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.

[The Speaker, Liberal, Peter Milliken]

I have the honour to inform the House that when the House went up to the Senate chamber His Excellency the Governor General was pleased to give, in Her Majesty's name, the royal assent to the following bills:

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--Chapter No. 15

Bill S-210, An Act to amend the Federal Sustainable Development Act and the Auditor General Act (involvement of Parliament)--Chapter No. 16

Bill S-2, An Act to amend the Criminal Code and other Acts--Chapter 17

Bill C-3, An Act to promote gender equity in Indian registration by responding to the Court of Appeal for British Columbia decision in McIvor v. Canada (Registrar of Indian and Northern Affairs)--Chapter 18

Bill S-215, An Act to amend the Criminal Code (suicide bombings)--Chapter 19

Bill C-464, An Act to amend the Criminal Code (justification for detention in custody)--Chapter 20

Bill C-36, An Act respecting the safety of consumer products--Chapter 21

Bill C-31, An Act to amend the Old Age Security Act--Chapter 22

Bill C-28, An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act--Chapter 23

Bill C-58, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2011--Chapter 24

Bill C-47, A second Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures--Chapter 25

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Dartmouth—Cole Harbour, Canadian Council on Learning; the hon. member for Vancouver Kingsway, Public Safety.

The House resumed consideration of the motion that Bill S-3, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the third time and passed.

Tax Conventions Implementation Act, 2010

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, it is a pleasure to speak today to Bill S-3, an act to implement tax treaties between Canada and Colombia, Greece and Turkey. The objectives of this bill are twofold: first, the avoidance of double taxation; and second, the prevention of tax evasion.

The Organisation for Economic Co-operation and Development, the OECD, has long been an advocate of these treaties to ensure equitable treatment of taxpayers who work and invest in countries outside their own.

Canadian businesses have a long tradition of trading internationally. As well, we have many Canadian workers who work for longer periods abroad, for example, engineers in the oil industry, et cetera. The implementation of these treaties will ensure that those doing business and accepting employment in those countries covered will not face the prospect of having their income taxed unfairly by both their country of residence and the country in which they are working. This double taxation is be very unfair to the people.

The stated goals for entering into a treaty are often included in the reduction of double taxation, eliminating tax evasion and encouraging cross-border trade efficiency. It is generally accepted that tax treaties improve certainty for taxpayers and tax authorities in their international dealings.

As we continue to sign tax treaties such as these with other countries, Canadians will see a benefit through increased tax revenues generated from some individuals who probably try to hide their foreign income and investments.

Taxpayers may have relocated themselves and their assets in the past to avoid paying taxes, so some of the treaties that we are signing thus require each treaty country to assist the other in the collection of taxes and in other enforcement of their tax rules. These treaties include a requirement that the countries exchange information needed to foster enforcement. The requirements in these treaties would ensure that the information on individual and corporate taxpayers would only be shared by the competent legal entities in either country.

While I support the government in continuing to sign treaties such as these, which have been an ongoing process for the past few decades, I cannot and do not support some of the policies of the government in regard to taxes. For example, the Conservatives' plan to cut $6 billion in corporate taxes to the wealthiest corporations will do nothing to help small businesses.

The Liberal Party wants to do things differently. Our policies will help small businesses, create jobs, enhance competitiveness and build cutting edge industries.

As I have been canvassing small and medium sized enterprises, they are asking these questions. What is wrong with the Conservative government? Why does it not have its priorities in place? Why does it not understand that the corporate tax cuts given to large corporations will not create jobs? It is the small and medium sized enterprises that are the engines of growth and it is the small and medium sized enterprises that need the investment.

It is all about choice, choice for Canadians; the Liberals' choice or track record of fiscal responsibility, a plan to make strategic investment in lasting economic legacies versus the borrow and spend Conservatives who spent Canada into deficit even before the recession began, the Conservatives who are wasting billions more on prisons, untendered stealth fighters and tax breaks for large corporations.

The Liberal plan is to invest in people. It is important to invest in people. It is important to use taxpayer dollars wisely. The Liberals have had a track record. They eliminated the deficit and the debt that the Mulroney Conservatives created.

The Conservatives made a mess of the economy. There was record unemployment, mortgages were at 21% and people were losing their jobs. I remember because I was working in receivership. I had the unfortunate task of taking over people's businesses or homes. People were in a bad state. They were losing their shirts, so to speak. The IMF called Canada the basket case of the developed world.

When the Liberals took over, they reined in expenses, brought fiscal prudence and, after the hard efforts of the Liberal government with the help of the Canadian people, Canada was back in business. It was the envy of the G8, thanks to the efforts of Prime Ministers Jean Chrétien and Paul Martin. The Liberal government invested in people, gave Canadians the biggest tax break to the tune of $100 billion and invested in cities and health care. Canada has been the beneficiary of Liberal fiscal competence.

Now that we have a Conservative government, what does it do? It takes the $13 billion surplus and savings, which was meant to help Canada face economic hardship, and it blew it away even before the recession came.

What do the Conservatives have to show for that fiscal incompetence? They have a $56 billion deficit and climbing, cuts to programs, cuts to funding for organizations that serve people, and cuts to organizations that do not meet its ideology. It is going down the same slippery slope as the Mulroney government.

The current finance minister has been called the “architect of deficit” for good reason. It is because of his previous stint in Ontario. That is the same finance minister who wanted to imitate the subprime mortgage initiatives, and we know what would have happened.

On the current economic front, the Conservatives have been a poor fiscal managers and it is not surprising as it has never balanced a budget. The last time that happened was when the Titanic sank, and that is telling.

The Liberals believe that Canadians must live within their means, so too must the government. The questions Canadians are asking are: How can the government, which has a record deficit of $56 billion and counting, borrow money, $6 billion for example, to give cuts to large corporations, many whose head offices are not here? How can they justify this? Why are they not instead investing in Canadian SMBs which are the engines of growth?

Canadians are also asking why the government is borrowing an additional $10 billion to create super jails for unreported crimes when the money should be invested in literacy, mental health, educational institutions, social housing, et cetera, which are the determinants of crime. Why is the government so foolish in its choices?

Would a family be foolish enough to borrow money for unnecessary toys when given a choice between food on the table or frivolous expenses? No family would have the luxury to do such foolish things. Therefore, Canadians want their government to ensure it is not spending their hard-earned tax dollars foolishly.

While speaking of tax treaties with other nations, it must be noted that those treaties do not address the problems of unscrupulous individuals who hide earned income in offshore bank accounts to avoid paying Canadians taxes. The government has been very slow off the mark in pursuing the potential billions of dollars hidden in Swiss and other bank accounts.

To have an efficient tax system, it is desirable to have an efficient government that collects and spends tax revenues in a logical, fair and transparent manner. As I mentioned, unfortunately the government fails on all three of these requirements. For example, spending $16 billion on an untendered contract for stealth fighter jets at a time when many Canadians are unemployed and in danger of losing their homes is not logical.

Spending millions of dollars in the industry minister's riding on such things as sidewalk replacement miles away from the meeting site and pretending it to be related to the G8 is not fair. Spending $6 billion on unneeded tax breaks to big business while threatening to increase EI premiums is showing how transparent the government's disregard for the average Canadian worker really is.

Canada's federal government now faces a $56 billion deficit, and its expenditures are simply not under control as examples of waste continue to add up.

Even before the recession, the government has spent more than any other in the history of Canada, increasing government spending at three times the rate of inflation in its first three years.

Now the government is pushing the accelerator pedal with plans that will cost $10 billion more for new prisons when crime rates are falling and $16 billion more on a sole-source stealth fighter contract when Canada's military requirements have yet to be defined. This is after it has already spent $1.3 billion on a 72-hour G8 and G20 summit when South Korea is expected to do the same for less than $25 million.

People are worried about their jobs and their ability to pay down a level of household debt that has soared. Middle class families in Canada are being squeezed like never before, more severely in fact than anywhere else in the western world.

The average Canadian family is about $96,000 in debt. We owe almost $1.50 for every single $1 of disposable income and our cost of living keeps rising. Credit card balances are high, mortgages have been borrowed against and lines of credit are full.

Canadian families face serious economic challenges as they confront rising household debt, which is mounting. Educational costs are mounting. The challenge of saving for retirement and the cost of caring for sick or aging family members is mounting.

As I was canvassing, seniors came up to me and asked, “How can the government justify spending $1.2 billion on the G8-G20 for a 72-hour photo op and not invest in seniors? Seniors who have worked hard, who have invested in their country, who have put in whatever they have, now risk losing their house and their income because the government refuses to reform pensions”.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to speak to Bill S-3.

I took the time to read the debate from May 13 on this bill, at which time it was sent to the Standing Committee on Finance. I currently serve on the finance committee but did not when the bill was sent to the committee back then.

I had an opportunity to read the debate from May to see some of the substantive points and I was not surprised to see that the Parliamentary Secretary to the Minister of Finance, who spoke to lead off this debate at third reading, made the same points that he raised at second reading. That is not surprising and it indicates to me that really nothing has changed since the last time we dealt with this legislation. In fact, I believe this particular bill was up even in the last session of Parliament.

For those who are following the debate, Bill S-3 was introduced in the Senate. It is a bill that would 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. It is fairly long.

The summary ostensibly repeats the title of the act, but there is some more information in the summary. It says:

The treaties implemented reflect [our] 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.

The summary repeats the two objectives: the avoidance of double taxation and the prevention of fiscal evasion.

The summary indicates that since a tax treaty contains tax rules different from the provisions in the Income Tax Act, it becomes effective only after being given precedence over domestic legislation by an act of Parliament such as this one. For each of those tax treaties to become effective, it must be ratified after the enactment of this bill.

Interestingly enough, the bill has a short title. There has been a lot of discussion about short titles in this place. People have given whole speeches about how short titles tend to represent that a bill does something that it in fact does not but it is pretty good politics to have the language out there.

As the short title, this bill may be cited as the Tax Conventions Implementation Act, 2010. It makes some sense, because we have these tax conventions with over 90 countries already and every one of them is identical in terms of their clauses.

The bill contains six clauses and the only thing different would be the name of the country. They are each included under parts to the bill. Part 1 is the Canada-Colombia convention, part 2 is Canada-Greece, and part 3 is the Canada-Turkey convention.

The bill is not long at all, and in fact, the first of the six clauses under each part is just to have another short title. For Colombia, for example, it states:

This Act may be cited as the Canada– Colombia Tax Convention Act, 2010.

Clause 2 says this act is a convention, etc.

Clause 3 says that the convention is approved and has the force of law in Canada during the period that the convention, by its terms, is in force.

Clause 4 basically says that, in terms of the provisions of this act or the convention and the provisions of any other law, the provisions of this act and the convention prevail to the extent of the inconsistency. It basically means that if there is an inconsistency between any legislation and this bill, the bill is in force to the extent that there is the inconsistency, and that is handled depending on the nature of it.

Clause 5 allows the Minister of National Revenue to make any regulations that he or she feels are necessary to carry out the convention and for giving effect to any of its provisions.

This gives me a chance to give my standard statement that when parliamentarians look at legislation, often they will find, in some of the clauses, “subject to” the regulations. I should indicate that as parliamentarians debate this at second reading, in committee, at report stage and at third reading, they still have not seen what the regulations are.

The regulations are supposed to be the details. For instance, it would say that, under the Income Tax Act, tools are deductible at a rate of 20% a year. In the regulations it would say that tools include hammers, saws, screwdrivers, et cetera. So the regulations are the details, and the provision in the bill for “tools” gives the generic.

During the debates, as I have said, we do not know what the details are. It is important to know details because we have a committee, a joint Commons-Senate committee called the Standing Joint Committee on Scrutiny of Regulations, which I chaired for a couple of years and served on for five or six years, whose whole purpose is to review the regulations that are ultimately made and then make sure that they are enabled in the legislation that was passed.

Sometimes, and quite frankly it happens far too often, governments try to put in the regulations things that are not contemplated in the bill itself and would in fact change it. It is called “back-door legislation”. It is where the purpose, scope or intent of the bill is changed without having it disclosed to parliamentarians.

I often say that when a bill is important enough, the House should ask the minister sponsoring the bill to present draft regulations to the committee responsible for reviewing the legislation, so that they can review it, not necessarily to change the regulations but simply to ensure that the regulations are properly enabled in the legislation and that the committee has an opportunity to make some comments with regard to whether there are any provisos that should be included in the regulations to make it better fit a specific case as opposed to simply the generic case.

If we have regulations that will apply to all three of these countries, there are some cases, as the previous speaker indicated, where a specific country, depending on its reputation or our circumstances with them, may require a more rigorous or more stringent approach to the regulations guiding legislation for that particular country. I wanted to raise that.

The final clause is that:

The Minister...shall cause a notice of the day on which the Convention enters into force

It just basically says that even if we pass this bill, even if it gets royal assent, et cetera, it is not actually going to become law until there is an order in council and a promulgation of the bill. Nobody knows when this is going to become law, if it will ever become law, but that is where that is.

Those same six clauses are in the bill three times, once for each of the three countries. As the parliamentary secretary noted in leading off this debate, there are four particular points that we should take into account.

First, with regard to reducing withholding taxes, I think there has been enough description about the fact that when people do business and earn income outside Canada, there is a withholding. For people who are not Canadians but are working in Canada, there may be withholding when it is paid to them outside.

Tax will follow people. If there is no treaty, one thing we could find is that people may be charged income taxes on the money by their country of residence and also by the country in which they did the work. This applies to people who have residency in one country and are doing work in another country. Both countries would claim that they needed to collect taxes or that there would be a liability for taxes. So the second point is the double taxation.

The reason we want to address the withholding tax is because we are not going to know whether there is double taxation until somebody files a tax return. But if the withholding tax rates are too high, all of a sudden an awful lot of taxes will be collected by two different government from people's earnings and they will not be able to reconcile them until some period later when they have figured out what income is attributed to which jurisdiction, what the tax rates are and how much they actually owe, and to claim refunds from one or the other or both jurisdictions.

So it is pretty important to deal with double taxation, and certainly one reason is that it is a barrier to trade.

If we do not have a tax treaty with another country with which Canada does business, or Canadians do a lot business there or that country does business in Canada, if they were going to be subject to taxation in both jurisdictions, obviously the value of the work done would have to be grossed up to take into account the fact that we cannot do work for nothing, if it is all going to be taxed back by the total taxes in two jurisdictions.

This issue of double taxation is very important. It would be a barrier to trade or to doing business or doing work between two countries, simply because there may be taxes collected in both jurisdictions that would leave a net income much lower than they could get by doing business in another country. There are some countries, obviously, that would be desirable for us to be able to do business in, and some maybe not, and we have heard a bit about that this morning.

The last point has to do with tax evasion and tax avoidance.

Interestingly enough, this morning the parliamentary secretary spent quite a bit of time talking about the fact that we need to deal with this whole issue of tax evasion and tax avoidance. There is a statement, if I could remember it, being a chartered accountant, that went something like this: tax evasion is illegal; tax avoidance is necessary.

The difference is that tax evasion is contrary to the laws and obviously illegal; but tax avoidance means that if the taxing authorities and the regulations of various countries let things slip through even if we have bilaterals, people may decide that they can do the same business, but if they do it through a particular country, with the amount of income they could earn or the reduction of taxes as a consequence of streaming business through a subsidiary in another country or something like that, they might be better off to do that. Of course, the consequence may be that the tax revenue to Canada would be reduced simply by the shaping of the characteristics of a business organization or corporate structure.

So dealing with the issue of tax avoidance is also an objective, even though tax avoidance is not in fact illegal.

That said, one of the speakers mentioned the recent stories about tax havens. That is a matter of tax avoidance, some would say, but actually it is tax evasion. I think the examples of Switzerland, Belgium, Liechtenstein, et cetera, have shown that there are circumstances out there where in fact countries with which we now have bilateral tax agreements happen to be tax havens and happen to be places where Canadians have been able to take advantage of the situation.

That list would get a lot worse if all of a sudden we started to do business with, I believe, Panama, Uruguay, Costa Rica, or Liberia, the whole list of countries that some people have thought we could be better off having business with and tax treaties.

However, it raises the question about whether one needs to look at the character or the country, its reputation and its track record. We want to do trade but trade at what cost? What does it mean if we have trade with 90 different countries and it is supposed to help deal with double taxation and tax avoidance? What good is that legislation if it has no results and no benefits have been achieved?

This concerns me because this morning, when the parliamentary secretary spoke to the House and there were questions and comments following his speech, I asked him a question. I said that we had tax conventions with 90 countries and I wanted to know what benefits we had achieve. I also asked him what loopholes we were able to close. I wanted to know what we had learned from this. If something is learned from one jurisdiction, it may be applicable to others.

In conjunction with these conventions we enter into, the member said that we also enter into information-sharing agreements. We have this exchange of information but what has that achieved? We need to ask whether we are just passing legislation for the sake of legislation or whether the legislation has some benefits to it, other than being pretty sure that if we lower the withholding tax more people will find it more attractive to do business with those countries. Bilateral trade is always a good thing. It is a good thing for this country because we are in an economic depression of sorts. Canada has much to offer and we want to do trade but if we get it in the front door but are losing it out the back door, what is the purpose?

