Bill S-3 (Historical)

Tax Conventions Implementation Act, 2010

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

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

Tax Conventions Implementation Act, 2010

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

Madam Speaker, 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.

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

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

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

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

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

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

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

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

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

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

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.

[John Cannis, Liberal, Scarborough Centre, ON]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[John Cannis, Liberal, Scarborough Centre, ON]

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

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

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

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

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

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

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

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

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

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

For the record, the bill states that it is:

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

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

In his speech, Senator Wilfred Moore said:

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

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

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

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

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

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

He is absolutely correct. He went on to say:

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

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

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

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

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

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

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

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

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

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

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

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

[John Cannis, Liberal, Scarborough Centre, ON]

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

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

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

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

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

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

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

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

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, the incapability and ignorance is on that member's side. If he understood what I was trying to tell him, he would ask himself, “If I am singling out Colombia on human rights, why am I not singling out Turkey for doing exactly the same thing?”

With Bill S-3, we are trying to show these nations the way forward by moving them toward tax avoidance and tax evasion so they can produce and input into their economies to make for a better tomorrow. I am sad that he does not have much knowledge on the Cyprus issue. I will ensure his constituents know about it.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, I would like to thank all of my colleagues, especially those who are kind enough to remind the members that they are supposed to ask for that at the beginning of their remarks.

As I said, the numbers are breathtaking. These are sums of money earned by individuals and companies—both real people and corporations—in jurisdictions like our own where there are institutions that guarantee the rule of law, competent courts untainted by corruption, police forces, educational institutions and so on. All of that costs our society money to ensure the peace, order and good government we have enjoyed here in Canada for 150 years. Then, once they have earned money thanks to these institutions that cost all taxpayers money, they are rich enough and organized enough to get their money out of this country and stash it away in opaque—non-transparent—jurisdictions. In other words, they do not pay their fair share of the cost of the social institutions that helped them get rich.

This is not just about cheating on taxes. This is about swindling the society that helped them get rich. That is what we need to tackle, and it is hogwash to suggest that such a treaty will curb tax evasion. That is not true. All we have to do is review the list of jurisdictions that have signed similar conventions with Canada to see that we are still signing agreements with problematic countries.

That brings me to another major concern about Bill S-3. This bill covers three countries. The issue I am about to raise has nothing to do with Greece or Turkey, but it does have to do with Colombia, and we believe that including that country in this treaty is a poison pill. The government knew exactly what it was doing when it included Colombia in a bill that also covers two countries that are not problematic in this regard.

All members are aware of our fierce opposition to the Canada-Colombia free trade agreement. There is a reason for it and it is not difficult to understand. If Canada is prepared to sign a free trade agreement with another country because it says that how we do business, deal with people, train our professionals, our way of being and our values are fairly similar, the other party must respect our basic values such as the respect for human rights. Unfortunately, this is not the case with the current government in Colombia.

That is at the root of our fierce opposition to the free trade agreement with Colombia, proposed by the Conservative government. We will vote in favour of the principle of Bill S-3. This bill could make it possible, for example, for a young Greek couple, working one half of the year in Canada and the other in Greece, to avoid double taxation. That is reasonable. However, we want to make it clear right now that although we are voting to send Bill S-3 to a parliamentary committee, once it gets there, we will do everything possible in terms of House procedure to split the bill, to amend it and to use every means available to remove the part concerning Colombia. That is understandable because we have to be consistent.

Therefore, while recognizing that there may be a young Colombian couple in the same situation, we will continue to work with the authorities in that country and with groups trying to raise the bar for human rights. Let us be clear, we cannot, on the one hand, express our fierce opposition to a free trade agreement with Colombia and, on the other, agree to the signing of this type of treaty. Consequently, it can be expected that the NDP will do everything possible, at the parliamentary committee, to split the bill and remove the part concerning Colombia or, once again, to amend it.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, I am pleased to speak to Bill S-3, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

The first thing I want to say is that the bill's alphanumeric designation is a clear indication that it comes from the Senate of Canada. We have to say that the Conservatives talk out of both sides of their mouths when it comes to the Senate's status as an undemocratic and unrepresentative institution.

