Massimo Pacetti

[Committees of the House, February 21st, 2007]

Mr. Speaker, I have the honour to present in both official languages, the Thirteenth Report of the Standing Committee on Finance in relation to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, with amendments.

I would like to thank all the members for handling the bill expeditiously and allowing me to chair the committee once again.

[Criminal Code, February 16th, 2007]

Mr. Speaker, it gives me great pleasure today to take the floor to talk about Bill S-211, introduced by the Honourable Senator Jean Lapointe. I would like to take a few seconds to salute him for all his accomplishments and for his dedication to making this bill a reality.

The bill that we are debating this afternoon is of crucial importance for the well-being of Canadians. The purpose of Senator Lapointe's bill is to permit access to video lottery terminals at race-courses—where people can bet on horse races—betting theatres and casinos.

The main reason for this bill is to ensure that young people and the elderly, the two groups most vulnerable to this scourge, do not have easy access to these terminals. Making gambling less accessible will prevent these people from falling into the VLT trap. Mr. Speaker, this bill must be adopted as quickly as possible to put an end to distress and to give hope to those afflicted by the illness of compulsive gambling.

Already I hear the voices raised against this bill saying that once again the federal government is interfering in an area of provincial jurisdiction. And it is true that this area has, in a sense, been on lease to the provinces since the agreement of 1985. Under the provisions of that agreement, the provinces take the federal government’s place in the area of gambling, but they must return approximately $50 million to the government for the use of this legislative space.

This is not the first bill to attempt to amend the Criminal Code regarding video lottery terminals. In 2004, a bill called S-6, also introduced by the honourable Senator Jean Lapointe, was debated. It looked in particular at the federal government’s limits in this area. At the time the Senate committee noted that “the lottery scheme provisions in section 207 express the current federal government policy. Provincial and territorial governments are free to make decisions regarding the kinds of lottery or gaming schemes that they may conduct or license within the limits set by the Criminal Code”.

Moreover, as Senator Joyal mentioned in committee proceedings studying the Bill, and I quote:

If the federal Parliament wanted to ban all kinds of gambling, it could do so through the Criminal Code ... If the federal Parliament decided to limit some kinds of gambling to some kinds of circumstances and some kinds of location, it could do so, too.

The federal government has the power to legislate in the Criminal Code to permit the use of these video lottery terminals only in the places mentioned. It is much more a question of public interest than a constitutional issue. We are talking about the health of our fellow citizens.

There is a certain urban myth about the revenues that video lottery terminals bring in for the provincial governments. Each year, the provinces rake in record false profits with their video lottery terminals. In fact, numerous studies by university researchers across Canada, provincial governments, private institutions and social workers show that the social costs associated with video lottery terminals are three to five times greater than the revenues they produce for the provincial governments.

In the current situation, the federal government derives almost no benefit from gambling. It is thus in a better position than the provincial governments to defend the interests and well-being of Canadians grappling with gambling problems.

All we want to do here is provide a healthier environment for Canadians by removing the terminals from bars and restaurants and concentrating them in betting theatres, race-courses and casinos.

According to some of the evidence given to the Senate committee, video lottery terminals are often installed in bars in poorer neighbourhoods.

Their presence thus leads people who might never have been exposed to gambling to play them because of their accessibility.

According to a study published in the Canadian Journal of Psychiatry, most compulsive gamblers are dependent on video lotteries, which they play daily or several times a week, because they can remain close to home and use the terminals available in local bars. These video lottery terminals have many more negative aspects than is commonly thought. It is clear that if we look at the revenues that the federal government receives from the money the provinces give back—we are talking about some $50 million here—it is markedly less than the social costs of gambling.

The reason is simple: people play more because the product is available.

Studies tend to demonstrate that people with a gambling problem prefer electronic forms of gambling to other types of games of chance.

In its 1999-2000 report, Jeu: aide et référence du Jeu pathologique du Québec, a telephone information and help line, reported that among the most frequently mentioned types of gambling, video lottery terminals were mentioned by 83% of callers in distress. It is important to note here that pathological gambling is compulsive, so there are serious social and financial repercussions for individuals, families and society in general.

Thus, pathological gambling can lead to indebtedness, divorce, bankruptcy, crime and, unfortunately, even to suicide. In all these situations, it is the family that will suffer. It should also be noted that pathological gambling has the highest suicide rate among all dependencies. Since the Coroner of Quebec began compiling statistics, 109 suicides have been directly related to gambling, including at least 49 in the past three years.

One of the groups that Bill S-211 wants to protect is young people. That is because researchers say they are more concerned about what will happen to adolescents than to adults. It is easy to understand; today’s children represent the first generation to grow up in a world where gambling is not perceived as a danger, where in fact churches, service industries and governments approve of gambling as a way to raise funds. Games of chance are legal, they are accepted and today’s children have never experienced a time when games of chance were not part of society. Moreover, they are considered the Nintendo generation; so, for them, electronic games are part of their surroundings and their lifestyle.