I asked the parliamentary secretary to give us some examples. When he spoke to this on May 13 and again today, both of his speeches were much the same but there was not one iota of evidence that there was any benefit whatsoever to Canada. There was not one case where a tax evasion scheme was identified. There was not one case where all of a sudden there were avoidance mechanisms that we could deal with.

Legislation needs to have a purpose that is seamless in terms of all the impacts, all the pluses and minuses. No legislation will be perfect but we cannot come here and argue that we need this because it will improve trade. I hope that, as almost side deals with information agreements, we will somehow be able to share information and all of a sudden have some benefits coming out of that. It has never been reported to this place.

I challenge the government today to look at what has happened over the history of these tax conventions with 90 countries and tell us whether there has been anything substantive come out of them, whether we have learned anything that we can apply to other countries and whether there are filters we can put on in terms of the agreements that we will enter into with other countries like Greece, Turkey, Panama and whatever other countries.

I will support the bill because this is a boiler plate approach to doing things. My question is whether it is satisfactory simply to keep doing what we have always been doing if there are no discernable benefits to those deals.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member referred to the situation in the Senate with regard to the climate change protocol. It is a very unfortunate situation, but it says one thing, which is the Conservative government has no interest whatsoever in climate change, that it is still back at Kyoto and it being a socialist plot. There is no question that the decision of the Senate came straight from the Prime Minister's office.

With regard to Bill S-3, it is designated with the letter “S” because it was initiated in the Senate. However, if we look at the debate in the Senate, we will have a hard time reading it because it does not exist. The bill just appeared and was referred to the House.

It is an insult to Parliament for a chamber simply to take responsibility for a bill and then to pass it off. If we come up with anything, I wonder how the Conservatives will deal with it after it is passed in the House. It has already passed in the other place.

I am curious about whether the member wants to muse about why the bill came through the Senate and that the Senate had absolutely nothing to say about the importance of it.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I rise to speak to Bill S-3 from several vantage points.

Bill S-3 is a fairly conventional taxation bill with regard to establishing international relations with the countries as described in this bill. In this case, the countries are Colombia, Greece and Turkey.

My party always has concerns over a bill that does not emanate originally from this House, as opposed to the other House. That is particularly true given the gross abuse of democracy we saw flowing from that other House last week, as it killed a bill that had substantial democratic support from this House, the elected House. We always have a concern when we see this, but I have to say that when we look at the purpose of this bill, as opposed to the one the other place voted down last week, it is so typical of that House that the bill would be coming through it, because this bill is really about establishing favourable tax arrangements to avoid double taxation. It is the type of elitism we see in that House that permeates the background of this bill.

We are saying to the government that its approach of using the other place the way it has, both to defeat bills that this House has passed and to initiate bills into this House, is a practice that really should stop. From a democracy standpoint, that House has no credibility. To use that House in the process of passing legislation and laws in this country is a fundamentally flawed approach to democracy.

The second concern we have with this bill will come as no surprise to this House or people who have followed our relationship with Colombia and the gross abuse of human rights that has occurred in that country and our opposition to the free trade agreement that has passed this House, which is giving it favourable arrangements with our country that it has no entitlement to, from the perspective of human rights as practised, or abused, in that country.

There is no possible way we can see extending a positive relationship between ourselves and Colombia until such time as it ceases those kinds of practices. The number of deaths, both in the aboriginal community and within organized labour and among workers generally in that country in the last few years, is so offensive to the values of this country, of Canada, that we should not be having any arrangements of this kind with it.

With regard to the other two countries, it is quite clear that the bill is doing what it has conventionally done, which is to try to avoid double taxation. We sort of have this image that the concept behind this bill and these conventions that we are entering into with these other countries is to avoid double taxation. This image is probably not the most common one that should be applied here, as members will see with some of the points I am going to make with regard to what is in the convention.

My colleague from Outremont used the example of the couple who are spending part of their working year in Canada and part in one of the other countries and making sure that they are not double taxed in both countries. This agreement obviously addresses itself to that.

It goes way beyond that, and I want to just go quickly through the areas it does address. It deals with the issue of residency. The type of revenue one is generating will define whether the taxation is going to occur here in Canada or in the other country. It deals with that fairly extensively at the beginning of the convention that we are now entering into if this bill goes forward, which it appears it will, given that it has support from the official opposition.

It then goes on to list the various types of incomes that one can have. It is important to note these because the approach as to how we will tax those incomes will vary by the nature of the income. I am not going to go into that detail because it just becomes too complex, but we deal separately with income from immovable property, from business profits and from the shipping and air transport sector of the economy. It then goes into a general category of associated enterprises.

It then goes on to other types of income with regard to dividends, interest from investments, royalties. It deals specifically with the capital gains area, which is always a problem between states as to how that will be taxed. It deals with general income from employment and for directors fees. It deals specifically with artists and sportspersons, which has become more of a problem in both those areas. It deals specifically as to how their incomes will be taxed. It finishes off with pension and annuities both in terms of how it will tax those and how they will be received, and there are some agreements in that regard.

It then goes on, under a separate category, to deal more specifically with the taxation of capital gains and capital loses, setting out criteria the countries we agree to follow.

It deals with one final area that is important to note because of some of the scandals we have had. I think members in the House agree we have taxation so the government generates revenue so it can provide for the needs of our society. Whether that is creating a military and supplying the resources it needs, to providing government pensions for those who are in retirement or disabled, assisting the provinces with health care, we can go down the list as to why we tax.

There is of some concern with this convention. Although it begins to address the abuse that we see regularly of corporations in particular, but wealthy people more generally, moving their assets offshore, both in terms of assets that continue to generate revenue but otherwise capital assets offshore to avoid taxation in the country, it does not address it very well. We have seen that any number of times.

We have seen it with some of the scandals that have flowed out of Switzerland, Liechtenstein and a couple of banks in Belgium that have facilitated this abuse. What it is really about is fair taxation, that everyone, individuals and corporations, pay their fair share so the needs of society are met. If one segment of society is intentionally and regularly avoiding its responsibilities by moving assets offshore, we should be doing whatever we can do to bring that in line and seeing that those assets are taxed appropriately and fairly to society as a whole.

We cannot do that without co-operation from the international community. It is just impossible to do it as a sovereign country by oneself. We need to have co-operation with the state to where the assets flow.

We have seen the kind of abuse particularly with Switzerland. Because of its banking system, it has been able to shield abusers over the last 100 or better years who have abused their responsibilities to pay a fair share of their taxes. We are beginning to break through that in many ways.

We saw horrendous abuse in that regard with protection that it gave to organized crime and to the Nazis and fascists both during and after the second world war. We are breaking this down in that country, but it is occurring elsewhere. The bill would not address that to any significant degree. The only point it goes to in that regard is it requires both countries at either end of this relationship to share information if that data is compellable in the country of origin.

Beyond that, the bill would do nothing to increase our ability to, in effect, enforce our tax laws in our country or to ensure that the tax laws in the country with which we have entered into this convention are enforced, oftentimes with assets that may have flowed from our country, whether it is income or capital assets.

It is obviously a flaw in these conventions. I come back to Colombia. Given the high level of corruption in that country, it is going to be a particular problem and it is not going to help us at all. Quite frankly, I seriously doubt the ability of the government of Colombia to enforce those parts of the agreement and to see that taxation is done fairly. If assets are being secreted in that country from Canada, I doubt it will share information with us so we can deal with it in an appropriate way. That is clearly a flaw in the agreement. I do not think we are in any position, as a party, to support that part of it.

With regard to Greece and Turkey, we would generally be supportive. Our relationship with both those countries is well established and well founded. They are countries that overall have a strong reputation of co-operation with Canada. It is appropriate that we enter into these types of arrangements them, whether it is with regard to how we deal with retirement pensions. We see pension moneys flowing between the two countries in some substantial amounts, so it is appropriate we deal with that. It is appropriate they are there to assist us if there is abuse of the taxation process in their countries, of assets flowing into Canada or out of Canada into Greece or Turkey. We have no problem supporting that, but we have very serious problems with regard to Colombia.

This is one of those bills, because of where it has come from, that we cannot support. Because of the arrangements with Colombia, we cannot support it. Support from our party would flow with regard to Greece and Turkey. It is a step in the right direction when we enter into conventions with those countries. They are countries we can deal with in a honest and trusting manner.

[Daniel Paillé, Bloc, Hochelaga, QC]

Mr. Speaker, there are days like this when we must promote the interests of the Bloc and Quebeckers. We have before us a bill with a title that is a bit long and a bit grand-sounding, namely, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation—the first objective—and the prevention of fiscal evasion with respect to taxes on income—the second objective. Are these objectives being met?

Everyone, particularly those who have done business abroad based out of Quebec or Canada, knows that taxation is a very complex area that only becomes more complicated with each budget speech. Sometimes people ask us why taxation is so complicated. It is because, every year, we have finance ministers who go into all of Canada's legislatures or national assemblies to announce what they plan to do. Since 1867, I do not think that Canada has ever seen a single finance minister stand up to give a budget speech and simply say that the taxation, treaties, taxes and fees are fine as they are and that no changes are needed, and then sit back down. This is the ideal, but it has never actually happened. Instead, each year, more and more layers are added to the giant fiscal onion making it harder and harder to digest.

This type of bill emulates treaties that prevent a source of income from being taxed twice for the same purpose. I am using this term because personal income, in Quebec for example, is taxed once by the Government of Quebec and then a second time by the Government of Canada or vice versa. Thus, it is not unusual for income to be taxed twice in Quebec, Ontario, Nova Scotia and elsewhere. That is an everyday occurrence.

Under this legislation, at the international level, income would be taxed by the country where it is earned or by the country where the taxpayer is a resident. There are thousands of treaties. The OECD has a model tax convention that has been used thousands of times over. Canada has about one hundred such treaties.

Which tax jurisdiction will apply? In the case of remuneration, a person's income will be taxed based on their residency, no matter where they earned the income. Thus, the parliamentary secretary from Calgary will be taxed by Alberta. Or, if I am from Hochelaga, my income will be taxed by Quebec under the treaty because I am a resident of that province. The residency rules are considered next. For example, to be considered a Quebec citizen with income taxable by Quebec, one must have lived there for at least six months plus one day.

Under international agreements, capital gains will also be taxed by the country where the asset that gave rise to the gain was sold.

The earnings of a company should be taxed based on its residency, or if the company is established—with a subsidiary—in a foreign country, local taxation laws apply. And that is where a number of problems arise.

For dividends, interest and royalties, each country basically gets its share. In the agreements we have before us with Colombia, Greece and Turkey, this varies between 5% and 15% for dividends. It is 10% for interest and 10% for royalties. That tax is payable to the foreign country and is deductible from taxes paid in Canada. So we essentially have an agreement. Why? To encourage free trade. Quebec has always been in favour of free trade. Everyone in Quebec and Canada knows that Quebec was the driving force behind the Canada-U.S. and Canada-U.S.-Mexico agreements. It goes without saying that Quebeckers support it.

But the tax systems must be comparable. We must ensure that the Canadian and Quebec tax systems are comparable to that of the country with which we are signing a tax agreement.

We have three countries here. For example, Quebec exports to Greece, Colombia and Turkey represented $550 million in 2009. So we cannot say that these three countries will change anything for Canada or Quebec with respect to international trade. With all due respect, that is rather minimal. For example, among these three countries, we do the most trade with Greece, and that represents only 0.64%, or one-third of 1%, of our imports.

In principle, we agree with it. We need to know the difference in the application, since we want to avoid double taxation, but we do not want this arrangement to encourage tax evasion or tax avoidance in the countries in question.

We apply section 26, as suggested by the OECD. Section 26 is often mentioned in these agreements. In Canada, we used it once with the Canada-Netherlands agreement on the Dutch Antilles in 2009. We applied the OECD principles to the letter. That is one country out of 87. As for the rest, it seems as though either the Canadian political system or the negotiators are in a hurry to go slow.

For example, there are 14 countries. And I remember that these negotiations were mentioned at second reading. They have been negotiating since that time. What are they negotiating? What are they discussing? Are they exchanging documents? Are they just chatting and visiting? We do not know. There is Anguilla, Aruba, the Bahamas, Bahrain, Bermuda, Gibraltar, Guernsey, and all kinds of islands, such as the Cayman Islands, the Isle of Man, Turks and Caicos, the British Virgin Islands, Jersey, Saint Kitts and Saint Lucia.

They are negotiating. But what has been happening in the meantime? We are beginning to wonder if Parliament can have a say in it and not just be asked to pass a bill and its schedules.

We think that we should have some say. What has been happening while they have been in talks with the 14 countries I just mentioned, which are not exactly large industrialized, trading or manufacturing countries? In 2008, Canadian direct investment in Barbados, Bermuda and the Cayman Islands totalled $86 billion. Canada is in talks with these three countries, but does not have agreements with them. They represent 14% of Canada's direct investments. That is a lot.

In 2000, direct investments totalled $33 billion, compared to $86 billion in 2008. After eight years, investments were 2.6 times higher. Using a cumulative interest rate, this equals an annual increase of 12.7%. How could we, from 2000 to 2008—remember 2009 and 2010 are not included—have gone from $33 billion to $86 billion of direct foreign investment in countries that are considered to be tax havens? All that time, there have been so-called talks.

We want the negotiations to produce results. We want them to sign agreements following negotiations with these countries. We want them to come to the House to report on all of these agreements.

The former revenue minister, who is responsible for these agreements, said at one time that tax agreements between countries should be as unrestricted as possible. I would love them to be as unrestricted as possible, but there have to be some restrictions. That is why we think parliamentarians need to get the information directly. It is good to have information, but that information needs to be accurate and complete.

The OECD has defined tax havens. What does the OECD say about tax havens? They are countries with little or no taxation. I was saying earlier that we agree that Canada and Quebec should enter into international agreements with countries that have similar tax rates. When tax rates on dividends, corporation income and individuals are similar to those of a tax haven with very low tax rates, we need to ask some questions.

Furthermore, since the bill very clearly says that the goal is to prevent tax evasion, we need clear, transparent information.

Just a couple of hours ago, I spoke to another bill, the bill concerning information the PBO was requesting from the government. As we said, the danger is that the government would ostracize the PBO and prevent him from getting accurate information.

Once again, for the second time in less than two hours and regarding another bill, we are saying that the information we get from countries with which we want to negotiate must be accurate and clear, not like pea soup. Clear information is needed.

We also need to avoid all legal and administrative barriers. We are coming up against more and more administrative barriers when trying to get this information. Requesting information is all well and good, but we need to obtain the information.

Again, I am referring to the Parliamentary Budget Officer's statement in fall 2010 that he still had not received the information requested from the government in June 2009. That is an administrative barrier. Is the government becoming a tax haven for information? It is not far off the OECD definition of one.

According to the OECD, to determine whether a country is a tax haven, you have to ask yourself whether the country advertises or invites other countries or businesses to invest in it because of its rather lax tax system. Quebec might invite countries to invest in it for its technologies, aerospace sector and people who understand hydroelectric energy. In this country we truly have the information, technology and resources. However, when a country invites us to invest in it because it has a rather lax tax system, that is the definition of a tax haven. It is a very good definition because it is easy to understand.

On April 1, 2010, the OECD came up with a grey list of 17 countries that are making efforts to move from the black list to the white list by signing a few treaties. However, we have to be careful.

I am all for signing tax treaties with countries such as Belize, the Cook Islands, Dominica, Grenada, Liberia, the Marshall Islands, Montserrat, Nauru, Niue, Panama, Saint Lucia, Vanuatu, Brunei, Costa Rica, Guatemala, the Philippines and Uruguay, but let us be careful.

A tax treaty has to include five conditions: exchange of relevant information, no restrictions, the possibility of accessing information, respect for rights and complete respect of confidentiality. Our electors and taxpayers are sometimes sick of the agreements reached with that type of country. They get the impression that rich people or people who work for companies that have the means to go elsewhere take advantage of the situation to benefit from the tax rate that simply cannot be compared to the tax rate here. They are fed up and they wonder why they are paying so much tax when others who are much wealthier pay far less in tax.

In closing, all these treaties should respect the commitments already made by the Conservative Party. The House should take part in the process and the government should also respect the jurisdiction of the provinces and Quebec.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I am certain the hon. member listens intently to every word I say and I would assume that he heard in my speech that we will be supporting Bill S-3.

In terms of the EU, I would draw the hon. member's attention to the remarkable leadership that the Premier of Quebec, Jean Charest, has played on the Canada-EU free trade agreement. In fact, it is an unprecedented role for a provincial premier to be leading the charge on the international stage in terms of a free trade agreement. Pierre-Marc Johnson, a former premier of Quebec, is playing an active role as one of the lead negotiators on the Canada-EU free trade agreement.

The principles behind deepening our trade relations with the EU, protecting our interests, but at the same time taking down barriers between our economies, is very attractive to us. We commend the Quebec government for its leadership role in helping to make that happen.

In terms of Canada-Colombia, under that current minister the Canada-Colombia free trade agreement was dead. It took some Liberal leadership on this side of the House to actually ensure that Canadians and Colombians could work together to not only have a free trade agreement, but to have the first human rights treaty based on a free trade agreement between any two countries anywhere in the world.