In the House and at rallies in Alberta, they rail against the Senate, but when it comes to signing treaties, which are the most important expression of our international diplomacy, they do not hesitate to introduce bills like this one in the Senate rather than the House. This is another fine example of the Conservative government's hypocrisy.

What is more, as the bill's title indicates, this bill is supposed to avoid double taxation and tax avoidance or fiscal evasion, as the bill title states.

I will start by talking about double taxation. Because there are many countries in the world and we live in a world in transition that is increasingly open to trade in goods and services, many people spend part of their professional lives in different countries. This sort of treaty is valuable in that it prevents people from being penalized and having difficulty working and crossing borders. We do wonder, though, whether it will really do anything to prevent tax evasion.

My colleague, the member for Hochelaga, just gave several examples, including Liechtenstein, which is very high on the list of opaque countries, to say the least.

According to the OECD, there is $6 trillion in opaque countries, that is, $6,000 billion. This is not far off the estimate of $10 trillion to $12 trillion that the Tax Justice Network, an extraordinary English organization, came up with. These figures are very close.

Madam Speaker, I must ask your consent to share my time with my friend and colleague, the member for Sault Ste. Marie. I was asked to remind you.

[Daniel Paillé, Bloc, Hochelaga, QC]

Madam Speaker, earlier, I heard our Liberal colleagues talking about broken election promises. As members will recall, during the last election campaign, the Conservatives promised two things: they promised to put international treaties before the House prior to ratification and to give the provinces a role in concluding treaties pertaining to their jurisdictions. But as we can see, and as the hon. member mentioned earlier in response to one of his Liberal colleagues, the Conservative Party made promises during the election campaign, but as soon as it took power, it forgot all about them.

We are not comfortable with this bill because it comes from the Senate, and we have to wonder what the Senate has to do with any of this. Earlier, the Parliamentary Secretary to the Minister of Finance said that we look to some senators for guidance. I realize that many of them have had successful careers and are knowledgeable, but what good is this knowledge in the upper chamber if it wastes away from lack of use?

Bill S-3 would implement tax treaties between Colombia and Canada, Greece and Canada as well as Turkey and Canada. One interesting aspect is that this seems to be a pure, unadulterated bill, unlike Bill C-9, which is a mishmash of things, odds and ends, that the government sent to us in parliamentary committee. We will be studying those 888 pages clause by clause this afternoon. I do not know what time we will finish. But this bill is focused strictly on avoiding double taxation and exchanging information. That is very important.

We in the Bloc Québécois will take our roles as parliamentarians seriously, and we will be diligent in our work. We have studied this bill and, because we encourage diligent and serious examination of issues, when it comes time to vote, we will do our jobs as parliamentarians. We want to see this bill further studied in committee. This is very important to us because we often hear that the Bloc is systemically opposed to everything, that we are here just to stonewall, as some token Quebeckers in the Conservative Party seem to enjoy saying or erroneously suggesting. I am obviously not insulting anyone here in the House by saying that because they are not here. The Bloc Québécois will vote in favour of this bill because we believe in looking at things carefully.

Trade between Canada, Colombia, Greece and Turkey affects the revenues of the Government of Canada, but it also affects the revenues of provincial governments and of Quebec. There was no consultation about that. We do not even know how much this will cost. It will cost something, obviously, but we have no idea what it will cost the government.

Of course, for Quebeckers with companies that do business abroad—and I used to work in companies that did business abroad—tax conventions are attractive. I will always remember when I made my first foray into politics in 1994 in the Government of Quebec. At the time, my employer and immediate superior was Pierre Péladeau, who was president of Quebecor Inc. I was his executive vice-president of acquisitions.