In support of these arguments, some surveys show us that there is general public support. In Quebec, 68% are in favour of such a bill, with only 10% opposing it. Nationally, 71% favour regulations that would relocate video lottery terminals to casinos and race-courses alone. Eliminating video lotteries, outside of casinos, race-courses and betting theatres across the country, would improve the quality of life of our fellow Canadians, particularly of our young people and elderly.

The government has the duty to act to protect our fellow citizens against any threat. Now is the time to take concrete action and to show the Canadian public that these video lottery terminals are harmful and dangerous to their health.

That is why we must legislate in this matter as quickly as possible and why you, hon. members, must support this bill.

[Textile and Clothing Industry, February 16th, 2007]

Mr. Speaker, this answer is not acceptable. The Liberal government helped the industries that were having difficulties, such as the clothing and textile industry. The Conservative government seems to be under remote control by our overseas competitors and is making sure all our jobs are exported. We created a program of duty remissions on inputs to help the textile industry cut its costs.

Why did the Conservative government eliminate this program and re-establish the duties, thereby increasing costs?

[Textile and Clothing Industry, February 16th, 2007]

Mr. Speaker, one of the manufacturing sectors most harshly affected by job losses due to globalization is the clothing and textile sector. The previous Liberal government had implemented measures to help this industry become more competitive, with the CANtex program for example. Far from helping this industry, the Conservative government has cut its funding. Last fall, $25 million was cut from this program.

Why is this government trying to destroy this industry? Why does it not have a plan?

[Committees of the House, December 13th, 2006]

Mr. Speaker, I have the honour to present, in both official languages, the ninth report of the Standing Committee on Finance entitled “Parliamentary Review of the Canada Customs and Revenue Agency Act: A Value Proposition or a Failed Experiment”.

Pursuant to its mandate under Standing Order 108(2) and Section 89 of the Canada Revenue Agency Act, your committee has undertaken the statutory review in the first five years of the Canada Revenue Agency Act.

In closing, I would just like to thank all the people who made this possible, because we have been working on this for the last two parliamentary sessions. I want to thank the research staff and of course the clerks and the translator for getting the report out in 24 hours.

[Tax Conventions Implementation Act, 2006, December 7th, 2006]

Mr. Speaker, we agree on this one. Any type of treaty legislation that will enhance Canada's place in the world will benefit all Canadians. I travelled with my colleague across Canada and saw that Canadians live on trade. Whether it is the exporting of manufactured products or natural resources, Canada has to be more competitive.

We talked about keeping a competitive tax structure or maintaining our social programs. Those are all important aspects of keeping Canada competitive. We live in a global economy and a global world and the tax treaties represent only one aspect of the whole competitive package that Canada has to maintain on the international stage.

[Tax Conventions Implementation Act, 2006, December 7th, 2006]

Mr. Speaker, I wish to speak on Bill S-5. Some of the points that I am going to speak about were already addressed by my colleague from the Conservative Party, but I want to speak today on the Liberal point of view.

Bill S-5 is an act to implement conventions and protocols concluded between Canada, Finland, Mexico and Korea, all separate tax treaties from what I understand, for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes. It is also known as the 2006 tax convention implementation bill.

While international tax law does not always make for the most exciting of debates, its importance is indisputable, especially as we move toward greater globalization and greater free movement of labour and capital across international borders.

This bill seeks to obtain tax treaties between Canada and, as I said, three other countries, those being Mexico, Korea and Finland. We have had tax treaties in place with these countries for many years. As with most laws, there comes a time when they need to be amended in order to reflect changing times.

Consequently, the bill presents some routine amendments that I believe will help ensure Canada remains a leading participant in the global economy.

Our party will support the updates contained in the bill.

There are two primary areas with which the bill occupies itself. The first is to help combat tax avoidance between signatory countries. The second is to avoid the double taxation of nationals working abroad in these other countries.

I will begin with the issue of international tax avoidance. As an accountant, I can tell the House that combating tax evasion is not an easy task, but it is an urgent one. It is also a task that Canada cannot fight on its own. As the former chair of the finance committee during the last parliamentary session, I can say that this is why our committee looked at how Canada can increase its battle in curbing the increase of tax evasion.

With the call of the election by the opposition parties, our work was never completed, but during this session the finance committee, forced to conduct a parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, has hopefully given FINTRAC more tools to help combat tax evasion, through Bill C-25.

Stemming international tax evasion is something that requires the efforts of all countries among which capital and people flow back and forth, and they are perhaps flowing more freely now than at any other point in history. It is therefore not only advantageous for us to close tax avoidance loopholes in order to protect our own tax base, but it also speaks about our commitment to the international community. We have to show our partners, allies and competitors that Canada takes its international responsibilities seriously. We have to be willing to exchange information and work with foreign revenue authorities to help stem the tide.

I will now move on to the second part of the bill, the avoidance of double taxation. We are living in a highly globalized economy. Without international tax treaties such as this one, a Canadian working abroad would likely be taxed twice on the same income, once by the Canadian government and then again by the country in which that income is earned.

There are several ways to ensure that double taxation does not occur when the citizen of one country works in a foreign country.