[The Acting Speaker, Conservative, Barry Devolin]

Order, please. I would like to remind all hon. members that the matter before the House today is Bill S-3. The member for Oak Ridges—Markham has asked a question. I will give the floor to the member for Kings—Hants to reply.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I am speaking today, of course, on 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 Liberal Party of Canada recognizes that Canada is a country whose prosperity is based on trade. We have a small, open economy, and as such, we depend disproportionately on external trade for our wealth and prosperity and our standard of living.

The fact is that when the Canadian economy is healthy it is because we are producing and exporting more than we are consuming or importing. The sale of Canadian goods and services to foreign markets is the source of Canadian jobs and prosperity, and securing access for Canadian exports to foreign markets is essential to the Canadian economy and to creating the jobs of today and the jobs of tomorrow.

With this in mind, we understand and support the principle of free trade and the principle behind Canada's tax treaties with our trading partners, and as such, we support the goals of Bill S-3. But we are very concerned about the state of Canada's economy and we are very concerned about Canada falling behind in terms of our share of the global economy. We are concerned about the Conservatives' mismanagement of Canada's finances and their mismanagement of our important and vital trade relations.

The Conservative record on international trade has been troubling. The Conservatives have given us, for the first time in 30 years, a trade deficit, in fact a $4.5 billion trade deficit. That is the largest trade deficit in Canadian history and it is the first annual trade deficit that Canada has had since 1975.

What is troubling about this is that, for a small, open economy such as Canada's, when we are actually buying more from the world than we are selling to the world it is an ominous sign in terms of our ability to strengthen and continue to build our standard of living and quality of life. That is an ominous sign in terms of our ability to protect the jobs of today or create the jobs of tomorrow.

In the first nine months of 2010, Canada has accumulated a trade deficit of $7.6 billion. This puts us on pace now for an even more massive trade deficit this year than the record trade deficit that we had last year.

The Conservatives have to take responsibility for these massive trade deficits. It was their misguided trade policy that has failed to defend Canadian interests in the world. Under the Conservatives we have been far too dependent on the U.S. market. We have seen how vulnerable we are to U.S. protectionism, whether it is Buy American provisions or other protectionist measures in the U.S. Congress.

The Conservatives have not only failed to defend Canadian jobs against U.S. protectionism, but they have failed to effectively defend Canadian jobs in the world by building the kinds of important trade relations that would enable Canadian companies to diversify their trade relations.

The Conservatives spent their first three years in office chiding China and ignoring India. The Conservatives turned their back on a remarkable and profoundly important 40-year relationship with China, a relationship starting 40 years ago when Prime Minister Pierre Trudeau had the vision and foresight to lead the first western developed country to establish diplomatic relations with post-revolution China, building a profound social, cultural and foreign trade relationship with China. The Conservatives turned their backs on that relationship for ideological reasons in their first three years of office and set the relationship back decades.

We have seen the Conservatives' clumsy foreign and trade policy with the treatment of important trading partners like China, Mexico, the Czech Republic, at a time when it held the presidency of the EU. More recently, I do not have to remind Canadians or this Parliament as to how embarrassing it has been to watch the Conservatives' bungling of our vital relationship with the United Arab Emirates, and the internal cabinet squabbles that have come to light between ministers on this issue. The fact that we have squandered a vital trade investment and defence alliance with the UAE demonstrates a Prime Minister, a cabinet and a government that are not really ready for prime time when it comes to the world stage, that really are unsafe at any speed, as Ralph Nader would say. This is part of the cost Canadians have paid for having a Prime Minister who really has never been outside North America without a government jet and a motorcade.

It is important that we have prime ministers and governments with foreign experience and an understanding of the world. Canadians benefit from prime ministers and governments that have that kind of understanding of Canada's place in the world.

The Prime Minister does not do multilateralism well. In fact, that is because he does not really believe in multilateralism. The Prime Minister was critical of the G20 when Paul Martin, as the Liberal finance minister, was leading the charge and in fact building the G20. The G20 has emerged as the principal and most important voice of financial reform today, during and after the financial crisis.

Canadians should take some pride in the fact that it was a Canadian finance minister, Paul Martin, a Liberal finance minister, who looked ahead and saw the need to expand the G8, to build a G20 that would welcome in some of the emerging economies and be ready for whatever turbulence emerged on the global stage, but also to deepen relations and governance among our countries as we deal with what are no longer issues that are faced by individual countries but increasingly by the entire world.

Again, when we talk about emerging economies, we have talked in the last few years about the BRIC countries. We could say today perhaps it is more the BIC countries because it is Brazil, India and China; Russia has had some challenges. There is the next wave of emerging economies, the CIVETS countries, Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. It has never been more important for Canada to diversify and deepen its trade relations with some of these economies. Canada has a natural advantage to do that, and that is our multiculturalism.

Over the weekend, I met with a group of Chinese Canadian business people in Winnipeg. I also met with a group of Indo-Canadian business people in Winnipeg. Winnepeg, like a lot of Canadian cities and towns, has emerged as a very multicultural community. What is really quite remarkable is that we look at multiculturalism as a successful Canadian social policy, and it is. Increasingly, it is not just a successful social policy, but it is a source of immense economic advantage because our multicultural communities are among the most entrepreneurial communities we have in Canada. They also represent natural bridges to some of the fastest growing economies in the world, which leads me to what a Liberal approach would be on trade and foreign policy.

We would build a global network strategy that leverages on the rich connections that Canadians have around the world, connections that derive from our multicultural communities, and our universities which are educating citizens from around the world today. We recognize the importance of partnering with Canadian businesses, universities, civil society and private citizens to better identify and capitalize on trading opportunities and foreign trade relations and influence around the world.

We would return to the very successful team Canada missions. We would focus them on sectoral areas where we have a comparative advantage, such as education, clean technology and clean energy technology. We would focus on creating the jobs of tomorrow by building bridges and deepening our ties with the markets of tomorrow in areas where Canada really has something to offer: clean conventional energy, water treatment, education.

Canada has some of the best universities anywhere. I come from Nova Scotia, a cradle of higher education in Canada. I am immensely proud of Nova Scotian universities and the role that Nova Scotian universities play in educating people from across Canada and around the world. I think we can do more to attract students from around the world to study in Canada. That would be a really good and important thing to do for the future of Canada.

If we look at the CVs of cabinet ministers from India, China and Brazil, over half of them have some educational experience either in the U.K. or the U.S. That educational experience gives the United States and the United Kingdom a lifetime of relations and influence on those countries through those individuals. Educational experiences are critically important in terms of trade and foreign relations.

A Liberal government would introduce a Canada global scholarship program which would enable young Canadians to study abroad at universities around the world, to learn the cultures and the languages to become citizens of the world. It would enable young citizens of the world, particularly from the emerging economies, to study here in Canada, to exchange students between our countries, to attract students to Canada and to encourage Canadian students to study abroad.

We would be building a global network advantage where Canada and the next generation of Canadian graduates could be the most networked and connected citizens anywhere in the world. Canada would be seen as the best place in the world to get an education, to start a career, perhaps to return to one's country of origin, but to represent a natural bridge to a country with which the person has a great fondness and respect.

Education is an industry that can benefit from more foreign trade. When we attract students from other countries to study at Canadian universities, that is a form of trade. It is a form of trade that not only helps create jobs and prosperity today, but for decades to come will strengthen and augment our influence in the world through trade relations, foreign relations and the creation of jobs.

We would take a very different approach as a Liberal government to deepening and diversifying our trade relations. We would ensure that Canada was not trying to escape the world, but was once again shaping the world. Whether it is on the environment, defence or security policy, the Canadian voice would be heard again and it would be an effective voice.

I want to speak about the fiscal mismanagement of the Conservative government. A Liberal government would clean up the fiscal mess created by the borrow and spend Conservative government. I would remind the House that the Conservatives inherited a $13 billion surplus from the Liberals, which was the best fiscal situation of any incoming government in the history of Canada.

The Conservatives increased government spending by an astonishing 18% in their first three years in office. That is three times the rate of inflation. They combined these massive spending increases with reckless tax policy to actually give Canada a structural deficit even before the downturn began. Now the Conservative legacy is a $56 billion deficit, the biggest deficit in Canadian history.

While Canadians are watching the Conservatives plunge Canada deeper into debt, they are asking themselves what they are getting in return. Let us compare the stimulus package of this Conservative government to the stimulus packages of other governments.

Other governments invested in long-term competitiveness, modernizing their energy systems, energy production and energy transmission, helping households and companies cut their energy consumption so that when the recession was over, ultimately companies would become more profitable and at the end of the month households would have a little more money in their back pockets.

The Conservative government was more interested in buying votes than in building competitiveness. It was more interested in counting signs than counting jobs. The stimulus package was a hodgepodge of spending measures aimed at short-term politics, not on long-term prosperity.

We often hear the Conservatives talk about Canada's debt and deficit numbers compared to those in other countries of the world in a favourable way, as if Canada is a lot better off than many other countries. However, when we combine federal and provincial debt numbers in Canada, we get a startlingly different picture.

If we combine federal and provincial numbers for something called gross debt, our gross debt to GDP ratio is actually at 82.5%. To put this in perspective, the U.S. is around 83%, so we are almost as bad off as the U.S. in terms of gross government debt in Canada. That figure is worse than those in Germany and the U.K. The fact is that provincial and federal debts impose a burden on all Canadian taxpayers. There is only one taxpayer.

In the coming years, as we now enter the negotiation around the health and social transfer culminating in 2014 with the new agreement, these issues are going to come home to roost. We are going to see increased pressures on Canadian provinces to deal with an aging demographic. Fewer Canadians will be working. More Canadians will be relying on retirement income and depending on an increasingly challenged health care system.

How have the Conservatives been preparing for this? Has there been any discussion on how to prepare for that demographic shift? How have they been saving for a rainy day in the future? Let us look at what the Conservatives have been doing.

They have proposed spending $16 billion on untendered fighter jets, and $10 billion to $13 billion on U.S.-style mega prisons during a time when crime rates are on their way down. They spent $1.3 billion for a 72-hour photo op for the G20 and G8 summits. Spending on the G8 and G20 summits included $1 million for fake lakes, $300,000 for a gazebo and bathrooms that were 20 kilometres away from the summit site, $400,000 for bug spray, $300,000 for luxury furniture, $14,000 for glow sticks and, of course, millions on high-end hotels.

The last finance minister to cut government spending in Canada, not just to hold government spending but actually to cut government spending, was the hon. member for Wascana. It was a Liberal government, and under the leadership of finance minister Paul Martin, that implemented the biggest tax cuts in Canadian history after having paid down the biggest deficit to date in Canadian history.

We will once again cut corporate taxes in the future but only after we pay off the Conservative's deficit and get Canada back in the black responsibly, not on borrowed money. We will also invest in the priorities of Canadians, in Canadian families, in learning, in jobs, in pensions and in family care. We will not invest in the these wasteful priorities of the Conservatives.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the great support I am getting from across the way. As a matter of fact, I will refer to the hon. member's support.

I thank the House for the opportunity to start the third and final reading on Bill S-3, and before continuing, let me quickly thank all fellow members of the House of Commons finance committee for their swift consideration of this legislation and their unanimous support of its passage.

This important legislation will implement Canada's tax treaties with Colombia, Greece and Turkey. Tax treaties like these are important for Canadians, as they protect taxpayers both by helping to prevent unfair double taxation as well as in the matter of tax evasion. Canada has nearly 90 tax treaties already in place with other countries, and Bill S-3 is simply part of our Conservative government's ongoing effort to update and modernize the already extensive network of tax treaties.

Before continuing, let me again emphasize that although Bill S-3 is important legislation, it follows closely in form to previous similar tax treaties adopted by this Parliament. For instance, in the 39th Parliament, tax treaties with Finland, Mexico and Korea were adopted. Additionally, in both the 38th and 37th Parliaments, under the previous Liberal government, numerous tax treaties with countries such as Gabon, Armenia, Mongolia, Moldova and Norway were also adopted.

Furthermore, let me again underline that Bill S-3, like the legislation related to tax treaties from previous Parliaments, is based on the commonly accepted international standard for such treaties, and that is the OECD model tax convention. This OECD framework has long been established throughout the world as the standard for tax treaties. Indeed, as the OECD itself points out:

Most bilateral tax treaties follow both the principles and the detailed provisions of the OECD Model. There are close to 350 treaties between OECD Member countries and over 1500 world-wide which are based on the Model, and it has had considerable influence on the bilateral treaties between non-member countries.

Likewise, Peter Barnes, the noted former U.S. Treasury Department tax counsel, has remarked, in a recent edition of the OECD Observer magazine:

the OECD model has achieved a consensus position as the benchmark against which essentially all tax treaty negotiations take place. [...] But make no mistake: the OECD is a vitally important organisation and the OECD Model Tax Convention is a tremendously important tool for smoothing the way of international business and global trade.

Canada maintains one of the world's largest networks of bilateral tax treaties, serving as a key feature in both our ability to compete and to ensure everyone pays their fair share of taxes. Without a doubt, parliamentarians and Canadians are strongly opposed to tax evasion. We all know that tax evasion by some only punishes honest, hard-working Canadians and job-creating businesses. This is simply not fair. To detect and deter tax evasion, we need to work with and share information with our international partners. That is why Canada participates in international tax information exchange agreements and encourages countries to do so, as demonstrated in Bill S-3 here today.

Indeed, our Conservative government has been very aggressive and proactive in that regard. For example, in 2007, we unveiled a policy that introduced incentives to have non-treaty countries enter into OECD-model tax information exchange agreements with Canada. It also requires that all new tax treaties and revisions to existing tax treaties include the OECD standard for tax information exchange.

I am happy to report that negotiations on tax information exchange agreements are all well under way with over a dozen jurisdictions. Indeed, Canada signed its landmark first tax information exchange agreement with the Netherlands Antilles last August.

Canada also contributes actively to the efforts of the OECD's Global Forum on Transparency and Exchange of Information, as well as in the G20, in order to push for further implementation of the previously mentioned OECD standard.

What is more, according to the director of the Centre for Tax Policy and Administration of the OECD, Jeffrey Owens, during his tenure as chair of the G7 and G20, Canada's Minister of Finance has, “shown leadership in getting G20 members to crack down on tax havens with new sanctions.”

Clearly Canada is serious about combatting tax evasion and is committed to advancing this effort internationally.

While tax treaties help guard against tax evasion, they also provide individuals and businesses in Canada and the other signatory countries with predictable and equitable tax results in their cross-border dealings.

I would now like to talk in a little greater detail about how these tax treaties will improve a number of areas, namely: reducing withholding taxes, avoiding double taxation, preventing tax evasion, and removing barriers to trade and investment.

First, let me briefly look at the withholding taxes. Withholding taxes are a common feature in international taxation. They are taxes imposed by a country on income arising in that country and paid to residents of another country. Indeed, Canada with respect to non-tax treaty countries usually taxes this income at a rate of 25%. Given that one of the principle functions of a tax treaty is to fairly allocate taxation powers between the respective treaty partners, tax treaties include provisions to properly determine the level of withholding tax that can be applied by the jurisdiction in which certain payments arise.

The withholding tax rates vary from one tax treaty to the next as they reflect the result of negotiations with Canada's tax treaty partners, as is the case in Bill S-3. Indeed, Bill S-3 provides for a maximum withholding tax on portfolio dividends paid to non-residents of 15% in the case of Colombia and Greece, and 20% in the case of Turkey. For dividends paid by subsidiaries to their parent companies, the maximum withholding rate is reduced to 5% in the case of Colombia and Greece, and 15% in the case of Turkey.

Withholding rate reductions also apply to royalty, interest and pension payments. The treaties in Bill S-3 cap the maximum withholding tax rate on interest at 10% in the case of Colombia and Greece, and at 15% in the case of Turkey.

Each treaty in Bill S-3 also caps the maximum withholding tax rate on royalty payments at 10% and on periodic pension payments at 15%.

Tax treaties like this one help ensure fairness for taxpayers, both domestic and international, and help ensure that they are not essentially overtaxed due to withholding taxes.

As the Liberal member for Scarborough—Guildwood, a former colleague on the finance committee and a former parliamentary secretary to a finance minister, has pointed out:

withholding taxes do not provide for the deductability of expenses incurred in generating income and are imposed on the gross amount of the payment. The taxpayer will therefore be subject to an effective rate that is significantly higher than the tax rate that applies to net income in either the source or the residence country. To remedy this, Canada's network of tax treaties limits the rate of withholding tax that can be withheld by the source country on various types of income so as to more accurately reflect the level of taxes that would be payable on a net income basis.

The second area that I would like to address is somewhat similar, that being double taxation. Double taxation in an international sense arises when two or more states tax the same income for the same period of time. Obviously, nobody should have to pay their income tax twice.

Tax treaties like in Bill S-3 help avoid double taxation and ensure that taxpayers pay tax on the same income only once. Again, in the words of the member for Scarborough—Guildwood, “Without a tax treaty in place to set out the tax rules, the same income can be taxed in both countries without consequential relief. This situation can have a negative impact on the expansion of trade, and the movement of capital and labour between countries”.

Tax treaties utilize numerous methods to address the potential for double taxation. This happens in one of three ways. First, the income may be taxable exclusively in the country in which it arises, that is the source country. Second, it may be taxable only in the country in which the taxpayer is resident, that is the resident country.

Third, it may be taxable by both the source country and the residence country, with double taxation relief provided in some form.

The treaties in Bill S-3 grant exclusive taxing rights to a number of items, meaning the other treaty partner cannot tax those items, thus avoiding double taxation.

