Bill S-17 (Historical)

Tax Conventions Implementation Act, 2013

An Act to implement conventions, protocols, agreements and a supplementary convention, concluded between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes

This enactment implements four recent tax treaties that Canada has concluded with Namibia, Serbia, Poland and Hong Kong. This enactment also implements amendments to provisions for the exchange of tax information found in the tax treaties that Canada has concluded with Luxembourg and Switzerland.
The tax treaties with Namibia, Serbia, Poland and Hong Kong are generally patterned on the Model Tax Convention on Income and on Capital developed by the Organisation for Economic Co-operation and Development (OECD). The amendments to the treaties with Luxembourg and Switzerland ensure that their provisions for the exchange of tax information reflect the current OECD standard on this matter.
Tax treaties have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Since a tax treaty provides relief from taxation rules 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. Finally, for each instrument implemented by this Act to become effective, it must be ratified after the enactment of this Act.

Tax Conventions Implementation Act, 2013

[Chungsen Leung, Conservative, Willowdale, ON]

Mr. Speaker, I disagree with the premise of the member, that in order to solve this problem, we simply need to dedicate more resources. As business partners, it is far more intelligent to share information with the countries we are dealing with by dedicating resources to electronic detection and getting the co-operation of the other countries to assist us with tax information. It is a far more efficient way of identifying where the sources of income are and taxing them accordingly.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Mr. Speaker, I liked what the parliamentary secretary described as a business partnership between countries. Obviously, Canada likes to have a lot of trade with various countries. There are 90 other countries in the world with which we have tax treaties and these are six more. In fact, these are four new ones and amendments to our tax treaties with Luxembourg and Switzerland.

My question for the hon. member is to ask him to describe the importance of having tax treaties like this when it comes to investment, trade, business development, new business opportunities and direct foreign investment. This is one of the foundational elements. There are other things, of course, such as mobility agreements, bilateral agreements on social security, and so forth. I would ask him to tell us why this is an important cornerstone to establishing a better relationship between Canada and other countries.

[Chungsen Leung, Conservative, Willowdale, ON]

Mr. Speaker, prior to entering politics, I spent 40 years doing business with 35 or 36 countries around the world. Before entering a country to do business, it is absolutely vital to have a clear understanding of the road map of the local business culture, the legislative framework, import-export regulations, permits and taxation. It is also important that in our international global economy, we need to understand both sides of the trading countries. Therefore, it is absolutely important that these regulations are set forth as we negotiate our business relations with foreign corporations.

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

Mr. Speaker, any tax agreement is only as good as the enforcement provisions that are contained within it, as members know. Now we have a situation in which it appears that the Minister of National Revenue actually refused data on hundreds of Canadians who were hiding money overseas. The information was offered to the current government on a silver platter. The information was being provided to the government, and the government, unlike other, deeper-thinking governments, refused to take that information.

Given how lamentably bad the Conservative government's record is on the level of tax debt climbing by 57%, the doubling of the amount, the tens of billions of dollars invested in tax havens overseas with the government basically rubber-stamping that, and then the Minister of National Revenue refusing to take information on the hundreds of Canadians hiding money overseas, how does the member think the current government has any credibility whatsoever when it comes to the issue of tax fairness?

[Chungsen Leung, Conservative, Willowdale, ON]

Mr. Speaker, again I totally disagree with the member's line of thinking.

First, there is no crime in having money overseas. Any international businessperson will say that we need to have international accounts, and that is precisely why we are negotiating with countries such as Switzerland and Luxembourg, which have in the past been tax havens in not disclosing the holders of their bank accounts. This information is now exchanged among the various taxing authorities around the world, and there is a way of tracking the source of that income.

Also, as I remember from my public accounting days, the Canadian tax system is probably one of the fairest systems in the way that it is administered, and we certainly have the co-operation of the five countries that concur with us on this aspect.

[The Acting Speaker, Conservative, Barry Devolin]

In accordance with an order made earlier related to this piece of legislation, there are 16 minutes remaining.

Resuming debate, the hon. member for Surrey North.

[Jasbir Sandhu, NDP, Surrey North, BC]

Mr. Speaker, I will try to sum up my thoughts for my constituency in the 16 minutes I have. It is an honour to speak to Bill S-17 on behalf of my constituents of Surrey North.