A tax treaty can ensure that worker's income is taxed solely in the country where the work is done. Conversely, a treaty can also ensure that only the country of which the worker is a citizen taxes that person. Or again, finally, a tax treaty can see both countries tax a worker but at lesser rates, to ensure that the taxpayer who pays in one country will receive a tax credit in the other country in which he or she files his or her income tax return based on global income, to avoid double taxation.

The treaties in Bill S-5 cap the tax rate at 15% on portfolio dividends paid to investors who do not reside in Canada. In the case of dividends paid by subsidiaries to their parent companies, the maximum withholding tax rate is reduced to 5%. The withholding rate reductions also apply to royalty, interest and pension payments.

Each treaty in Bill S-5 caps the withholding tax rate on interest and royalty payments at 10%, which is in line with current trends in this area and current Canadian tax policies.

At this point what does concern me are the recent rumblings by the present government that seem to indicate it would like to rip apart many of the 90 tax treaties that were signed by the previous Liberal government in order to prevent the double taxation of Canadian dual citizens who work outside of Canada.

It was a little over a month ago when the Minister of Foreign Affairs told the Senate committee that the government was considering imposing a tax on Canadians living abroad under a second nationality. This would not only violate our bilateral treaty obligations with dozens of other countries, but it would also go against the fundamental value of what it means to be a Canadian at home and in the world.

Furthermore, it would also represent a complete U-turn from what Bill S-5 attempts to do. Bilateral tax treaties signed between Canada and other countries, such as the one we are discussing today, allow for dual nationals to live and work in one country without having to pay income tax in their country of citizenship. In a world of increasing international movement, these tax treaties have become more and more vital. As such, Canada has been hard at work to extend its tax treaty network for decades.

International arrangements such as these allow for relatively free movement of people and capital across borders, contributing greatly to the rich multicultural nature of our country. Imposing an income tax on dual citizen Canadians living abroad would not only violate these treaties, it would seriously reduce our domestic tax base by opening up the likelihood that foreign dual nationals here would face double taxation from their country of citizenship.

While I am happy to support the bill, which will ensure there is no double taxation between Canada and either Finland, Mexico or Korea, I am very concerned about the government's commitment to respecting the bill over the long term. I am also concerned about what that says about the government's commitment to making Canada internationally competitive in terms of taxing its citizens working abroad and potentially foreigners coming to Canada to work.

There is another aspect of what international tax treaties such as Bill S-5 achieve. It is just as important as avoiding double taxation or stemming tax avoidance. That aspect has certainty. With so much investment, goods, services and labour flowing across international boundaries, it is important for the people involved to hold a fair degree of certainty that the tax situation that exists today will more than likely exist tomorrow.

In short, it is a commitment that the rate of taxation will not change on the whim of a government. It is kind of guarantee to the international community and to Canadians that the government will not, for instance, suddenly decide to tax its dual citizen nationals living abroad like the present government decided to do by taxing income tax after promising not to do so in the last election. I have no idea why the government wanted to erode that confidence by musing about taxing its dual citizens living abroad.

Finally, I am also concerned that the government is not moving important legislation through Parliament as fast as it should. I am told that the bill needs to receive royal assent by January 1, 2007. Fortunately, it is a Senate bill and it has already passed in that place in a very speedy manner, which is why it is before us in the House.

The bill arrived in the House just two short weeks ago. It has taken the agreement of all opposition parties to fast track the bill through second and third readings. In short, it took the three opposition parties to ensure the bill, a bill that may not be tremendously exciting but is nonetheless important to Canada's competitiveness, was passed on time.

That being said, we on this side of the House are happy to support the bill at all stages.

[Tax Conventions Implementation Act, 2006, December 7th, 2006]

Mr. Speaker, I understand from the hon. member's speech that investment is an important part of why we sign tax treaties. It is important for the flow of goods and services, but for investment as well.

I wonder if the member opposite has any idea of how much foreign direct investment there is in Canada, in particular by the U.S., or about why these tax treaties important, because they do lead to additional investment.

[Petitions, December 7th, 2006]

Mr. Speaker, I have the honour to table a petition from Canadians mainly from Ontario but not necessarily from my riding.

The petitioners are asking the Government of Canada for a new automotive trade policy. This is the last of a series of petitions that I have tabled in the House. It basically calls upon the Government of Canada to cancel negotiations for a free trade agreement with Korea which would worsen the one way flow of automotive products into our market and to develop a new automotive trade policy that would require Korea and other offshore markets to purchase equivalent volumes of finished vehicles and auto parts from North America as a condition of their continued access to our market.

[Petitions, November 22nd, 2006]

Mr. Speaker, today I am tabling a petition in this House that was signed by Canadians from all parts of the country. It asks the Government of Canada to establish a new trade policy for the automobile industry.

The petitioners urge the Government of Canada to cancel negotiations with Korea on a free trade agreement that would increase the massive one-way flow of automobiles into our country.

The petitioners are also asking the government to develop a new trade policy for the automobile industry requiring Korea and other foreign markets to purchase equivalent amounts of North American finished vehicles and auto parts if they wish to continue to have access to our market.