For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment such as two to three months to any one of the three treaty countries contained in Bill S-3, Canada has the exclusive right to tax that person's employment income. Also, from an administrative point of view, this greatly reduces the paperwork and red-tape burden associated with multiple jurisdiction tax filing. However, in the case of most items, taxing rights are shared.

The third area I would like to elaborate on is tax evasion. Tax evasion and avoidance are also unfair and economically damaging. One of the most important benefits of increased co-operation between Canada and the other countries is preventing tax evasion.

Indeed, tax treaties are an important tool in protecting Canada's tax base in that they allow consultations and information to be exchanged between Canada and the countries with which we have tax treaties. What this means is that these treaties help ensure fairness and equity in our tax system by helping to ensure that taxes owed are indeed paid.

Equally important, as I mentioned earlier, international tax treaties help ensure that taxpayers do not pay more tax than they should. Treaties such as those found in Bill S-3 permit the exchange of tax information between revenue authorities, and in so doing, help them identify cases of tax avoidance and evasion and act on them.

Indeed, our Conservative government firmly believes all Canadians should pay their fair share of taxes and has aggressively targeted tax loopholes. We again confirmed that fact in budget 2010 when we rolled back nearly 10 tax loopholes in order to protect Canada's tax system. This included, for instance, better targeting tax incentives for stock options, as well as ensuring that businesses cannot inappropriately capitalize on differences between the tax systems of Canada and the other countries to artificially increase foreign tax credits in order to pay less tax.

Noted public policy commentator and co-founder of the Dominion Institute, Rudyard Griffiths, writing in the March 10 National Post in response to budget 2010's aggressive initiatives to close tax loopholes, said:

the Conservative’s snipping of a raft of erroneous tax loopholes met with near universal applause, and rightly so.

...it defies logic, in an era of fiscal restraint, to allow corporate mucky-mucks to use generous stock options to take gobs of cash out of their companies tax free.

The final area that I would like to discuss is how tax treaties help remove barriers to trade and investment. Investors, traders and others involved in the global marketplace want to know the tax implications associated with their activities both in Canada and abroad. Equally important, Canadians with business interests or investments abroad want to be sure that they also will receive fair and consistent tax treatment.

Tax treaties boost international trade in goods and services by providing individuals and businesses in Canada and the other signatory countries with predictable and equitable tax results in their cross-border dealings. This in turn helps Canada's economic performance at home by encouraging our exporters. Indeed, over 40% of Canada's annual GDP can be attributed to exports alone. Moreover, it helps attract new investments into Canada as well.

In short, the tax treaties contained in Bill S-3 will serve as a key step in solidifying Canada's economic links with Turkey, Colombia and Greece by eliminating tax barriers to bilateral trade and investment.

In the words of the Hellenic Canadian Association president, Theodoros Aslanidis, “The agreement is very positive”.

To summarize, the tax treaties covered in Bill S-3 comply with the international OECD standards. They would promote certainty, combat tax evasion, and promote a better business climate for taxpayers and businesses in Canada and in these treaty countries.

Additionally, these treaties would help to secure Canada's position in the increasingly competitive world of international trade and investment.

The House proceeded to the consideration of 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, as reported (without amendment) from the committee.

Business of the House

[John Baird, Conservative, Leader of the Government in the House of Commons and Minister of the Environment]

Mr. Speaker, let me make an undertaking to my colleague, the House leader of the official opposition, to make enquiries into that and respond to him in short order.

The House will continue today with the opposition motion.

Tomorrow we will continue debate, and I know the NDP will be excited about this, on Bill C-10, Senate term limits; Bill C-19, regarding political loans; followed by Bill S-3, tax conventions implementation.

On Monday and Tuesday of next week, we will call Bill S-3, tax conventions implementation; Bill C-3, gender equity in Indian registration; Bill C-28, fighting Internet and wireless spam; Bill C-22, protecting children; Bill C-29, safeguarding personal information; and Bill C-30, response to the Supreme Court of Canada decision in R. v. Shoker.

On Wednesday and Friday we will call Bill C-41, strengthening military justice; and Bill C-43, RCMP labour modernization.

Thursday will be an allotted day. I believe this allotted day will go to the Bloc Québécois.

With respect to a take note debate, there have been discussions amongst the parties. There have not been a lot of take note debates. Two weeks ago we had one on veterans issues. I believe next week we will be having one on the issue of pensions, which I know is a concern for all of us, but particularly this was brought forward by the House leader for the official opposition. I believe we are looking at Tuesday night for that.

I appreciate the co-operation we have had from all parties. This gives members an opportunity to bring issues relevant to their constituents forward in the House.

[John Baird, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, certainly in the course of my comments I will answer both of those questions. We will continue debate today on Bill C-49, the preventing human smugglers from abusing Canada's immigration system act.

Tomorrow we will call Bill C-36, the consumer product safety bill. Since it was only reported back from committee today, we will need to adopt a special order, which I will propose after my statement. This is a bill that will help protect children, help protect families, and I think it speaks incredibly well of all four political parties that they put politics aside and are seeking speedy passage of the bill. So I would like to thank everyone in all parties for their support on this important initiative. It is a good day for Parliament.

On Monday, we will continue debate on Bill C-47, the second budget implementation bill. I know the member opposite has been waiting for this and I hope he will have the opportunity to speak to this important piece of legislation.

That would be followed by Bill C-49, the preventing human smugglers from abusing Canada's immigration system act; Bill S-2, regarding the sex offenders registry; Bill S-3, the tax conventions; Bill C-41, strengthening military justice; Bill C-48, the protecting Canadians by ending sentence discounts for multiple murders act; Bill C-29, safeguarding Canadians' personal information; and Bill C-30, on the Supreme Court of Canada decision in R. v. Shoker.

On Tuesday, we will call Bill C-32, copyright modernization. At the conclusion of debate on the bill, we will call Bill C-48, protecting Canadians by ending sentence discounts for multiple murders. Following Bill C-48, we will return to the list for Monday, starting with the budget implementation act, which again speaks to one of the member's questions.

On Tuesday evening we will have a take note debate on honouring our veterans and I will be moving the appropriate motion in a few minutes. I think it again speaks well that we are having a take note debate. I know the member for Vancouver East joined members of the Liberal Party, the Bloc Québécois and the Conservative Party in supporting this.

Thursday shall be an allotted day for the New Democratic Party, an opposition day as requested by the House leader for the official opposition.

Therefore, consultations have taken place among the parties and I am pleased to move:

That a take-note debate on the subject of the courageous contribution and service to Canada by Canada's Veterans take place pursuant to Standing Order 53.1, on Tuesday, November 2, 2010.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Finance concerning 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 committee has studied the bill and has decided to report the bill back to the House without amendment.

[The Chair, Conservative, James Rajotte]

Thank you.

I will now suggest we move to clause-by-clause consideration of Bill S-3.

Pursuant to Standing Order 75(1), consideration of clause 1 is postponed.

Mr. Wallace.

[The Chair, Conservative, James Rajotte]

I call the meeting back to order, colleagues.

The clerk has asked me to remind you that we will be at 1 Wellington tomorrow at 9 a.m. That is the new building next to the Chateau Laurier.

We have an hour set aside for the study of 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. We do have....

[The Chair, Conservative, James Rajotte]

Thank you.

I want to thank you for your presentations and your answers to our questions.

If you have anything further you'd like the committee to look at, even on an ongoing basis—and Mr. Hodgson mentioned some reports—please feel free at any time to forward those to the clerk and we'll ensure that all members get them.

Thank you so much for your time here today.

Colleagues, I will pause for a few minutes and then we will move on to Bill S-3.

Combating Terrorism Act

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am pleased to have this opportunity to speak in this debate on Bill C-17, An Act to amend the Criminal Code (investigative hearing and recognizance with conditions). The short title is the Combating Terrorism Act.

It is important that we review what this bill actually sets out to do, because sometimes when we are debating it, we lose track of this over the course of the debate, and people who might be listening could lose track as well.

Specifically, what this bill will do is establish investigative hearings under the provisions of the Anti-terrorism Act, whereby individuals who may have information about past or future terrorism offences can be compelled to attend a hearing and to answer questions. No one attending a hearing can refuse to answer a question on the grounds of self-incrimination. Information gathered at such hearings cannot be used directly in criminal proceedings against the individual, but derivative evidence may be.

The other significant provision of this legislation is a provision for preventive arrest, whereby individuals may be arrested without a warrant in order to prevent the carrying out of a terrorist act. Detention in this case would be based on what someone might do in a certain situation. The arrested individual must be brought before a judge within 24 hours, or as soon as it is feasible. The judge determines whether the individual is to be released unconditionally or released under certain conditions, recognizance with conditions, which are in effect for up to 12 months. If the conditions are refused, the individual may be imprisoned for up to 12 months.

The bill also contains a five-year sunset clause, requiring a resolution of both the House and Senate for it to be renewed.

This is indeed significant legislation, and it is not the first time we have seen it come before the House. It came out of the Anti-terrorism Act that was enacted after the 9/11 events. At that time, when there were serious concerns about what had recently happened, everybody was worried and fearful, which is not too strong a word to use, about what was actually going on at that time.

These two provisions were included in that legislation, albeit with a sunset clause requiring that they be reviewed within five years. If Parliament did not re-approve them, they would come to an end. In fact, that is exactly what happened. When they were put to Parliament, Parliament did not agree to their extension.

Since that time, there have been several attempts by the Conservative government to reintroduce these provisions into our criminal law, into the Anti-terrorism Act. One was short-circuited by an early prorogation of the House, and others have not been given the priority that, if they were sufficiently important, they should certainly have received.

This is not the first time, in my term as a member of Parliament, that we have debated these issues. I have to wonder why, if this is so important, it was not given a higher priority by the government. It belies the importance of these issues that the government has not made sure this legislation got through earlier.

I also have to wonder why this legislation is necessary. I do not believe that we are responding to any serious failure of the Criminal Code of Canada to deal with terrorism, or any of the crimes that might be related to terrorism in Canada. I have not heard that we have failed to convict people who have committed terrorist acts or who are considering terrorist acts. In fact, post 9/11, we have convicted people under the provisions of the Criminal Code, without using these special provisions of crimes related to terrorism. We have seen the group in Toronto. We have seen others who have been convicted. This would say to me that there is not a problem with the existing Criminal Code legislation, that there is not a problem in investigating and actually charging and convicting people in the usual process of crimes related to terrorism.

I have to ask, then, regarding these special provisions, which go way beyond the normal provisions of our justice system, and which violate fundamental human rights in Canada, why we would want to go down that road. To my knowledge, no proof has ever been presented to the House or to one of the committees of the House, that the current provisions of the Criminal Code are not functioning when it comes to dealing with acts of terrorism or conspiracy to commit terrorism. Why do we have these provisions before us?

It is important to consider the serious nature of these provisions. They have a serious effect on what Canadians have come to know as basic human rights, basic civil liberties. The proposal to compel testimony from individuals, to force people to testify in court, violates the right to remain silent. It violates the right not to incriminate oneself before the law. That is a serious violation. It is something that most Canadians appreciate in our criminal law. Before we go down this road, we need to consider carefully why all this is necessary.

The investigative hearing proposals in this legislation would force someone to testify before a judge if he or she were suspected of having information about terrorist activity that has already occurred or that might occur. It directly compromises the right to remain silent, one of the fundamental principles of our justice system. The refusal to testify at an investigative hearing can lead to one year of jail time. It can also reduce the right to silence for persons who are questioned by the RCMP or CSIS: if they are uncooperative with a police investigation, the possibility of having to go to an investigative hearing can be used to compel cooperation and compromise their right to remain silent.

We have to realize that not everyone who chooses to remain silent in such circumstances is guilty, that choosing to remain silent is not an admission of guilt or proof of guilt. People may have legitimate fears and concerns. For instance, they might be concerned about their personal safety. Given the broad definition of terrorism in the Anti-terrorism Act, I believe that this provision is a problem. The definition itself has come in for criticism in the past.

This provision and the one on preventive detention are serious departures from our justice process. They could be used against people who are legitimately protesting or who are viewed as dissidents by our society. These provisions could be used to harass or even imprison such people.

A number of people today have mentioned the G20 protest and the mass arrests that were held. For the most part, they appeared to be carried out for preventive reasons. In my opinion, this process violated the rights to peaceful assembly, protest, and the expression of political views.

The whole question of investigative hearings raises another serious issue about how we do justice in this country. It puts judges in the position of having to oversee an investigation, which is a real departure from the normal process in our system. It is not the practice of our justice system and it is not something that most judges have experience with. It is a major departure since investigations in our system are normally undertaken by police authorities.

In hearings the Senate had on the previous incarnation of this bill, Jason Gratl, the president of the B.C. Civil Liberties Association, put this concern in this way:

The primary difficulty with investigative hearings is that they distort the functions of the judiciary and the Crown. In essence, the course of order-making power of the judiciary is brought to bear on an investigation. That power places prosecutors in the role of investigators, which is unlike their usual role. It also places the judiciary in a position of presiding over a criminal investigation.

This is a serious consideration that we need to look at with this legislation and this proposal.

There is also the matter of preventive detention. Preventive detention, or recognizance with conditions, is the other key part of the bill. It compromises a key principle of our justice system, namely, that one should be charged, convicted, and sentenced in order to be jailed. This provision would allow for the arrest and detention of people without ever proving any allegation against them. It could make people subject to conditions on release with severe limitations on their personal freedom, even if they have never been convicted of any crime. That is a serious departure from what we would normally expect from our justice system.

Some folks may say this is necessary, but I believe that jailing people because we think they might do something is extremely problematic, to say the least. It is easily apparent how such a measure can be abused.

There is a good example to be found in our practice already, and I think it is a very bad practice. It relates to the question of security certificates, which is a measure under the Immigration and Refugee Protection Act. We have seen this in the post-9/11 period. It was intended to expedite deportation of non-citizens. Under this legislation, we have seen it used as a method of detaining people, a method of preventive detention for people that the state suspected may have been involved in terrorist activity. The most recent cases were the five men who were detained for years, some up to eight years, without ever being charged or convicted of a crime.

I think this was a distortion of the intention of the security certificate legislation. I also think it was a process that violated basic human rights in Canada. Some of these men are still subject to release conditions as a result of the security certificate that this government issued against them and that the previous Liberal government initiated.

There are serious problems, and we have seen some of these problems emerge in the court processes that these men have been involved in over the years. In fact, a number of the security certificates have now been thrown out because of the length of time they have been used and problems related to evidence.

I have to emphasize that these people have never been charged or convicted of any crime in Canada. The security certificate process has had nothing to do with that. I think this is an indication of how a legal measure can be distorted. Security certificates were intended to expedite deportation for people who had violated the conditions of their stay in Canada. But they have been used for other purposes. That is something we need to consider when we are looking at extraordinary measures like the ones in this legislation.

I point out that there is no issue related to terrorism that is not already covered by the Criminal Code. I think the NDP's justice critic, the member for Windsor—Tecumseh has said this loud and clear on a number of occasions. The last time we were debating this issue in the House he put it very eloquently. I want to quote from his speech at that time. He said:

There is no act of terrorism that is not already a criminal offence punishable by the most stringent penalties under the Criminal Code. This is obviously the case for premeditated, cold-blooded murder; however, it is also true of the destruction of major infrastructure.

Moreover, when judges exercise their discretion during sentencing, they will consider the terrorist motive as an aggravating factor. They will find that the potential for rehabilitation is very low, that the risk of recidivism is very high and that deterrence and denunciation are grounds for stiffer sentencing. This is what they have always done in the past and there is no reason to think they will do differently in the future.

It is clear that there is no crime related to terrorism that is not already included in the Criminal Code. I can think of no circumstance of a crime committed as part of an act of terrorism that would not be dealt with in the strictest, toughest way by our courts. Some specific examples might be helpful. For instance, counselling to commit murder is already an offence under the Criminal Code. Being a party to an offence is also a crime. The crime of conspiracy is well established under the Criminal Code and deals with the planning of criminal activity.

Let us be clear. In the conspiracy category, no crime actually has to be committed for someone to be found guilty of conspiracy under the Criminal Code. A charge is possible even when no crime has been committed under the existing provisions of the Criminal Code of Canada.

We also have hate crime legislation that outlaws the promotion of hatred against a particular group, which may have some relevance in situations of terrorist activity.

The whole question of preventive detention also has an existing parallel in some ways in the Criminal Code. It should be noted that peace bonds provisions already exist in the Criminal Code and can be exercised where there are reasonable grounds to believe that a person's life or well-being is threatened by another person. This provision has similar power to preventive detention, as discussed in this bill, but more significant safeguards are built into the Criminal Code provision.

No one has demonstrated to my satisfaction that this existing provision will not meet the needs of dealing with terrorist activity. It is crucial to be very clear about that. We have not seen any evidence that there is a failure of the Criminal Code to deal with acts of terrorism or the planning of terrorist acts in Canada. We have not seen that the existing provisions of the Criminal Code of Canada need these extraordinary measures, which are an affront to some basic and long accepted and long established, for hundreds of years, principles of our justice system in Canada.