He told me that if I went into politics in the Government of Quebec—I became Minister of Industry, Trade, Science and Technology—I should try to do as little harm as possible. That was how he liked to talk. Pierre Péladeau was a believer in the popular KISS principle, which recommends keeping things simple. To keep things simple, I will try to remember this man I loved working with.

This bill opens loopholes and revolving doors, and we will want to ask questions in committee or here in the House. For example, how is it that Canadian companies can register elsewhere to avoid paying their fair share here? We are concerned that there may be loopholes.

This bill is also supposed to fight tax evasion. Earlier, an NDP colleague wondered whether the current government really wanted to fight tax evasion. That is disturbing. We have to wonder which countries are tax havens and whether they have agreements with the Government of Canada. This is something that needs to be looked at. I still believe that we are being presented with a done deal, but we still need to examine a number of provisions in the bill.

For example, in subclause 1(d) of the General Definitions in Schedule 1, which pertains to the agreement between Canada and Colombia, the term “person” is defined as including “an individual, a trust, a company, a partnership...”.

On page 29, in subclause 1(c) of the General Definitions in Schedule 2, which pertains to the agreement between Canada and Greece, the term “person” includes an individual, a trust and a company. There is no mention of a partnership. This is the sort of question we could ask, but the agreement is a done deal. We have to take it or leave it.

Moving on with general definitions. In that same paragraph of the agreement with Turkey, the term “person” is defined as an individual, a trust, a company and an estate. As a parliamentarian, I would like to ask a question before signing this kind of agreement. Why are estates not mentioned in the agreements with Greece and Colombia, but they are mentioned in the agreement with Turkey? What does that mean? It is our job as parliamentarians to know what that means. There may be good answers out there, but I have not had a chance to get any. The parliamentary committee will try to get those answers.

There are currently 87 conventions between Canada and other countries, but only one contains the ideal standard of information exchange recommended by the OECD: the Canada-Netherlands convention. It is all a bit vague when it comes to other countries, and that raises a question.

Canada is apparently in talks with 14 other countries: Anguilla, Aruba, the Bahamas, Bahrain, Bermuda, Gibraltar, Guernsey, the Cayman Islands, the Isle of Man, Turks and Caicos, the British Virgin Islands, Jersey, Saint Kitts and Nevis and Saint Lucia. But there have been delays. Until these agreements are signed, people will continue to take full advantage of tax havens. That is the important thing here.

Let us look at three random cases: Bermuda, the Cayman Islands and Barbados. There are no conventions with these countries. They say negotiations are ongoing, but between 2000 and 2008, Canadian investment in those countries rose from $30 billion to $90 billion.

Can anyone tell me what it is about those three countries that caused investment to triple in the absence of tax conventions? Some might suggest that 300% divided by eight is 37% growth per year. As a financier and former university and HEC professor, I would say that that is not how it works. We have to consider compound interest. That is still 15% growth per year. Investment rose from $30 billion to $90 billion. Can anyone tell me what it is about those countries that supports that volume of international trade?

There are other countries as well. We remember the enthusiasm of President Sarkozy, who had the political will to act quickly, to sign and to condemn tax havens. He condemned what is known as the grey list. Who is currently on this list? Belize. My NDP colleague spoke about Belize earlier. In fact, it seems that some Conservatives do business in Belize. It would seem so. It is still on the list along with the Cook Islands, Dominica, Grenada, Liberia, the Marshall Islands, Montserrat, Nauru, Niue, Panama, Saint Lucia, Vanuatu, Brunei, Costa Rica, Guatemala, the Philippines and Uruguay. They are all on the grey list. What are they waiting for? Canada does not have agreements with these countries and therefore why not take full advantage.

What is a tax haven? The OECD has established criteria for identifying them. We have agreed on 0.08 as the legal alcohol limit for driving a car. I can say that the taxation rate is 0.0 when looking for tax havens. That means that there is no or nominal taxation. When you go to a country and ask about the corporate tax rate or the tax rate on capital gains, and you are asked in turn what tax rate and told 0.0, that should be a sign.