Basically the bill would bring into being bilateral income tax treaties with a number of countries in accordance with the OECD tax treaty standards. Basically we support harmonization and greater clarity of taxation laws, as well as bringing tax treaties into line with OECD standards, and therefore we will support the bill at this stage.

The Conservatives would have us believe that somehow the bill would address the elephant hiding here. The elephant is tax evasion, and the bill does not address tax evasion at all.

Before I get to the big elephant in the House, the one the Conservatives do not want to talk about, let me tell a story. My daughter was here about a month ago during her recess, and she had a chance to spend about three days with me.

She asked me what time allocation was. A 16-year-old was asking me what time allocation was, and I tried to explain it to her by telling her that time allocation was basically shutting down debate. It is a word I learned when I got here from my friends the Conservatives. They have now used it about 43 or 44 times.

I explained to my daughter that it was used when the Conservatives wanted to shut down debate and did not want to debate the bill before them. They do not want MPs who represent their constituents to give their views, so they basically shut down debate.

My daughter said, “That is not democracy. You should be able to represent our constituents and speak freely in this House”.

A 16-year-old understands that it is important to have the views of constituents and what they want in their constituency represented by their members of Parliament. A 16-year-old understands it.

We have seen time allocation after time allocation used by Conservatives in shutting down debate. That is not right whether we support the bill or not, and of course we support the bill. We want to highlight how we can improve the bill, and we would encourage the Conservatives to take some of those ideas to make the bills better and improve them.

One of the elephants that has not been addressed in the bill is tax evasion. We have heard reports. I have listened to very informative debate by my NDP colleagues highlighting what needs to be done and what is being done around the world, yet we have the Conservatives dragging their feet on addressing the big elephant in the room, which is tax evasion.

I had a chance to cruise through a number of headlines while listening to speaker after speaker this evening. I looked up tax evasion in Google News, and the first seven articles were about France taking on tax evaders, Italy taking on tax evaders. A headline from India said that the Indian government is going after tax evaders. I saw a headline from the United States to the effect that they are going after virtual tax evaders. These are headlines within the last six or seven hours.

Then I saw a Canadian headline about tax evasion. The headline from the Ottawa Citizen was basically that the Conservatives are dragging their feet in tackling tax evasion.

Our partners around the world, the G7 countries, our closest allies—Japan, the United States, Italy, Germany and the United Kingdom—have taken a leadership role in tackling tax evaders and getting additional revenue for the government.

My friend from Burnaby—New Westminster asked a very valid question. The Canadian government was offered information on hundreds of tax evaders, as my friend from Burnaby—New Westminster said. The Conservative government was being handed this information on a platter so that it could look at these tax invaders and go after them. What did the Conservative government do? Nothing. It did nothing.

There is another report, and we can look at some of the facts and figures. I know my Conservative friends do not believe in facts and figures, but $170 billion is being invested by Canadians in 12 of the largest tax haven countries, so there is a lot of money being invested in tax havens offshore by Canadians. It used to be a figure in the single digits back in the 1980s and 1990s, but under the Conservative government it has gone up to double digits. In fact, it is about 24%.

There is $170 billion going offshore, and the tax that we could collect from this, estimated by Canadians for Tax Fairness, is calculated at about $7.8 billion. That is what the Canadian government is losing because it is not going after the tax billionaires.

In this House, I have heard member after member talk about tax fairness and paying our fair share. I can assure members that hard-working people, people such as plumbers, electricians, taxi drivers, truck drivers and the professionals in my community, pay their fair share of taxes.

It is time for the millionaires to pay their fair share. The average person does not have the ability, or enough money, to put money offshore. Average working Canadians pay their fair share of taxes, but those with resources, those with tens of millions of dollars, are able to put this money offshore. That is $7.8 billion that we could have collected this year alone.

Why are my Conservative colleagues not going after this revenue? In fact, the money we could collect from offshore, the $7.8 billion, is being put on the backs of Canadians. We could use that money to reduce the largest deficit ever, a deficit that has occurred under the current government.

Let us talk about that. It is under the current government that we have had the largest deficit. It is not only a large deficit; we have also increased our debt by $200 billion under the Conservative government.