We need to be clear that when it comes to dealing with terrorism and conspiracy to commit terrorism, we really need to focus on and put our energy into police and intelligence work. We have seen in the past that Canada was ill-prepared when it met the challenge of a terrorist act. The Air India bombing comes to mind. Canada did not have the ability to appropriately investigate that situation. Police authorities did not have the resources, staff or people with the skills they needed to appropriately investigate that kind of crime.

We have to make sure in this process that our police and intelligence services have the personnel and resources they need to investigate potential terrorist acts and to charge those responsible. That has to be the flow. We have to do the investigations and lay the charges and ensure the full gamut of our justice system is engaged in that process.

I do not think it is appropriate to say that we are going to do the investigation and come up with some evidence but shut down the rest of the process of charging and hopefully convicting someone who is alleged to have committed those crimes. The conviction is very necessary in all of that. For me that is one of the failings in the security certificate process.

We have to be aware that these provisions were first proposed in a time of fear, after the attacks of 9/11. People were not exactly sure what was happening at that time. We have to also be aware that legislating in a time of fear and uncertainty like the period immediately after 9/11 can lead to bad legislation. It can lead to unintended consequences, ultimately, such as labelling and stereotyping individuals and groups in our society.

There is much evidence that says when we do that kind of thing, we do not make good legislation. Denis Barrette, the spokesperson for International Civil Liberties Monitoring Group, said at the Senate hearings on Bill S-3:

These laws are used in emergencies, where fear and panic are at the forefront—somewhat like what happened at the time of September 11, 2001.

Fear is never a good adviser. It is rather in moments of peace and quiet that the importance of preserving rights and freedoms should be rationally assessed. It is obviously important to defend them in difficult times, but we must plan for how to protect them in difficult times.

It is easy to protect rights and freedoms in peaceful times. We must provide for the unpredictable and ensure that, in a moment of panic, legislation does not result in innocent victims because it was poorly conceived or because it was dangerous or useless.

I believe that is what we have before us in Bill C-17, and that is why I strongly oppose this legislation.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I was here in the chamber when the minister gave his speech. I looked at the provisions in the law. He put his reasons forward. My understanding is that it is not much different from the legislation that existed, which the Conservatives at the time, the member will recall, in 2007, wanted to renew without any changes.

It even, in fact, picks up some of the recommendations in Bill S-3. The two major provisions are still in the same order.

In fact, if I read the minister's speech, he appears, subject to the test at committee, to be adopting some of the improvements that were suggested, ultimately, by the Senate when it passed the bill before we were prorogued into another election.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

In the legislative history of the bill, there were improvements made along the way. With respect to his preliminary concerns about where the party is, the party generally accepted the Senate's view in its Bill S-3 improvements.

We have to examine what the minister means with respect to the right to instruct and retain counsel, which I think is key to the member's point on self-incrimination.

I challenge the member to show me where the right against self-incrimination, which is from the section 10 and section 11 rights of individuals in the legal process, is not at all times in collision with, say, section 1 of the Charter, which is the override provision, or with the general sense of the need for national security.

I said in my remarks that there is always a collision between these. They cannot be compatible. There has to be a collision between the rights. No one right is alone, sacrosanct, and overpowering.

For the member to say that to the public belies his training, I think, as a lawyer and also as a public official.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I am pleased to speak this morning to this important bill. I also am pleased to be back in the Chamber after a summer recess that was very successful in terms of democracy, of hearing from the public and of coming back here, as I think all parliamentarians have, with a joint sense that we must make this place work. We must make it more co-operative, more intelligent and more reasonable and open.

With that in mind, I am drawn to the comments of Andrew Cohen in this morning's Ottawa Citizen who said that backbench MPs and individual MPs have no power, have no independence, do not think, do not debate and pretty much are the stuff found under rocks. However, I beg to differ in a non-partisan moment.

In two days we will be voting on a backbencher's bill that has engaged all of the public one way or another in debate. Many current members in the House and those in past Parliaments have worked very hard and quietly on issues of importance to them and their constituents. Overall, with all due respect to question period and the reforms therein proposed and the highlights on the news every night from this Chamber during that time, it bears repeating that most of the serious work in Parliament is done in committee and in cross party, cross the aisle negotiations with respect to laws that hopefully make this country a better place and, as I bring it back to this debate, a safer place.

Bill C-17 is a perfect example of a bill that has been bandied about in various incarnations dealing with the security of the public, which is one issue that does not divide anybody in the House. We all want the public to be safe and we all want public security. We may differ, however, on the means to achieve public security.

The debate itself has been discussing two important tools. Whether we agree they are needed is the hub of the debate but it bears repeating as to what they are.

In response to threats of terrorism and in the period just after 9/11, there was much debate about what we would do if we were faced with future terrorist threats, attacks or rumours of attacks or threats to our country and to our people. It was not a unilateral decision but it was felt by this Parliament that two inclusions should be made to our over 100-year-old Criminal Code. For the people who wrote and enacted the Criminal Code in the 1890s, probably the nearest thing to a terrorist attack was the War of 1812 or the raid in St. Albans, Vermont in 1865. That was probably in the psyche of most of the people who wrote the code way back when.

Let us look back to 2001 to the communities like Gander, Newfoundland and Labrador, Moncton and Halifax that welcomed plane loads of people diverted by the terrorist attacks in New York, which we recently commemorated earlier this month. What was the mentality of the Canadian public and parliamentarians with respect to public security? Something needed to be done. As Canadians and parliamentarians, we felt under attack. We felt ill-equipped to handle the next perhaps imminent threat of terrorist activity. We as Canadians felt, because of concerns made known at the time, that our border was porous and that somehow we had something to do collectively in a remote guilt sense for the occurrences in New York and other places on that day.

Parliament, therefore, decided to inculcate the Criminal Code with two tools to be used if necessary, one being the investigative hearing. In the Criminal Code of Canada an investigative hearing would allow authorities to compel the testimony of an individual without the right to decline to answer questions on the basis of self-incrimination.

The intent would be to call in those on the periphery of an alleged plot who may have vital information, rather than the core suspects. These are the people on the periphery, who would have an overwhelming incentive to lie to protect themselves, the actual accused. It was an attempt, working in concert with CSIS and our investigative security-based individuals, to find out more information to prevent terrorist attacks and terrorist incidents. That was to be inserted into the Criminal Code of Canada, a very new provision.

The second new provision was the preventive arrest provision, allowing police to arrest and hold an individual, in some cases without warrant, provided they have reasonable grounds to believe that the arrest would prevent future terrorist activity. Those were introduced in 2004. In the context of 2001, the context seemed reasonable. The context was that we were protecting our community. We were protecting our nation.

There were many safeguards built in to those provisions, and I might add that it was a Liberal government that brought in these provisions, so I do not think it lies in anyone's mouth on any side to say that Liberals are not concerned with terrorism. This was Liberal legislation, and like all legislation that was new and that dealt with the collision between the need for public safety and the primacy of individual rights, it is the collective versus the individual. Like all of those debates and all those pieces of legislation, the collision always results in imperfection because no one goes home completely satisfied with the result.

The key part of the legislation was the so-called sunset clause. At the end of five years, the legislation would sunset and would be no more. The provision was put in place clearly because parliamentarians, particularly members of the Liberal caucus and members of the government, and committee reports and minutes are replete with speeches to this effect, realized that this collision between the public security goal and the private rights goal would result, potentially, into an intrusion into the latter, so they said, “Let us sunset it. Let us see if it is needed, if it is used wantonly, without regard for personal rights, if it is used at all, and if it can be interpreted by the courts or refined through practice”.

Many times we lob a ball into the air called legislation and really hope that the courts get a chance to interpret it, to get it right, one might say, but we do try to make legislation work. In this case, the sunset clause was allowed to sunset, despite attempts to bring the debate back to Parliament. At the very end of the time for the period to run out, a debate was held and the sunset clause was not removed, or the legislation was not permitted to continue, so we are without these tools. This is where we are today. This is the debate today, whether we should have these tools in our Criminal Code with respect to terrorism or suspected terrorism.

A bill which eventually worked its way through the Senate of Canada, with good recommendations from senators and Commons committees before that, a bill known as Bill S-3, correctly and accurately assessed the situation since the original enactment of these provisions. These provisions are found in the Criminal Code in sections 83.28, 83.29 and 83.3. These are the conditions for investigative hearings, which define at some length the modalities as well as recognizance with conditions and arrest warrants for the anti-terrorism legislation.

It is not just these three sections. It is a misnomer to think that we just put these three sections in. There are some 25 pages in section 83 dealing with terrorism. They deal with seizure of property and all sections that have not been challenged or rescinded. It is only these sections dealing with individual liberties that have been touched.

Bill S-3 made some improvements to the regime as it was. There was an increased emphasis on the need for the judge to be satisfied that law enforcement has taken all reasonable steps to obtain information by other legal means before resorting to this.

There was one key consideration: the ability for any person ordered to attend an investigative hearing to retain and instruct counsel. A person so apprehended should have the right to counsel of their choice. There were new reporting requirements for the Attorney General and the Minister of Public Safety who then must now both submit annual reports which not only list the uses of these provisions but also provide opinions supported by reasons as to whether the powers needed to be retained.

There should be flexibility to have any provincial court judge hear a case regarding a preventive arrest.

And, finally, the five-year end date, unless both Houses of Parliament resolve to extend the provisions further, would be put in; that is, another sunset clause.

These amendments made their way through Parliament and, at the risk of not having a completely happy audience, then the P word intervened and we were sent home to go through yet another election. That is sad. That is too bad. But that has been debated before. We know that we do not like prorogation, it interrupts our business, but we were on our way.

Remember now these provisions were put in and as I said, we often want to hear what the courts have to say about them.

Well, an important decision of the Supreme Court of Canada took place in 2003 and 2004. The hearing was December 2003 and the decision was in the middle of the year 2004. The court, made up of the current chief justice and almost all the existing judges now, with the exception of New Mr. Brunswick's Mr. Justice Bastarache, who has since retired, concluded that the provisions put in, particularly 83.28, investigative hearings, were constitutional, but there were a number of comments made in that decision which no one could take as a complete endorsement of the legislation.

While they upheld it, it is important, I think, to note that three justices of the Supreme Court, remember, one has left the court, dissented and found, for instance, using their language:

The Crown's resort to s. 83.28 [which was an investigative hearing] of the Criminal Code in this case was at least in part for an inappropriate purpose, namely, to bootstrap the prosecution's case in the Air India trial by subjecting an uncooperative witness, the Named Person, to a mid-trial examination for discovery before a judge other than the Air India trial judge.

They went on to say:

The Named Person was scheduled to testify for the prosecution in the Air India trial, but because the Crown proceeded by [a different method known as the] direct indictment, neither the prosecution nor the defence had a preliminary look at this witness [who was detained from the investigative hearing]. Section 83.28 was not designed to serve as a sort of half-way house between a preliminary hearing and a direct indictment.

What we have here are the players and the justice system ending up using a tool that was there for, quite frankly, maybe a different purpose. The players and the system had used a certain way of proceeding in a criminal case. They saw this tool lying on the shelf and they used it.

The court, in its majority, said, sure, we can do that because public security is the number one aim here. However, it did lead to the feeling that we, as parliamentarians, in sort of a renvoi or a send-back, have been told by the court that we did not draft perfect legislation when we drafted these pieces and it had been used somewhat indirectly for the purpose in question because of a prosecutor's choice to go a certain way, which I cannot second guess because the Air India trial was a very complicated matter, involving numerous informants of high publicity content throughout Canada. So, I cannot second guess the prosecutors, but they used it for a purpose that led three justices of the Supreme Court to say that is not what this was intended for.

The majority of the court, however, went on to say it is allowable, that section 83.28 does not violate section 7 of the charter and it does not violate section 11(b) with respect to counsel.

I find that a bit strange and I allow for the fact that because the person was not a person under arrest but a witness, by the clear letter of the law the individual would not have a right to counsel. I like the changes that have been submitted by the Senate, by members of the committee and the House that say yes, counsel of the choice of the detained person should be permitted.

We went further in the House and in the Senate than the majority of the Supreme Court that would have allowed such a use of section 83.28. In other words, we have improved, through the recommendations and now the bill being presented, what the Supreme Court thought was allowable with respect at least to the right to counsel.

The court said:

--a judicial investigative hearing remains procedural even though it may generate information pertaining to an offence...the presumption of immediate effect of s. 83.28 has not been rebutted.

It took the law of Canada to be serious. It took the tools in the tool box regarding anti-terrorism as serious and upheld the use of it, and we are down to numbers almost with respect to the Supreme Court, even when good, smart thinking, and now three members of the Supreme Court said it was misused, essentially.

Where are we, then, with the need for this legislation? There are opinions on either side, but let us remember the legislation originally introduced was to combat terrorism. Besides 9/11, which was traumatic for everyone in North America and the world, the prime instance of terrorism and trying to combat it resulted in or came out of the crash of Air India flight 182 and the following study of it by John Major, who was a former Supreme Court justice.

I know Liberals want to send it to committee and examine what was done with Bill S-3, the precursor acts. We want to put safeguards into any proposed legislation and keep the balance right between the need for public security and the primacy of individual rights. That is a given.

I told a little story about how we are interpreting laws based on the one instance of a prosecutor using a certain tool, which led the Supreme Court to say in a divided way, “Yes, it's okay, but you should be more careful than the committee improving the act”. The bigger picture that has been missing in the debate so far is what use is this if our security services do not talk to our police services and our police services are not in sync with the court officers who ultimately direct that this tool be used?

The report of John Major is very instructive in that regard because he says terrorism is both a serious security threat and a serious crime. Secret intelligence collected by Canadian and foreign intelligence agencies can warn the government about threats and help prevent terrorist attacks. Intelligence can also serve as evidence for prosecuting offences.

There is a delicate balance between openness and secrecy and that is what this debate is all about. We have to focus more on terrorism threats from the national security level than this tool, which the Supreme Court of Canada has already said is allowed.

Finally, I would close by saying that the member for Windsor—Tecumseh, on behalf of this party, said we do not need this because we have not used it. I have a sump pump in my basement and I may never use it, but if I have a flood I want to have that sump pump there. I want to be ready for something that may happen in the future.

For my dollar's worth, I think this should go to committee and we should look seriously at what the dissent in that Supreme Court judgment said, what the majority said and this time, with the benefit of its advice and the advice of John Major, we should get it right. We should have those tools on the shelf.

The members who say we do not need them should be happy that we do not need them because it means that we have not had a terrorist threat. However, if we have a terrorist threat, I want those tools to be on the shelf for prosecutors to use, if needed, to keep our country safe, which is the goal we are all here to pursue.

Tax Conventions Implementation Act, 2010

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Madam Speaker, I completely agree with my colleague, who pointed out that Bill S-3 is a large bill, and that we must examine it thoroughly. I remind members of the initiatives that were introduced by the government, for example, in Bill C-9. The government opened loopholes in the Income Tax Act to allow corporations that are not registered in Canada to avoid paying their fair share of taxes. The Bloc Québécois also introduced a number of initiatives to combat tax evasion. Every time, something happened in Parliament, with prorogations or elections, and our bills died on the order paper. The Bloc Québécois also tabled some provisions to combat tax evasion that were not passed by the House.

I would like the member to share with us some real solutions for combatting tax evasion.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Madam Speaker, I would like to thank the members of this House who have taken a principled stand against, first, the Canada-Colombia free trade agreement and now this treaty that we see before us, Bill S-3, an act to implement the most recent tax treaties with Greece, Colombia and Turkey.

I did wish to note that there is nothing exceptional in tax treaties. Canada enters into such treaties to help individuals and corporations to work in both Canada and the home country without double taxation, and to prevent tax evasion.

However, in the context of the Canada-Colombia free trade agreement, I am convinced that in order for Bill S-3 to be successful, it is essential to divide the bill. We can then vote for the treaties with Greece and Turkey, and set aside the treaty with Colombia.

The reason for avoiding the treaty with Colombia is related to our concerns with the Canada-Colombia free trade agreement. Our concern rises from the fact that we in the NDP caucus challenge the ethics of that free trade agreement between Canada and Colombia. We need to examine the situation in Colombia and look at it carefully so that we can understand why I am making this statement. Why kind of partner is Colombia, in terms of any kind of treaty?

I have been aware of the circumstances in Colombia for a number of years. I have actually had the privilege of speaking directly to Colombians from all walks of life in regard to the situation that they face in their homeland under the Uribe government. In fact, I have many constituents who fled to Canada because they no longer felt safe in their home country of Colombia.

In the last session of Parliament, I spoke about the CCFTA and undertook to talk about the lack of environmental protection and labour rights in the agreement.

Violations of labour rights and violence committed against unionized workers are among Colombia's foremost human rights challenges. Colombia is the most dangerous place in the world to be a trade unionist. A deep-seated anti-trade union culture exists in that country, both within the government and among entrepreneurs. These entrepreneurs and the government see autonomous organizations of workers as a threat.

There were 2,690 trade unionists murdered in Colombia since 1986, with 46 deaths in 2008 and 27 murders in 2009. Impunity rates for these violations are unchanged. There is only a 3% conviction rate for those who murder. Tragically, these crimes are tolerated by the Colombian government.

Canadians must not be party to this tolerance for violence. It goes against everything we believe about ourselves. It goes against our sense of justice. So, in signing Bill S-3 or in approving a tax treaty with Colombia, I think we are betraying our values as Canadians.

