House of Commons Hansard #46 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Tax Conventions Implementation Act, 2010
Government Orders

1:15 p.m.

NDP

The Acting Speaker 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:15 p.m.

Liberal

John Cannis 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:20 p.m.

Blackstrap
Saskatchewan

Conservative

Lynne Yelich 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:25 p.m.

Liberal

John Cannis 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?

Tax Conventions Implementation Act, 2010
Government Orders

1:25 p.m.

Bloc

Robert Carrier 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:35 p.m.

NDP

Peter Julian 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?

Tax Conventions Implementation Act, 2010
Government Orders

1:35 p.m.

Bloc

Robert Carrier 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:35 p.m.

Bloc

Christian Ouellet 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:40 p.m.

Bloc

Robert Carrier 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:40 p.m.

NDP

Peter Julian 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?

Tax Conventions Implementation Act, 2010
Government Orders

1:40 p.m.

Bloc

Robert Carrier 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.

Tax Conventions Implementation Act, 2010
Government Orders

1:45 p.m.

NDP

The Acting Speaker Denise Savoie

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

Tax Conventions Implementation Act, 2010
Government Orders

1:45 p.m.

NDP

Peter Julian 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—

Tax Conventions Implementation Act, 2010
Government Orders

1:45 p.m.

NDP

The Acting Speaker Denise Savoie

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

Tax Conventions Implementation Act, 2010
Government Orders

1:45 p.m.

Bloc

Robert Carrier 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.