A few weeks ago I had a chance to stand up and ask a question. It was a very simple question. I asked who was going to pay for that $200 billion, the debt that Conservatives have accumulated over the last number of years. I did not get an answer. I would still like to get an answer on who is going to pay for that.

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

Where is the $3 billion?

[Jasbir Sandhu, NDP, Surrey North, BC]

That is still missing. We do not even know about the $3.1 billion. We have asked, and we will keep asking. Hopefully in a few weeks, we will hear. The Conservatives have the whole summer to figure out where that $3.1 billion is. We are going to give them the summer to figure out if they can find that $3.1 billion.

The facts are that we could use this tax money to reduce our deficit, which is the largest under the Conservative government. However, the Conservatives have put no proposals forward. They are laggards in the G7 in coming up with progressive policies to go after these cheats so that we can recoup the money that has been lost by Canadians.

At the end of the day, it is Canadians who will end up paying for the mismanagement by the government.

I know that the Conservatives do not answer, but I asked them who was going to pay for the debt they have accumulated over the last six or seven years. In fact, they have not had a surplus budget. They call themselves fiscal conservatives. They have not had even one surplus budget. Who is going to pay for this? It will be my children, their children, their grandchildren and my grandchildren. It is unfair to leave the largest debt to our children.

We have ways we can collect this. Again, Conservatives have a chance to recoup some of the money being siphoned off to offshore accounts.

We talked about fiscal conservatives and their ability to manage budgets. They have not had a surplus.

Let me talk about their trade deficit. When the Conservatives came in, they had a $26-billion trade surplus. That means that we sold $26 billion more than we bought from other countries. That is good for Canada. It creates jobs. If we sell more of our products overseas, we create local jobs here. That is good. However, under the Conservative government, we have had a trade deficit of over $50 billion. That means that we are buying $50 billion more in goods coming into Canada than we are selling to other countries.

Not only that, under the Conservative government, our merchandise trade deficit is the largest ever. I mention that because that is how we create secondary well-paying jobs. However, under this government, we have had failure.

That is the Conservatives' record, whether it is on deficits or on trade. These are the two things they often talk about, but they do not tell us about the other side. They tell us that they have signed this or that trade deal, but the trade deficit just keeps growing. We asked on the trade committee to look at why we have a large trade deficit. They did not want to study that.

Not only that, getting back to Bill S-17, my hon. colleagues, the NDP finance committee members, offered a number of suggestions as to how we could go after these tax evaders. One of the suggestions we offered was the following:

That the federal government study and measure, to the greatest accuracy possible, Canadian tax losses to international tax havens and tax evasion, in order to the determine the Canadian federal “tax gap”.

They do not even want to go there. They do not even want to look at the deficit.

[Mark Adler, Conservative, York Centre, ON]

We did that.

[Jasbir Sandhu, NDP, Surrey North, BC]

I know that the member across the aisle is interrupting, but these are the facts.

I will read another one for him. Maybe he will comment on this one. Here was another suggestion:

That the Auditor General evaluate, on a regular basis, the success of the Canada Revenue Agency in prosecuting and settling cases of tax evasion.

Here is a practical way to find out how well our system is working, yet the Conservatives do not want to do that. If we do not know how much we could collect and how much we are losing in revenue through tax evasion and tax havens, how are we going to know how much is out there?

I know, going back to the same premise I talked about before, that if the Conservatives do not like the facts, they will change them or make them up. We have seen that over and over again. That seems to be a regular occurrence with the government.

There are many other suggestions we made, which make practical sense, to bring in more revenue and catch those cheaters and evaders so that we can reduce our deficit and offer the programs Canadians need. All we have seen are cuts from the current government.

It does not make sense to me. If they were going to go after tax cheats, one would think there would be a need for more inspectors and workers to go after those people. The Conservatives have actually cut CRA people in the last number of years.

Again, we will support this bill, but the elephant in the room is still not being addressed by the current government, and that is tax evasion.

[The Acting Speaker, Conservative, Barry Devolin]

It being 11:10 p.m., pursuant to order made earlier today, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the second reading stage of the bill now before the House.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Yes.

[The Acting Speaker, Conservative, Barry Devolin]

Accordingly, the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)