The Uribe government continues to inaccurately denounce union members as guerrillas, statements considered by the unions to give carte blanche to paramilitaries to act, putting workers in extreme jeopardy. Substantive labour rights protections remain in a side agreement of the Canada-Colombia free trade agreement, rather than in the body of that agreement. Enforcement of these rights is entirely at the discretion of the signatory government.

It is not a matter of discretion. It is a matter of life. It is a matter of justice. That life and justice is denied because the complaint process in the CCFTA does not investigate nor evaluate the complaints. There are no independent judicial or even quasi-judicial bodies that could lead to real remedies, that could look at the complaints and expect a change.

As I said, only a matter of discretion in the FTA governs these labour agreements. Unlike the provisions for investors' rights, the agreement offers no trading sanctions, no countervailing duties or abrogation of preferential trade status in the event that a party fails to adhere to labour rights provisions.

What it does institute, though, are fines. Fines for murder. That is just beyond belief.

Investors have rights, very clear and substantive rights. Workers do not. It defies logic. It defies understanding, and it is basically a matter of kill a trade unionist, pay a fine.

This is hardly acceptable or effective. Fines neither address the causes of the violence nor generate substantive incentives or political will in the Colombian administration to address the crisis and bring an end to the violence against trade unionists. Quite simply, there is no justice.

Given the scale and the depth of labour rights violations in Colombia, neither the Canada-Colombia free trade deal, its side labour deal or this tax treaty should be implemented. The fact is that it is more likely that agreement provisions for market liberalization and investors' rights, which are substantive, will exacerbate conflict and violations of workers' rights.

How on earth can we be party to this? How can we do it? How can we talk about tax treaties and trade agreements with a country where people's lives are in danger simply because they stand up for their rights?

Once Canadians understand what the proposed Canada-Colombia free trade agreement contains and what it means to sign a tax treaty with such a regime, they will simply reject it and they will ask this Parliament to reject it.

I would like to also speak about the crimes currently committed by the Uribe government against indigenous Colombians.

In a new report released February 23 of this year, Amnesty International called for immediate international action to ensure the survival of indigenous peoples in Colombia. It stated:

The organization says guerrilla groups, state security forces and paramilitaries are responsible for grave human rights abuses against Indigenous Peoples. These abuses include killings, enforced disappearances and kidnappings, sexual abuse of women, recruitment of child soldiers, persecution of Indigenous leaders and forced displacement of communities from land that is rich in economic potential.

People are quite literally forced from their land because they live in areas that are valued for their natural resources, including oil and minerals. Amnesty has stated that the situation of indigenous people in Colombia is nothing short of an emergency. Until countries like Canada recognize the gravity of this situation and exert much needed pressure on the Colombian government, there is a real risk that entire indigenous cultures may be eradicated. Signing tax treaties is not exerting pressure. It is simply going along with what is happening there.

According to the National Indigenous Organization of Colombia, ONIC, the survival of 32 different indigenous people in Colombia is at risk as a result of the armed conflict, the impacts of large-scale economic projects and a lack of state support. According to ONIC, at least 114 indigenous men, women and children were killed, many others threatened, and thousands driven from their land in 2009 alone, in one year alone.

In its latest report, Amnesty International says the threats facing indigenous people are intensifying and is calling on guerrilla groups and state security forces to respect the rights of indigenous people not to be dragged into hostilities, and equally importantly, to respect the rights of indigenous people to own and control the land on which they depend for their cultures and livelihoods. Tragically, indigenous leaders in communities that try to defend their land rights commonly experience threats, killings and mass displacement.

Colombia's ongoing armed conflict has affected millions across the country and left tens of thousands dead, tortured and forcibly disappeared. The vast majority of victims are civilians. In the last seven years, more than 1,595 indigenous people were forcibly killed or disappeared as a result of the armed conflict, and in 4,700 collective reports, threats were reported. In the vast majority of cases, these crimes have not been properly investigated, nor have the perpetrators ever been brought to justice.

Just as with trade unionists, the death toll is rising and still the Conservative government is determined to pursue trade agreements that are highly questionable and to enact a tax treaty that is equally questionable.

As Amnesty International testified at the House of Commons Standing Committee on International Trade in November 2009, one of the most worrying trends is a dramatic increase in the number of Colombians forced to flee from their homes, as many as 380,000 in 2008, and there are more every day. That brings the total number of internally displaced people in Colombia to between three million and four million, among the highest in the world, and it is growing.

Forced displacement has paved the way for misappropriation of lands, mostly by paramilitaries but also by guerrilla groups. It is estimated that more than four million hectares of land have been stolen by paramilitaries in this way. Displacement is one of the greatest threats facing indigenous communities, as in the case of Colombia.

I do not believe it is a coincidence that this happens in oil and rich minerals, and remarkable biodiversity. International mining, agribusiness and those who extract oil have a vested interest in these territories, all at the expense of people who have a right to live on these lands. We know that multinationals, including Canadian businesses, are interested in Colombia and are participating in the exploitation of resources.

According to the director of the United Nations High Commission for Human Rights in Colombia, when this displacement to urban centres occurs, it becomes very complicated. Since most of the indigenous women do not speak Spanish very well, the immensity of the city frightens them with its anonymity and lack of solidarity among residents. The women face new problems in raising their children and relating to their partners because the city is not a customary environment.

In addition to this uncomfortable environment is the anguish of leaving their homes and running with whatever little they had or could carry in order to outrun death and desolation. Accepting new, unfamiliar realities and activities not traditional in indigenous cultures results in culture shock and disorientation. People experience a way of life and language radically different from their own.

This fracturing can result in a breakdown of cultural continuity, as young people find themselves in alien environments and deprived of the social and cultural networks and practices necessary for the survival of their communities. Displaced people are at heightened risk of destitution, sexual violence, exploitation by criminal gangs, armed groups and discrimination. Even in the places in which they seek refuge, they may face further intimidation or violence and have to flee once again.

The inadequate state response by the Colombian government to the needs of internally displaced communities means that some people return to the dangerous situations that they fled. Without support or safeguards that should be provided by the state, the right to traditional lands is crucial to these indigenous people and the right to support is equally crucial. It is vital as an element in terms of their sense of identity, livelihood, way of life, and it is crucial for their future.

This brings me to the bill that is before us. This bill, as I said before, is of profound concern because it enables the government. It enables Colombia to abrogate its responsibilities. It is completely inadequate for any country to say that this is just a tax treaty, that the government of that country should be allowed to do whatever that government wishes. When one considers murder, torture and the displacement of people, we are treading on very dangerous ground here in our association, both through the Canada-Colombia free trade agreement and this tax treaty legislation.

It is clear that the members of the Liberal Party and the Conservative Party want nothing more than for Canada to move ahead with the CCFTA despite all the human, environmental and ethical costs. I think that we have to answer the ethical questions that are put forward by this discussion. I wonder what Canadians would say if they knew that, in last month's legislative elections in Colombia, independent foreign observers reported vote buying and fraud that allowed narco-paramilitary candidates to maintain influence over the Colombian congress.

I wonder what they would think about the plea to the Canadian Council for International Co-operation from Methodist Church of Colombia Bishop Juan Alberto Cardona during his visit to Canada in November 2007, when the bishop said:

--but we know from other places like Mexico that these agreements might create more wealth for wealthy people, but they make inequalities worse. Whatever new wealth is created does not reach the poor people.

The Canada-Colombia free trade agreement was signed behind the backs of the Colombian people, without any real participation from civil society and without any study on the impacts. Now we are proposing to move ahead with a tax treaty, again, I would say, against the wishes of the people of Colombia.

This is something that must be made very clear to this Parliament and to the people of Canada.

The stage is set for further and increased human rights violations in Colombia. We know that the Uribe government is looking for re-election. We know that this will give it carte blanche. Colombians have asked Canadian society, this Parliament, to demonstrate solidarity with Colombian people by mobilizing against the CCFTA. We did not listen to them. We are moving ahead with that. I think that is a great travesty.

Likewise, I think we should be very careful about moving ahead with this tax treaty.

When I began my remarks, I said that the fight against the CCFTA was principled. I have not changed my mind. How can our country contemplate any treaty that legitimizes such a corrupt government as the Uribe government? I believe Bill S-3 would exacerbate this. Therefore, I believe we need to split Bill S-3 so we can go ahead with treaties with Greece and Turkey.

We should not be accessories to the crimes committed against Colombia workers, the Colombian environment, Colombians of African descent and indigenous Colombians by signing a treaty with any government that sanctions murder, rape, the dispossession of people and that sanctions drug dealing and crimes against the human community. Let us rather say in one voice that no treaty, be it a trade treaty or a tax treaty, is something on which Canada is prepared to embark when there are such risks to human dignity.

Because we value human rights, human life and the legitimate aspirations of the Colombian people, let us refuse to engage in anything that might give credibility to the Uribe government and to the things that it represents in terms of its behaviour. Let us stand here together and divide the bill to ensure that Greece and Turkey's tax treaties are respected, but let us not proceed with anything with the Colombian government.

The House resumed consideration of the motion that Bill S-3, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Madam Speaker, it is encouraging to hear my colleague from Winnipeg talk about the implications of tax policy, with having done so much research on it, because those implications affect so much of what we do in this place, primarily the government's ability and willingness to collect taxes fairly across the country. Are there special understandings within the political class here, the cabinet, and those families that can even afford to even consider things like tax havens?

I suspect that most Canadians watching this have not contemplated with their families around the dinner table what to do with their tax haven structures this year. Most Canadians are struggling to make ends meet and pay their fair share of taxes, and are willing to do so, but it is when they hear stories of the excessively rich families in Canada making a certain amount of money, wanting to avoid taxes and then skipping town, essentially.

Some of these same folks end up getting a little pin on their lapels or the Order of Canada from prime ministers for their great and dutiful work for Canadians. The irony and the hypocrisy in that alone smacks so hard against Canadian values.

Bill S-3 is a bill that has come forward from the Senate. It is great to know that every once in a while the senators rouse themselves from their afternoon naps and produce something. However, it is a bill that does not necessarily mean a lot in its particulars but, in general, has implications for all of us.

In Bill S-3, as my friend from Winnipeg said, the government quite intentionally included a country that may cause problems, because it is trying to do a free trade deal with Colombia right now and now it is slipping it into this taxation bill. It is striking to me and to others why these three particular countries are locked together and why it is of interest to the government to include such diverse economies together into one piece, but the government has chosen to do that so we must work with that.

The issue that is in front of us is how to deal with this bill. The NDP has suggested, quite rightly, that the bill should be split, that it should be broken up into its contingent parts so we can deal with each reality on its own. The government at this point has refused that, but let us look at the pattern of how the government operates when it comes to making legislation and the role of the government.

Right now at the finance committee, members are dealing with Bill C-9, which, by all measures and accounts, is a Trojan Horse bill. It is supposed to be a budget bill but it is an omnibus bill, which means that it includes a whole bunch of different pieces. The government has included things like raising airport taxes and the selling off of Atomic Energy of Canada Limited, the largest crown corporation in this country. It is the nuclear industry. It has also included a watering down of environmental regulations on, of all things, the oil and gas industry, which is quite ironic to think about doing that right now. All of these things are embedded into a piece of legislation that is meant to be a budget bill, a finance bill. That is a cynical form of politics. It is a form of politics that says that it does not want to debate these things on their merits.

Let us just take one of those pieces as an example, the selling of AECL. Canadians, over the 50 years of this crown corporation existing, have put somewhere north of $21 billion into it to develop the nuclear industry here in Canada, both on the energy side and creating isotopes. That is a lot of money. What else could have been done with $21 billion? However, here we are and the money has been put in.

It actually says in legislation that was crafted in this place that in order to sell or break up AECL, the government must bring a bill before the House for debate. That makes sense. That is reasonable. That is what every other country around the world does. However, rather than debate the sale of AECL or how to break it up, or any of these other things, the government instead has slipped it into a budget bill and has said that it is a matter of confidence.

It also tacked in this thing about raising taxes at airports. This is from a government that is constantly claiming that it is cutting taxes. It is becoming laughable because at the same time it is raising them, like the HST.

I am a member from British Columbia and I was just at our first farmers' market in Terrace, B.C. this weekend. I manned the HST booth for a couple of hours and heard from constituents in British Columbia how frustrated they are that when they flick on the evening news they hear Conservative minister after minister talk about their glorious tax cuts, when they know in British Columbia and in Ontario that they are moving the HST onto the backs of hard-working families who will pay more taxes.

It was a tax that was brought in by a British Columbia premier who promised not to do it. The Conservatives pretend they had nothing to do with it, forgetting that their fingerprints are all over a $1.6 billion bribe that they sent to Ontario. The government took $1.5 billion from taxpayers to bribe another level of government to raise taxes on those same taxpayers. This is the way the Conservative government cuts taxes.

It is unbelievable that those guys can still walk upright and claim the high moral ground on taxation when they took $1.5 billion and slipped it into a budget bill to raise taxes in British Columbia and another $3.5 billion or so to Ontario. That is remarkable.

What is remarkable is that the folks who were coming up to us at this farmers market were from all political persuasions. Folks from across the political spectrum were saying that whether it was this type of tax or another type of tax, the process stunk. They were signing a petition so a free and fair vote could be held in British Columbia to decide things.

Bill S-3 is another effort at talking about things without actually doing anything. We have asked for evidence from the government about the effect of these treaties. The government has signed, I believe, 87 agreements. The Conservatives think they are great free traders because they have signed these agreements. They say that they are fantastic, thereby implying that something actually has changed in the world.

It must have cost a lot of money to print 87 treaties, never mind sending negotiators all over the world to make these things happen. These things are not free. We have invested in these things. We are asking for a return on our investment.

We want to know what has changed in tax policy. Have we caught those folks who take their money offshore to a tax haven? Have we recovered any funds from the people who have earned their money from investments by Canadians and then skipped town before the bill is due? The government has not provided any evidence.

This leads one to some suspicions. This is again the portrayal of action without anything actually changing. This is a level of government of which people are growing increasingly tired. If the government is going to do something, then it should do it.

I come from a remote rural part of northern British Columbia. When somebody says he or she is going to do something, often it is a handshake and the agreement is made. Then we go forth and do it.

To set up all these agreements with no evidence as to whether they work or not, or which kind work better for which situation, is governance by a certain ideology rather than governance by any kind of thoughtfulness and debate.

With this bill, the government is lumping three countries together so it can get the numbers up. It is signing more treaties, all the while refusing a fundamental principle of trade, which has been evolving, growing and maturing around the world for the last 50 years.

That is the counter to the free trade ideology. We can trade with other partner countries but we have to do it fairly. Everybody knows that nothing is free in this world. Even the terminology free trade must sound good, it must mean good things. However, when we ask about fair trade, when we ask about trade that is on good terms with our trading partners, that would improve working standards, that would take care of the environment, that would ensure we do not support regimes that we would never tolerate here, the government is silent. It is not interested in those types of trade agreements, and we see that with Colombia.

Our member for Burnaby—New Westminster has been pushing hard to get some sort of review of the human rights situation in Colombia. He has made some progress with members after a massive campaign involving thousands of Canadians. They would like to know that their trading partners are living up to some sort of standards, some sort of requirement, for the privilege of trading.

That is how trade works. It is a privileged status. It is not a right. Countries do not trade with each other based on any fundamental rights. Countries trade as a privilege. It is the same with operating a business. It is not a right to operate a business in Canada. It is a privilege. One has to follow certain rules and those rules cannot be broken.

If someone ducks out on taxes, the government comes after that individual, and rightly so, except for a particular class of Canadians. When we get into the billions of dollars, suddenly a whole new set of rules apply. People go to what is called a tax haven, and tax havens, as has been described earlier today, are set up by countries that have a skeleton of a banking sector. They are often islands. They are often very small countries, sometimes democratic, sometimes not. The list of prestigious Canadian families who have their money socked away in these tax havens is astounding.

We see it time and time again, whether it is Liberal or Conservative governments. A little private meeting goes on and Revenue Canada says that is all right. We saw it with a former prime minister, for goodness sake, who got caught evading taxes. It was Brian Mulroney, a Conservative. Those folks used to know him, then they pretended they did not him and now they know him again, I think. What did he do once he got caught. He cut a deal with Revenue Canada. If he paid back a portion of those taxes, it would be satisfied.

I wonder if the government offers that same deal to the average hard-working Canadian taxpayers. If they are having a hard time this year or last year paying their taxes, Revenue Canada will cut them a deal and they will only pay 50%. Of course not. The system would not work that way.

However, when we move up into this upper echelon, if it is a Brian Mulroney, or a Bronfman, or somebody who has some connections to this place, they can cut deals with the government to pay half of the taxes they actually owe. How does that make any sense? How can those guys call themselves fiscally conservative if, at the same time, they allow tax avoidance to go on? How can they be running deficits while, at the same time, taxes owed to the good people of Canada are not paid. The only reason is because there are connections, there is the familiarity, there is a need to have some sort of comfort with certain Canadians who are of a certain wealth.

On the agreements with countries, we hope, as Canadians, that our presence in the world, our ability to connect with other countries is for a betterment of the world. We do not go forth, whether it is through military or diplomacy or trade, hoping to make the world a worse place. Part of our underlying belief as Canadians is that we have accomplished something in our country that is, as some have said, a country that works well in practice but not in theory. We want to be a symbol and an example on certain issues, particularly, for other countries struggling to establish a democratic rule of law, struggling to establish women's rights and rights for minorities, rights for the gay-lesbian community. Canadians feel okay with promoting those things overseas. We hope we do that through our diplomatic core and our military, from time to time.

