barbados? Will the future Prime Minister and member for LaSalle—Émard stop looking out for his own personal interests and start looking out for those of all taxpayers in Canada and Quebec instead?
Can we get from this future Prime Minister the formal commitment that he will not consider the expansion of Canada Steamship Lines as the fundamental basis for his decisions as Prime Minister, but that he will consider the interests of all taxpayers? Concerning tax conventions that impact negatively on the federal tax base, that are a source of inequity for the other taxpayers who pay huge amounts in taxes every year and who are tracked down, as if they were thieves, when they owe as little as a single cent to Revenue Canada, he has to rectify the situation and to listen very carefully. We hope that he will do so even though he has remained silent for several years about our demands to denounce tax conventions, such as the one with Barbados, which impact negatively on the federal tax base.
We will see what happens, but I hope that the future Prime Minister will listen more carefully, will have a better sense of equity and justice and will not consider merely his personal benefits, but also those of taxpayers in general when he decides to maintain or abolish these conventions.
Statements By Members
Karen Kraft Sloan York North, ON
Mr. Speaker, we have heard a lot about big businesses like BP and Royal Dutch Shell who have made laudable strides toward energy efficiency and sustainable development. These accomplishments are worthy of remark, and one wonders why some industrial players would prefer to remain rooted in the industrial stone age.
Less mention has been made of the accomplishments of small and medium sized enterprises. Many smaller businesses across Canada are reducing emissions and using greener technologies. Profit making for these companies is clearly linked to more environmentally sensitive ways of doing business.
Unfortunately, the Canadian Chamber of Commerce and others fail to recognize that in a post-Kyoto Canada business can be profitable and compete. The fact is, industrial countries that do not ratify Kyoto will be left behind economically.
Statements By Members
Betty Hinton Kamloops, Thompson And Highland Valleys, BC
Mr. Speaker, yesterday I attended a meeting on the state of human rights in Iran.
Under the mullah regime, 214 innocents have been publicly executed in 2002. The method of execution was stoning. The vast majority of the victims were women. Their crimes were as minor as attendance at a birthday party. These sanctioned executions take place in public where victims are buried up to their neck. Their fellow citizens are encouraged and expected to participate in their slow torturous death. The stones used are not left to chance. They are supplied by the regime. They are not big enough to inflict a single lethal blow and not small enough to be painless. The intent is to prolong the agony, preferably for hours.
Yesterday the Canadian Alliance was the only party present at the viewing of these smuggled tapes. I cannot close my eyes without seeing these atrocities replayed. I am here today to open the eyes of my fellow colleagues to these crimes against humanity. Continued silence by the Canadian government is tantamount to sanction.
Canadian Broadcasting Corporation
Statements By Members
Gurbax Malhi Bramalea—Gore—Malton—Springdale, ON
Mr. Speaker, it is my pleasure to recognize the CBC which recently changed the way in which it develops and delivers its programs.
The new programming and format reflects the cross cultural composition of our country. It is about reaching new audiences and supporting Canadian talent across our country. It is bringing regional issues and points of view to national audiences. It has done this by adding new programs and continuing with the high level of excellence Canadians have come to expect.
In a world where media and foreign programming reach all of us, I wish to congratulate the CBC on maintaining its presence on the world stage.
Statements By Members
Charles Caccia Davenport, ON
Mr. Speaker, yesterday the Campobasso region in Italy was struck by an earthquake which took the lives of 25 children and two teachers. Some 3,000 people are now homeless, and one can imagine the despair of the victims' families. Worth noting is the fact that a school, usually a safe place for children, was demolished while the surrounding buildings resisted the impact of the tremor, 5.4 on the Richter scale.
This House, I am sure, would want to convey to the victims' families and all those whose lives have been so abruptly disrupted our heartfelt condolences and our expression of sorrow. May the memory of these innocent victims become a source of inspiration in rebuilding a new future and in strengthening community bonds.
Queen's Jubilee Medal
Statements By Members
Julian Reed Halton, ON
Mr. Speaker, last Wednesday I had the honour to present the Queen's Golden Jubilee Medal to 20 outstanding residents of the riding of Halton.
They were: Sgt. Chris Brooks, Stu Chapman, Lynn Clark, Wendy Cotton, Colin Cousens, Dr. Jianrong Feng, Ted Gorth, John Harrison, George Henderson, May Hoare, Doug Holt, Kirk Hughes, Dwight Jonker, Art Lindop, Krista Nicholls, Erin Rowe, Richard Ruggle, Bert Stewart, Lt. Scott Teeter, and Major Tom Weihmayr.