A lack of transparency is the second sign. It is like opening files and there is no system of record-keeping. Organizations specialize in not keeping records.

Lack of diligence is the third sign. It is expressed by administrative, legal or bureaucratic barriers or evasive answers when responding to our questions.

There is no transparency, no diligence and no taxation.

I find the fourth sign interesting: a total absence of economic activity associated with the investment.

I would like to go back to the three examples cited earlier. Canada's foreign investment in three countries went from $30 billion to $90 billion and we wonder what is in those countries.

There is nothing. Well, there are beautiful beaches, beautiful people and beautiful places, but in terms of industrial activity, there is nothing.

When a company that does metal and chemical processing invests in Barbados, we have to wonder what that country has to accommodate that. If there is nothing, along with a 0% tax rate, no transparency and no diligence, that is the perfect example of a tax haven.

In the 1950s, there was a sign on the way into Montreal meant to attract American investments in Quebec where, supposedly, labour was cheap and docile. Older people may remember it. Mr. Duplessis boasted about it. In a tax haven, you would see a sign that says that taxation is very cheap and very flexible. It is very docile. That is what a tax haven is all about.

Consider Barbados as an example. It is said that the tax laws in that country include a specific section for international business corporations. An international business corporation is a corporation that is registered in Barbados, but that conducts most of its business outside of Barbados.

Very few conditions have to be met to be there. The business has to be registered in Barbados, have its head office there, hold one annual meeting there—which can be a teleconference—keep records of a board of directors there and employ a local resident as the manager. How interesting: a job is created. However, the manager does not have to have any power. Accordingly, the board of directors recruits a manager from Barbados and tells that person they have no power and that is just fine.

How are the companies taxed? The maximum tax rate is 2.5% and the minimum tax rate is less than 1%, which is not much more than zero. They are exempt from capital gains tax, exempt from exchange controls and they can import anything they like duty free. One small detail: the average salary of a manager of a foreign subsidiary in Barbados is $1,500 a year. That same Barbados branch manager simply has to find 1,000 jobs at $1,500 each and he or she is the manger of 1,000 companies. It is a great way to earn a very good living.

I will close by talking about the road to healthy co-operation. We are told, of course, that things are improving and that this occurs less and less. Attempts are made to have tax agreements with countries, but under what conditions? We are told a country will be removed from the list if we can have access to real, valid information, if there is no banking secrecy, if access to information is relatively easy and if taxpayers' rights are protected. What happens if there are a dozen agreements? The trick is to have a dozen agreements with lenient countries and then continue to operate as a tax haven.

We are voting in favour of the bill. I know that my colleague from Alfred-Pellan will address some of the Bloc's other concerns, but we are voting in favour of the bill in order to be able to go over it with a fine-toothed comb.

With all due respect, it would have been better if the agreements had been submitted to the House beforehand and with input from the Government of Quebec.

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

Mr. Speaker, I am not aware of any government briefing. Normally there are some sort of government briefings on bills, where critics could be briefed on the provisions of the bill. In this particular case, one would have to brief the parliamentary secretary, because after he made his speech I asked him how much money has been recovered in terms of tax avoidance and tax evasion issues. Given that these treaties have been enforced for many years, and there are 80 of them in place, one would think he would be able to tell us right away how much money had been recovered in terms of tax avoidance and tax evasion issues.

For many years in Manitoba, I was able to get in estimates, on an annual basis, the amount of arrears on PST, on provincial tax arrears. In estimates it was an open book. I find it really surprising that the member would not have that information at his fingertips.

Another question I want to ask him is: To how many people does this apply? Surely the government has some idea of how many citizens this particular new initiative, the new Bill S-3, would apply to in terms of citizens from Greece, Colombia and Turkey who we are dealing with here.

Clearly the government should be a little more prepared and have more information when it brings in bills such as this. I ask the member if he would like to make some comments about those points.