However, when we look at the free trade ideology coming from the government, all these other issues get short shrift. One wonders if the government even believes that trade is a mechanism and a vehicle for promoting human rights and environmental standards around the world. Conversely, and I think this is much closer to the reality for those guys. The very nature and vision of the role of Canada, the very vision of Canada promoted by the Conservative government is not one that supports human rights. It is not one that supports environmental protection or the rights of first nations people. The reason I can make that strong statement is there is so much proof that the government does not mind cutting access to women's programs. The government does not seem to mind cutting back funding for certain groups that it does not like if their ideology is not right. It does not mind watering down environmental regulations on the oil and gas industry. In fact, the government suggests the oil and gas industry can regulate itself, which might be better.

In committee this morning we heard that our national regulator that governs oil and gas for most of the country, with the exception of Newfoundland and Labrador, had said that it was no good to have these regulations any more, that we should just be goal-oriented in our rules. Let us not have rules, in fact. Let us just have guidelines. Would it be a good idea to just have goal-oriented guidelines for driving regulations or for the safety of our homes and our streets? Of course not. We put regulations in place.

As my father-in-law, who works for a compensation board in British Columbia, says that a lot of the rules and regulations that govern industry for workers' safety are written blood. What he means is those rules were not invented out of nowhere. They were often invented after there had been an accident. In his case, workers' safety, somebody died, or somebody was hurt seriously. They realized they had to change the rules guiding construction, or a certain industry. The had to make them stronger so people could go to work knowing they would come home at the end of the day. That is the principle from where regulations and rules come. There is not a little office of people sitting around Ottawa, not that I am aware of, who make up rules for the sake of it. We make up rules and regulations so they enable good practice to flourish, so they give people a fair opportunity earn a decent buck to be social citizens. There is a social licence to operate that is buried within it.

However, when it comes to the regulations, the government promotes a Canada that does not necessarily belive in this, that industry can self-regulate. If we look to the Gulf of Mexico right now, we see what happens when an industry is given more self-regulation.

This does not always happen in one shot. It happens over time. There is a creep, they call it. It creeps edge by edge. We saw it in the stock market in the U.S. and in Canada. We put rules and guidelines in place to try to contain some of the greed that would be rampant in any stock market, because it is a profitable place to make money. We put those in place because not everybody was very ethical. Some traders want to bend and break rules and rip off their investors. In American, it was the Glass-Steagall act. In Canada, we had a bunch of other stuff, but the creep happened.

Bit by bit, the Americans eroded some of their guidelines. They eroded the rules and decided to do outcome-based guidelines. The outcome-based guideline for the stock market is to make money. If people keep making money, that is all right, but they will not be guided. The invisible hand of the free market will save them at the end of the day.

The marketplace is a magical thing. It can bring billions of dollars into new technology, ideas that spur innovation and that ambition can be allowed to flourish. However, it needs to have some rules and some sort of containment so people who try to do the right thing are rewarded and those who are crooks are thrown in jail. We take away all those regulations and they make guidelines. We make goal-oriented objectives and we get what we get, which is the worst of the worst are able to manipulate the system to their best abilities and make money in unethical ways.

Now we move to trade in Bill S-3, the bill from the Senate. We need to have these tax deals so people are not double taxed. That is a very fine principle. It is something we can support. Then we look at all the existing tax haven countries. Has the government signed any treaties with those countries, the places where people actually set up tax havens?

I have not known Turkey to be a great and rampant source of tax havens for the wealthy and rich around the globe, because it is not. We have the list of the places that are. Transparency International runs a list of the most corrupt regimes every year. Some of those are also the regimes where these tax havens exist. All one has to do is pay somebody off to not pay any taxes in the country, to never have to declare it and to have one board member.

Former Prime Minister Martin ran his whole shipping company under different flags of convenience. Why are they convenient? Because if people have shipping companies like the former Prime Minister of Canada did and they do not want to follow Canadian, American or European law, they fly them under the flags of some backwater African country, which has no rules or regulations for shipping. Therefore, they do not have to stand by any labour or environmental laws because they have this convenient flag flying over their ships.

The problem with the government's ideology on this is it also applies a flag of convenience to its trade policy. It uses trade in a convenient way to accomplish only a very narrow band of things. There are those of us who believe strongly that trade with a country can be an opening of a conversation about improving the conditions for people on both sides of the deal, both Canada and the country with which we are trading.

There is some evidence that this has happened around the world. In the last 25 years, we have seen steady improvements for the lowest-income people across the globe in some regions. However, it is false to think that this just happens naturally and that it is some byproduct that will happen no matter what we do. Very strong evidence exists to show this is the case.

We traded with Iraq during the entire Saddam Hussein regime. We bought its oil. The Americans bought its oil. We did not put a single stipulation in place. We had to drive furiously at a previous Conservative government to get a proper regime set up against South Africa when apartheid existed. We had to make the moral implication. The argument against any trade sanctions against South Africa was that free trade had to reign. That was the most fundamental principle. If we just traded with South Africa, it would eventually let apartheid dissipate.

Of course that was never going to happen. It would still be there today if the world did not get together and say that, as part of human trade, we would insist on human rights. As part of our trade with South Africa, to buy its resources and products, we would insist that it also treated all its citizens with some level of dignity. It was a good moment for the world when we finally decided that. Conservative ideological thinkers were against it. They opposed every step of the way.

We see it again here today. We need good trade policy in Canada. We are a trading nation. We need to shut down tax havens around the world and have people, whatever their social standing, pay their fair share of taxes. It is the right thing to do.

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

Mr. Speaker, I am pleased to speak today to Bill S-3, which originates in the Senate. Interestingly enough, there are a considerable number of bills that are coming to us from the Senate this year. This is An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The House resumed consideration of the motion that Bill S-3, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

Business of the House

[Jay Hill, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, we will continue today with Bill S-3, the tax convention bill, followed by Bill C-15, nuclear liability. It would be by intention to call these two bills tomorrow if they are not completed today.

Might I add that, thankfully, as my hon. colleague noted, next week is a constituency work week.

When the House returns on May 25, it is my intention to call Bill C-3, gender equity in Indian registration, which will be at the report stage. Following Bill C-3 will be Bill C-20, the National Capital Act, and Bill C-10, Senate term limits.

My hon. colleague asked about the committee of the whole. I would inform the House that pursuant to Standing Order 81(4) I would like to designate May 27 for consideration in committee of the whole of the main estimates of the Department of National Defence and May 31 for the Department of Natural Resources.

Friday, May 28 shall be an allotted day.

Tax Conventions Implementation Act, 2010

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[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.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, I am delighted to speak to this bill today.

Those of us in the Liberal Party are into what is called nation-building. Nation-building is a bit different from what the parliamentary secretary said a moment ago is the primary function of parliamentarians, that is, to make sure they conduct things the way a businessman would run his corner shop. That is not to diminish the fact there always needs to be economic probity, financial probity in everything that we do, but there is a different action.

In this place, all members of Parliament, whether their background is in business, law, academic teaching, small business, or worker, are interested in building this nation. They do it through the economic stimuli available to a Parliament like our own to ensure that all men, women and children have the opportunity to fashion out a future for themselves in this country, to avail themselves of all of the natural resources that are here and the human resources that come with the interaction of people who live in a collective, and all of the entrepreneurial skills that are developed either through some of the institutions that are funded by government in part on the one hand and stimulated by those who see the value in research and development on the other.

Bill S-3 addresses one component of that social economic development that comes with nation-building. One would expect that I as a Liberal and those of us in the Liberal caucus would be supportive of any initiative that would render the free flow of capital for investment to allow enterprise to capitalize on its ingenuity and create wealth as a result, and to do it not just here in our country but elsewhere. It is called the exporting of our intellectual property, of our entrepreneurial skills, indeed of our culture.

Those of us who are nation-builders, those of us who are members of the Liberal Party, understand that government is not only about operating a balance sheet. We understand that balance sheet has to include the ambition and the dreams of all Canadians in whatever fashion they are developed around the country.

The reason taxation treaties are important and why Liberal governments in the past have sought them in the context of the OECD and the model tax convention that has driven it is that we believe in fairness, the fairness that comes with making an investment and recovering revenue from that investment, but not an investment or return that would be double taxed. In other words, we do not have to make a contribution twice to the infrastructure of a culture, economy and society that may be thousands of kilometres away.

That does not mean our corporate culture would go in and ransack and pillage and walk away without any responsibilities. We believe in a mutual co-operation with legitimate authorities in other locations that welcome our entrepreneurs, our investors and co-operate with them in developing the local economy while allowing ours to come back with the merited profits without being taxed there and here.

When we have to tax here and we have to tax back, the first casualty is probity, i.e., it is replaced by corruption. The second of course is people look for ways to avoid tax and that obviously leads to tax evasion.

That does not work well for the development of any country, because the underlying weakness is one that says the individuals, or the corporate individuals who make an investment, who garner wealth from the activity in whatever place that activity is resident, no longer have a responsibility to their community.

In the Liberal Party we believe in a collective responsibility. We believe there should be profit and capitalization of all intervention and investment that is made in a territory or a collective, but we believe that something must be left behind: growth. Growth is what we leave behind, and a respect for the individuals that allowed us to move along.

We have developed a series of treaties with many countries. I am glad to see that we are now moving ahead with Greece, Turkey and Colombia. I understand that we are already in negotiations with other countries like Cuba. The idea is that those countries and their legitimate authorities help our own investors to secure a proper investment environment and at the same time leave behind an additional investment through taxation that is not so onerous as to generate avoidance, evasion and corruption.

Legislation like this seeks to impress upon the international stage that one can be a responsible and active democracy and still be very dynamic economically. One can be socially oriented, i.e., have a sense of responsibility to the collective and at the same time pursue a very dynamic and rewarding bottom line. We wonder why legislation like this, which purports to do that, would not have been presented earlier and would not have been initiated in the House of Commons, where all money bills, tax initiatives and fiscal responsibilities are developed, debated and promulgated.

We would have thought that. Not to be light on this, but it seems to me that it did happen in the past, but prorogation came along and killed it. Now it has returned again through the Senate. It has come back here. Maybe there will be another prorogation. I must think about it a moment. Why? Because the parliamentary secretary talked with such great earnestness about the government's commitment to all of these bottom lines and fiscal responsibility issues and about how this is almost indispensable to everything in the world.

I agree, but I am not sure that the issue of commitment can be attached to that speech. The legislation was presented, debated, prorogued and killed. Now it has been raised in the other place and brought here. We will make a few interventions. There is no indication that things are going to be moving with any speed. It is important for our businesses to understand that the government is actually in a position where it wants to help and prepare the road so that foreign governments are at least as sensitive to the dynamics of the marketplace as our own might be.

It struck me as well that the parliamentary secretary talked about the greatness of the Canadian financial system and the basis upon which it is founded, how solid it might be, how much of a beacon it is for the rest of the world, how the marketplace is solid and how there is an appropriate balance between business and government, between society and business and between what must be invested and what must be taxed. In other words, how do we make a contribution to renewal and growth?

The parliamentary secretary said that all of these things are part of the Canadian culture. In saying that, he is paying a compliment to the governments of former prime minister Jean Chrétien and former prime minister Paul Martin, who were able to establish a system of balanced budgets.

Someone is going to say, “Oh yes, but somebody had to pay for it”. Canada had balanced budgets and surpluses, in the western world, so that we had the most solid financial system, financial administration, anywhere among the G8. In the OECD countries, Canada was seen as a country that reduced taxes. Of course we had a reduction in the national debt from roughly $600 billion to about $500 billion and an elimination of the deficit, from $43 billion to zero. No, I am sorry, it did not go to zero; it actually went to a $12 billion surplus, at last count, which was then reinvested in our collective, our community, Canada. It was invested in the taxpayers. It was invested in those Canadians who wanted to make this country grow.

Every country lusted at our model. They asked how it could be that Canadian administrators, Canadian legislators, could make investments in research, in human resources, in universities and colleges, could produce a federal system that allowed for two levels of government to be able to make investments in their young people, in the infrastructure to take care of the old, in the hospitals and medical systems that are required to give a quality of life that is the envy of the world? How can this be? What do they do?

Well, they took a look at the tax system. The two governments of Jean Chrétien and Paul Martin, over a 15 year period, produced the kinds of results I mention. They were able to initiate all these treaties that were reciprocal arrangements with countries, with the business environment in other places and the expectations of our business community.

The Government of Canada and the governments of the provinces were able to go into countries around the world in support of their businesses and receive the red carpet treatment. Why? Because when they struck those deals, those reciprocal arrangements, like those proposed by Bill S-3 right now where two countries are talking about recognizing which of the two has the residual authority to tax an activity, to tax an income, they do it on the basis of fairness. The Canadian government has demonstrated a culture of probity, a culture of continuity, a culture of respect for those who contribute the earning and those who withdraw from that earning to reinvest with their partner.

That is why countries around the world approached us and asked “Can we get an arrangement with you, because you can be trusted?”. People do business with those whom they know, with those who have established a record of continuity, those who have established a record of trust.

That is why I mentioned a moment ago the issue of income trusts. The justification for it was that there was tax leakage here. We needed to get a little bit more. We could not lose that $300 million. The parliamentary secretary said, “That's old hat”, three years ago. But it is not old hat to refer to the environmental standards that were set, perhaps not met, by previous governments of 10 to 15 years ago and replaced by no standards. Therefore, there is no judgment.

The issue of income trusts is extremely important because it goes to the heart of internal tax treaties. Those are the arrangements the Government of Canada, i.e. the people, the collective, makes with those who engage in economic activity to produce wealth and to share it, to fund programs.

When the Conservative Government of Canada made a big deal of saying, “We are making the tough decision; we are going to cancel these income trusts because that is $300 million”, it said that these guys through a legal tax loophole were avoiding paying $300 million. That is going to be replaced by a circumstance that sees 85% of those activities bought by American and foreign-owned enterprises. As my colleague from Scarborough Centre mentioned a moment or two ago, what happens is they get all the benefits and advantages out of the Canadian tax system and ours do not.

Of those companies that became the target of that $300 million tax leakage, 85% are now in the hands of foreigners. By the way, they are not paying taxes here. They are paying taxes there.

What is worse is that those Canadians who had made an investment in their own future and in their own retirement lost $35 billion overnight. They saw their savings melted away like rare snow on a hot June day. They just melted away because the Minister of Finance and the Prime Minister, both Conservatives, said “We need to make a tough decision. You pay for it. You have got $35 billion to burn. You pay for it so that we can save $300 million”. We save $300 million and we are losing whatever is the balance to all those Americans who took the 85% of the income trusts that still exist. That is great.

Let us go back to these tax treaties. Foreign countries are looking at us; now it is tougher to negotiate with them. We are negotiating with them and happily there are people who still want to sit at the table with us, but they are wondering about our right-wing government, I am sorry, an extreme right-wing government. It does not pay attention to that dynamic I mentioned a few moments ago, the dynamic with the individual citizen, the individual taxpayer, engaged either as a worker, a subcontractor, an entrepreneur, an administrator in a large enterprise, or indeed, an administrator in one of those social institutions that make us the great country we are. That relationship of trust and mutual service is being eroded, if not snapped. They look at us and say, “If they have a country whose government has so little respect for all of the elements that go toward wealth creation, that go toward the development of a society that is an economic model for the world, what can we expect? If the Government of Canada has little regard for its own citizens, if the Government of Canada is busy in the process of eroding all of those programs and institutions that have got it to this place of such elevation, what can we expect in any agreement we sign with them?” We should think about that.

Sometimes we listen to people like the parliamentary secretary, who say to us that this is good, that is good and this is good, then take a look at each item of the puzzle and go out and say, “Look at how many pieces we have in the puzzle”. Put it together and see what it looks like.

We want to support a system, and we will support Bill S-3. We find that those initiatives are a logical outflow of those initiatives we had as a Liberal government. They have to flow from the logic of nation-building that we established in this place and that we still adhere to very proudly, despite the mudslinging that is thrown at us for all of the achievements we made through all those years. Those achievements no longer belong to the Liberal Party. They belong to the country of Canada. They belong to every province. They belong to every municipality. They belong to every citizen.

We have a responsibility in this place to ensure that all the interests of all Canadians, be they workers, small entrepreneurs, administrators or large corporate citizens, are always weighed in an equilibrium, a balance that sees them first as members of Canada, and Canada always.

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

Mr. Speaker, I want to thank the member for his speech on Bill S-3. I have several questions for him, but the main one that I am interested in is the fact that even though we have 90 or so of these treaties in existence right now, and they do deal with the whole issue of tax evasion and tax avoidance, I would like to ask him whether he could tell us how much money has actually been recovered under the existing treaties that have been signed?

He talks about how we can co-operate between our tax department and the tax departments in other countries. I presume that there are some provisions to get our hands on bank records. I am just not sure how that works.

Under the existing 80 to 90 agreements that are in force and have been in force for a number of years, how much money has actually been recovered by the Canadian government in terms of tax avoidance or evasion?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I thank my hon. colleague not only for his question, but for his assistance in pronouncing the Greek gentleman's name. I did have trouble with that.