I am humbled to have played a small role in paying tribute to these Canadians whose achievements and contributions have benefited their community and their country, and to celebrate 50 years of Her Majesty's reign. God save the Queen.
Statements By Members
Rahim Jaffer Edmonton—Strathcona, AB
Mr. Speaker, the government is desperately clinging to minority hiring targets for public service employees. This policy does not work and is degrading to all visible minority groups in Canada.
The Canadian Alliance policy is to work toward the elimination of discriminatory hiring and promotion policies for federally regulated employees. Every public service job should go to the most qualified applicant. As an MP, I am proud to have been elected based on merit, not as part of some quota for visible minority MPs. Constituents voted for me because they felt that I was the best candidate for the job.
Instead of reverse discriminatory practices, the government needs to look at why qualified Canadians from all groups are not applying to join the public sector. The reasons are clear. The private sector has more to offer. We need to find new ways to communicate available positions and to recruit applicants from across the country. We also need to rebuild respect for the public service through responsible management, something this government does not understand.
I strongly urge the government to end this negative program of discriminatory hiring practices in the federal public service.
Statements By Members
Nancy Karetak-Lindell Nunavut, NU
Mr. Speaker, on November 2 Father Louis Fournier of the Catholic Mission in Repulse Bay will be celebrating his 50th anniversary of priesthood and his 50th year in Nunavut.
Father Fournier, shortly after his ordination in France, came to northern Canada in 1952. Over his 50 years he has lived and worked in numerous communities such as Chesterfield Inlet, Igloolik, Iqaluit, Whale Cove and presently in Repulse Bay. Known “as the builder”, Father Fournier constructed many stone structures and monuments in the communities in which he lived and served. Father Fournier has taken an active role in ensuring Inuit culture is represented in the church as well as supporting cooperative movements in the community.
On behalf of my constituents of Nunavut I wish to congratulate Father Fournier on his 50 years of serving the people of the Arctic. We wish to thank Father Fournier for his generosity and sensitivity to the Inuit people and their culture.
Statements By Members
Gérard Asselin Charlevoix, QC
Mr. Speaker, the federal government is a very bad owner.
It allowed the wharves in Les Escoumins and Trois-Pistoles to deteriorate to the point where the Compagnie de navigation des Basques was prohibited from using the wharf at Les Escoumins, thus depriving the regions of Charlevoix and Les Basques of $5 million in economic spinoffs.
Worse still, after getting assurances from the Minister of Justice, who is responsible for Quebec, that the work would be done this fall, we have now been now told by the federal Minister of Transport that he cannot guarantee that the repairs will be completed in time for the 2003 ferry season.
The transport minister's carelessness is unacceptable and the unfulfilled commitments of the Minister of Justice are scandalous. It is no wonder that the Compagnie de navigation des Basques, the stakeholders from the tourism industry and the whole region are upset.
The federal government must get its act together and announce this fall that the repairs will be completed. The very existence of a powerful tool for economic development and tourism is in jeopardy, and this is strictly because of the federal government's ineptitude.
Statements By Members
Jeannot Castonguay Madawaska—Restigouche, NB
Mr. Speaker, today marks the beginning of National Down's Syndrome Awareness Week. Close to 50 organizations have got together to launch this national campaign. In Canada, about one in seven hundred live births is affected by this syndrome. It is a chromosomal disorder that may restrict children's development. Still, those who suffer from this condition manage to live an active life and make a positive contribution to our society.
A number of activities are scheduled this week, and I invite Canadians to participate in them.
Together, we can help improve the lives of these people by acknowledging their contribution to our society and by facilitating their integration.
Statements By Members
Gurmant Grewal Surrey Central, BC
Mr. Speaker, car theft has been referred to as Surrey's fastest growing industry. Last year 6,100 cars were stolen in Surrey, the car theft capital of North America. Car thieves drive stolen cars to their court hearings. This is not a joking matter.
Auto offences in Surrey cost ICBC $13 million last year. Out of 13,000 court cases, half were auto theft related. The RCMP Auto Theft Task Force complains that thieves receive virtually no punishment. In the revolving door, criminals are arrested over and over with 90% being repeat offenders. Courts refuse to treat auto theft as a serious crime. Less than 8% of those arrested go to jail. The truth in sentencing is lacking. Parole should be harder to earn and easier to lose. The people of Surrey have had enough.
When will the government give adequate resources and laws with teeth to our law enforcement agencies, become serious about property crime, get tough on criminals, and make our streets safe?