Certainly, as I mentioned in my speech, this is about tax fairness. He likes to keep bringing up in this House the fact that we actually implemented tax fairness with the income trust issue that the Liberals were either scared to address or just buried their heads in the sand and did not deal with.

This Conservative government has dealt with some very difficult issues, but we have dealt with them head-on, such as the environment. Canada is a leader with our environmental record because we met it head-on. We listened to the fact that other countries were not meeting their commitments and frankly, we were a little ashamed that we were not meeting the commitments that the Liberals had challenged us with. They had never followed up, so we went to Copenhagen and we were sponsors of a commitment to an accord that many countries have now signed on to. We take the tough decisions.

Getting back to Bill S-3, this is very important for his home country, for Colombians, for Canadians operating in Greece, Turkey and Colombia. They need to be assured that when they send employees of a Canadian company to those countries, they are not going to be overtaxed or double taxed.

It is a part of our pattern of expanding trade. We continue with our very strong and very bold trade agenda in putting forward new trade initiatives and agreements. This is just part of a treaty that will protect our Canadian companies to help protect their employers as well as those countries.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to start debate on Bill S-3.

However, before I get into my prepared remarks, as this legislation involves Greece, perhaps it is a very relevant time to bring the members of the House up to speed on the latest issues in Greece. It has been very much in the media and I think it is appropriate to comment on the current situation.

First and foremost, Canada is concerned about the situation in that country and other threats to the global economy. That is why we have been taking a leadership role within the G7 and the G20 on global financial reform, including Greece.

Over the weekend, the finance minister chaired conference calls, and I emphasize “calls”, with G7 finance ministers on that matter. Canada, through the IMF and through our IMF partners, is providing key support to help ensure the situation is contained.

The Bank of Canada, working with the central banks around the world, is also helping provide key liquidity to markets.

While we are satisfied that the IMF and the EU actions to date will help address recent market volatility, we remain concerned about the fiscal situation in some countries. Hopefully, in a small way, the passage of Bill S-3 and the Greece-Canada tax treaty within it will help the turnaround in Greece by reducing tax barriers to trade and investment between our two countries. The strong ties between our two countries, bolstered by the large and active Greek Canadian community, will further be strengthened by this legislation as we create better conditions for Greek companies to do business in Canada and for Canadian companies to operate in Greece.

As Hellenic Canadian Association president, Theodoros Aslanidis, and I thank my hon. colleague from Scarborough Centre for helping me with the pronunciation of that name and I still may have it wrong, noted, “the agreement is very positive”.

The legislation would implement Canada's recently concluded tax treaties with Greece and Turkey as well as Colombia, tax treaties that would help both prevent unfair double taxation and tax evasion.

Bill S-3 is part of Canada's ongoing effort to update and modernize its network of income tax treaties, which represents one of the most extensive in the world. In fact, Canada has tax treaties in place with nearly 90 countries. Moreover, Canada is continually working on agreements with other jurisdictions.

Before I continue, let me be clear. While Bill S-3 is important legislation, it is largely routine. Indeed, in the 39th Parliament, the House adopted similar legislation related to tax treaties with Finland, Mexico and Korea. In the 38th Parliament, under the former Liberal government, legislation concerning tax treaties with Gabon, Ireland, Armenia, Oman and Azerbaijan were also adopted.

Bill S-3 and all the aforementioned similar legislation related to tax treaties are in fact patterned after the OECD model tax convention. This OECD framework is widely accepted in the international community.

As Peter Barnes, the noted former deputy international tax counsel at the U.S. Treasury Department, noted in the OECD Observer magazine:

—the OECD model has achieved a consensus position as the benchmark against which essentially all tax treaty negotiations take place....the OECD Model Tax Convention is a tremendously important tool for smoothing the way of international business and global trade.

Rest assured, the provisions in the three treaties in Bill S-3 comply with the international norms that apply to such treaties. They are exactly like the legislation from the 38th and the 39th Parliaments. Accordingly the tax treaties with Greece, Turkey and Colombia have all been designed with two goals in mind: avoiding double taxation and preventing international tax avoidance or evasion.

Before elaborating further on the importance of these two objectives, there are a couple of general points to discuss regarding tax treaties and their role in contributing to a competitive tax system in Canada.

Our Conservative government is always working to expand its network of tax agreements with other countries. In order to combat offshore tax evasion, we unveiled a policy in budget 2007 that introduced incentives that have non-treaty countries enter into OECD-modelled tax information exchange agreements with Canada. It also required that all new tax treaties and revisions to existing tax treaties include that standard for tax information exchange.

I am happy to report that negotiations on tax information exchange agreements have commenced with more than a dozen jurisdictions. What is more, in August 2009, Canada signed its first tax information exchange agreement with the Netherlands Antilles. That agreement, along with those between Canada and Colombia, Greece and Turkey, all include the OECD standard on international tax information exchange.

We have built on that record in recent years as well. For instance, we have given the Canada Revenue Agency additional resources for international tax audit and enforcement. I believe all members realize and understand that tax treaties are an important tool for improving our system of international taxation.

As I mentioned, the tax treaties with Greece, Turkey and Colombia are designed with two key objectives in mind. The first objective is to remove barriers to cross-border trade and investment, most notably the double taxation of income. The second objective is to prevent tax evasion by encouraging cooperation between Canada's tax authorities and those in other countries.

First, we all recognize that removing barriers to trade and investment are paramount in today's global economy. Investors, traders and others with international dealings need to know that the tax implications associated with their activities, both in Canada and abroad, are protected.

Canadians also want to be treated fairly, with consistent tax treatment that is set out from the start. In other words, they want to know the rules of the game and they want to know the rules will not change in the middle of the game.

Bill S-3 will remove uncertainty about the tax implications associated with doing business, working or visiting abroad in Greece, Turkey and Colombia.

These tax treaties will establish a mutual understanding of how those tax regimes will interface with those in Canada. This can only promote certainty and stability, and help produce a better business climate, especially with respect to eliminating double taxation. Nobody wants to have their income taxed twice, nor should it be, but without a tax treaty, that is exactly what could happen. Both countries could claim tax on income without providing the taxpayer with any measure of relief for the tax paid in the other country.

To alleviate the potential for double taxation, tax treaties use two general methods, depending on their particular circumstances. In some cases the exclusive right to tax particular income is granted to the country where the taxpayer resides. In other cases, the taxing right is shared. For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment, perhaps for three months, to any one of the three treaty countries noted in Bill S-3, Canada has the exclusive right to tax that person's employment income. If, on the other hand, that same person is employed abroad for a longer period of time, say for one year, then the host country can also tax the employment income.

Under the terms of the tax treaty, this individual will be treated fairly. When the individual files his or her taxes, a credit will be provided on the tax that has been paid in that other country, thus avoiding double taxation and keeping the tax system fair.

It has been noted that one way to reduce the potential for double taxation is to reduce withholding taxes. These taxes are a common feature in international taxation. They are levied by a country on certain items of income arising in that country and paid to residents of another country.

The types of income normally subjected to withholding tax would include, for example, interest, dividends and royalties. 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 own legislation, the Income Tax Act. Accordingly, Bill S-3, as with all tax treaties, addresses this issue with numerous withholding rate reductions. Specifically, Bill S-3 will provide for a maximum withholding tax on portfolio dividends paid to non-residents of 15% in the case of Colombia and Greece, and 20% in the case of Turkey.

For dividends paid by subsidiaries to their parent companies, the maximum withholding rate is reduced to 5% in the case of Colombia and Greece, and 15% in the case of Turkey. Withholding rate reductions also apply to royalty, interest and pension payments.

The treaties in Bill S-3 cap the maximum withholding tax rate on interest at 10% in the case of Colombia and Greece, and 15% in the case of Turkey. Each treaty in this bill caps the maximum withholding tax rate of a royalty payment at 10% and on periodic pension payments at 15%.

I mentioned the tax treaties have two objectives. I have spoken at length about the first objective of removing barriers to cross-border trade and investment by eliminating double taxation. While double taxation is clearly problematic, tax evasion and avoidance are also unfair and economically damaging. The loss of revenue resulting from tax avoidance and evasion obviously negatively affect the efforts of governments to function.

Not only that, tax evasion is blatantly unfair as it places an uneven share of the tax burden on honest taxpayers. That is why the second objective of tax treaties is to encourage co-operation between Canadian tax authorities and those in other countries.

We all appreciate that the best defence against international tax avoidance and evasion is through improved and expanded mechanisms for international co-operation and information sharing. By increasing co-operation between Canada and other countries, in this instance Colombia, Greece and Turkey, we are able to better prevent tax evasion.

Tax treaties are an important tool in protecting Canada's tax base by allowing consultations and information to be exchanged between our two governments. This means that we can better catch those trying to avoid taxes, ensure the integrity of our tax system, and that everyone is taxed equally.

Indeed, our Conservative government firmly believes that Canadians should be confident that all taxpayers contribute their fair share. We demonstrated that commitment in budget 2010 through a number of initiatives intended to protect the integrity of Canada's taxation system, initiatives that will help ensure that all taxpayers pay their fair share of tax on income earned in Canada and abroad.

For instance, in budget 2010 we proposed to address tax planning practices that have developed, which have allowed under particular circumstances a portion of stock-based employment benefits to escape taxation at both personal and corporate levels, by: preventing tax arbitrage opportunities involving leases with government entities, other tax exempt entities or non-residents who are not subject to Canadian taxation; consulting regarding a proposal to require taxpayers to identify aggressive tax planning, which will provide the Canada Revenue Agency with early notice of new and emerging aggressive tax-avoidance schemes; consulting on revised proposals to prevent tax avoidance through the use of offshore trusts or other foreign investment entities; and ensuring that businesses cannot inappropriately capitalize on the differences between the tax systems of Canada and other countries to artificially increase foreign tax credits related to cross-border transactions and, thus, pay less tax.

We also propose to prevent aggressive tax planning by ensuring that income trust conversions into corporations are subject to the same loss utilization rules that currently apply to similar transactions involving only corporations, and finally, to ensure the provisions of the Criminal Code that apply to serious crimes related to money laundering and terrorist financing can be invoked in cases of tax evasion and prosecuted under Canada's tax statutes.

Taken together, such initiatives are consistent with our Conservative government's ongoing commitment to tax fairness.

In conclusion, as I mentioned at the outset, Bill S-3, while standard legislation at heart, is nevertheless very important. There is little doubt that its benefits are clear. The tax treaties covered in this proposed legislation will promote certainty, stability and better business climate for taxpayers and businesses in Canada and in these three treaty countries.

Moreover, these treaties will help to secure Canada's position in the increasingly competitive world of international trade and investment. They comply with international OECD standards and will help ensure a stronger tax system for Canadians. It will help ensure our goal of tax fairness for Canadians.

[Peter Kent, Conservative, Thornhill, ON]

moved that Bill S-3, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

Business of the House

[Jay Hill, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, it is my pleasure to respond to the Thursday question from the hon. House leader of the official opposition.

We will continue with the debate today and tomorrow on Bill C-13, fairness for military families, followed by Bill C-10, Senate term limits.

Next week we will continue with Bill C-13 , if we do not complete it this week, followed by Bill C-14, fairness at the pumps act; Bill C-15, nuclear liability; and Bill S-3, tax conventions.

I will give consideration to any bills also, as usual, that are reported back from committee to the House.

My hon. colleague asked about allotted days. Next Tuesday, May 11, shall be the next allotted day.

I am pleased to report that following extensive consultations between all parties, pursuant to Standing Order 53(1) I choose to designate Wednesday, May 12 for a take note debate on the importance of the Atlantic shellfish industry.

In conclusion, there have been additional consultations between all parties and I believe Mr. Speaker, you would find unanimous consent of the House for the following motion. I move:

That, notwithstanding any Standing Order or usual practice of the House, the hours of sitting and the order of business of the House on Thursday, May 27, 2010, shall be that of a Wednesday; that the address of the President of Mexico, to be delivered in the chamber of the House of Commons at 10 a.m. on Thursday, May 27, 2010, before members of the Senate and the House of Commons, together with all introductory and related remarks, be printed as an appendix to the House of Commons Debates for that day and form part of the records of this House; and that the media recording and transmission of such address, introductory and related remarks be authorized pursuant to established guidelines for such occasions.

Message from the Senate

[The Speaker, Liberal, Peter Milliken]

I have the honour to inform the House that a message has been received from the Senate informing the House that the Senate has passed the following public bill to which the concurrence of the House is desired: 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.

Bill C-304—An Act to ensure adequate, accessible and affordable housing

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I would like to address some of the points raised by the Parliamentary Secretary to the Leader of the Government in the House of Commons relating to an amendment made in the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities to Bill C-304, An Act to ensure secure, adequate, accessible and affordable housing for Canadians.

Mr. Speaker, I will refer to a ruling that you made on January 29, 2008, referring to a committee amendment to the Immigration and Refugee Protection Act then before the House. In that ruling, you said:

In essence, what we are dealing with is the distinction between the principle of the bill and its scope. The principle refers to the purpose or objective of a bill, while the scope refers to its legislative scheme or the mechanisms that will give effect to the principle, purpose or objective of a bill.

In Bill C-304, the parliamentary secretary himself stated in his argument on April 1 that the purpose of this bill was to “require the development of a national housing strategy” by having the minister “consult all provincial and territorial ministers on the development of such a strategy”. He then said that the rules explain that amendments cannot be outside the scope or principle of the bill as passed at second reading, a rule with which we are all familiar.

I would submit that while the parliamentary secretary did give an accurate description of the principle and the scope of this bill, the principle is to develop a strategy and the scope or the mechanism is to do that through consultations. The key to the government's argument seems to prejudge what the results of these consultations will be.

The amendment in question is a permissive, not mandatory, amendment. It would give the minister an ability to achieve the principle of the bill, a national housing strategy, by refining the scope in terms of consultation to include an option that has been in place in other social policy strategies throughout Canadian history. Therefore, I would submit that the amendment does not change the scope or purpose of the bill but rather seeks to clarify it.

I believe that the committee chair's opinion on the principle of this bill may have been well-intentioned but the committee members were also correct when they decided that the amendment to allow the minister an option to respond to consultations, up to and including an opt-out for Quebec, was within the scope of possible consultations that are required to allow the minister to meet the principle of the bill, which is to develop a national housing strategy.

This option provided in the amendment is a reasonable one and one which is as old as Canada, the option to treat different parts of our country as different and unique.

The House recently passed a motion to define Quebec as a nation within our nation. We have the Canada pension plan and the national child benefit, two well-functioning national programs that Quebec has chosen not to participate in but instead to provide similar services. Quebec has opted out of the Canada student loans program since 1964 and recently received its transfer of approximately $125 million from the federal government in support of student financial assistance programs for the most recent academic year.

To go back further, the Liberal government's 2004 action plan on health exempted Quebec from the criteria and accountability set up for all other provinces and territories while guaranteeing full health transfer payments.

A further example is Canada's Social Union Framework Agreement of 2002, which was a pan-Canadian approach to the reform of Canada's health and social policy systems to which all provinces were signatories except Quebec. The Canada-Quebec accord on immigration allows Quebec to establish its own immigration requirements, distinct from the rest of Canada.

Governments for years, as former prime minister Paul Martin noted, have recognized “Quebec's unique place within the Federation”. It is reasonable that members of Parliament understand that any national strategy must reflect Quebec's right to protect its unique nature through the delivery of certain programs.

The amendment in question today does not alter the nature of the bill but clarifies this right. The government argued that, because an amendment to exclude Quebec from Bill S-3 was inadmissible, this amendment on Bill C-304 should also be inadmissible.

However, these two bills are not comparable. Providing the option for Quebec to opt out of a consultation process as outlined in Bill C-304 does not have the same effect on the act as the exclusion of Quebec does from Bill S-3, which was an act affecting the duties of every federal institution in Canada by enhancing the enforceability of the Government of Canada's obligations and of part 7 of the Official Languages Act.

It is also relevant that the 2005 ruling was not challenged by the majority of the committee members as necessary to the bill, as was the case of the amendment to Bill C-304. The aim of Bill C-304 is to ensure the delivery of the right to adequate housing.

Quebec is in the unique circumstance of having ratified the International Covenant on Economic, Social and Cultural Rights, recognizing the right to adequate housing, and currently meets many of the objectives outlined in Bill C-304.

Therefore, as this House stated when it defined Quebec as a nation within a nation, the principle of this bill being a national housing strategy should naturally reflect Parliament's definition of our nation, which is that it can include an asymmetrical form of federalism without changing the principle of being a united Canada.

Quebec has an existing agreement in place with the federal government giving Quebec jurisdiction over the development and delivery of its housing programs, clarifying that Quebec may participate in the process of establishing a national housing strategy, as was the case before the adoption of the amendment. It will only serve to enhance Quebec's potential willingness to participate in the process set out in Bill C-304.

Therefore in closing, I submit that the amendment made in committee is permissive and not mandatory. It only clarifies in nature an acknowledgement of our understanding of a nation within the scope and consistent with the principle of Bill C-304.

I further submit that this is a rare case when the chair's decision on the scope is misplaced and the members of the committee were correct in allowing this amendment to stand.

Mr. Speaker, I hope you will take this into consideration and support the committee members who agree that this amendment does have its rightful place in Bill C-304.