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

[Joe Daniel, Conservative, Don Valley East, ON]

Mr. Speaker, when we make life easier and reduce the bureaucracy between countries, there is much better opportunity for trade. By having these agreements, we would protect both Canadian companies doing business with the treaty countries and the treaty countries being able to work closely with us.

Clearly, an exchange of the phenomenal resources we have in this country in terms of providing services to countries like Namibia and Hong Kong and access to the Asian markets is a great opportunity. We need to stay with it and compete globally. That is why this bill is so appropriate.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, this bill will be passed, but I would like to know what my colleague thinks of the fact that it is woefully short on content. Indeed, a closer look will show that instead of solving problems, it will create others.

Under this bill, 3,000 Canada Revenue Agency employees will be laid off as a result of $250 million in budget cuts, I believe. There will be fewer people available to investigate and make businesses pay their taxes as they should. As a result, more money will be diverted to tax havens. This file is a losing proposition for Canada.

Given that that billions of dollars, 57% more money, is going to tax havens, how can this be considered a serious bill that actually targets the root causes of tax evasion? On top of not providing additional resources to the Canada Revenue Agency, the government is cutting the resources the agency already has.

[Joe Daniel, Conservative, Don Valley East, ON]

Mr. Speaker, it would have been appropriate if the member had read the bill in detail, because one of the key aspects of it is the double taxation, which would actually increase our business with the countries we have these treaties with, thus helping us in that sense.

There are also opportunities to invest both ways and make sure that works well for us and increases our competitiveness on a global scale.

That is what is contained in Bill S-17.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, we are talking about a very interesting agreement with Hong Kong and with countries such as Switzerland. The problem is that the agreement with Switzerland, in particular, does not solve the problem of Swiss banks and their bank secrecy. Switzerland is now, and will continue to be, a tax haven.

Can my esteemed colleague explain how it is that this legislation will mean that people who pay their taxes will not be penalized, but it will not prevent those who do not want to pay their taxes from continuing to do so, thanks to Switzerland's bank secrecy?

[Joe Daniel, Conservative, Don Valley East, ON]

Mr. Speaker, the bill does not look at avoiding the issues with Switzerland specifically on taxes. It is designed to improve businesses and make our position as Canadians competitive globally. The bill would allow more business to take place, which in itself would generate a lot more taxes.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, some of what we have been talking about tonight has been about trying to catch tax cheats and the $29 billion that sits outside of Canada's reach at the moment because it has effectively been hidden from our tax collectors.

However, at the same time that we are trying to find that money, we are cutting staff and funding from the Canada Revenue Agency, which means that there will be fewer people there to catch these cheats. Can we deal with that, effectively?

[Joe Daniel, Conservative, Don Valley East, ON]

Mr. Speaker, technology has moved on from some of the days when my esteemed colleague was around. We can obviously do a lot better with the technologies we have, and I am sure there will be a lot of detail worked into how we can use those technologies to actually catch tax cheats.

That aside, this legislation is focused mainly on improving our position globally and on making sure that Canada stays competitive in the global picture.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I am honoured to share my time with my colleague from York South—Weston, who, based on what we just heard, is not up on the latest technology. However, I know that he is young at heart, so I am very happy to share my time with him.

In all seriousness, the bill before us today is very important. It is rare to see a bill that deals with such a topical issue. Just today there were a number of newspaper articles about tax evasion.

Before I talk about that, I want to clarify that the government seems to have a habit of mismanaging things. It talks about this bill as though it offered a tangible solution to the issue of tax evasion. In reality, although we support the bill, it simply contains routine measures to update different agreements with other countries.

It is important to update these agreements, maintain good relations with these countries and move forward with the process. However, at the end of the day, these routine measures, although important, are no substitute for resources, the staff and money allocated, in this case, to the Canada Revenue Agency, whose mandate includes trying to resolve this issue.

There are two things I want to talk about that have been in the news. The first is that the Canada Revenue Agency did not want to pay for a list of people who are evading taxes.

That is interesting, because on my way back to Ottawa, I listened to an interview with my party leader on 98.5. The NDP leader explained what he found so shameful about the whole process. Unlike countries such as the United States, which seized the opportunity to obtain the information, punish people and collect the money, the CRA did nothing.

These people are very wealthy. They have lots of money. They are millionaires. They have millions and billions of dollars that they can hide elsewhere.

The NDP leader focused on those two points, and I think he was right to do so. This issue is a big deal not only to people in my riding but also to all Quebeckers. We are debating this issue at the federal level here in Ottawa, but Quebec's National Assembly is debating this too. MNAs are talking about how they can put the brakes on tax evasion and collect that money.

The fact that all politicians are starting to work on this is a signal that people are saying enough is enough. They really want to see action on this issue.

Unfortunately, as I said at the beginning of my speech, that is not what we are seeing today. This is just a routine procedure to update various agreements.

The other relevant point is the one I find more interesting as I listen to my Conservative colleagues this evening. They have a different perspective on the issue. They talk about the potential benefits for free trade. The NDP understands the importance of that.

During the debate on the free trade agreement with Panama, for example, tax evasion was one of the main issues. People talked about how there was not a good system in place for exchanging financial information and how that might lead to even more tax evasion. People raised those concerns.

Government members are right when they say that fighting tax evasion and having a good information exchange system contributes to a relationship of trust that facilitates trade between countries. That is a fact. However, we have to look at other issues too, such as what is really going on right now.

The government talks about wanting to create an environment that fosters good relations with other countries, about eliminating tax evasion and facilitating free trade.

This morning a newspaper article talked about the G8 summit. There will be discussions about this, including with the Prime Minister of Great Britain. The countries that truly want to work together on fighting tax evasion will be involved in the discussions. After all, this is a matter that requires a great deal of collaboration because it is not limited to one country. We are talking about a number of countries. This collaboration is important.

This evening, we have heard Conservative members talk about the apparent willingness to create conditions that are conducive to eliminating tax evasion. Despite that, the article says that Canada will not be participating in these talks. It seems to be very reluctant, even absent, and it just does not want to work with the other countries on measures that might be put in place. We find that extremely disappointing. This goes against the message that the NDP wants to convey this evening.

If we really want to fight tax evasion and there are agreements or multilateral discussions with a view to implementing multilateral agreements, then we have a duty on an international level to take part in those discussions. This is a very significant way for us to be able to recover this money and establish good faith relationships that will also allow other countries to do the same thing. Accordingly, we hope to create an international environment that will be much more honest about tax evasion. This is a growing trend. Many of the cases we are dealing with these days require international negotiations and good faith relationships. The government is increasingly withdrawing from these processes. This trend is starting to take hold.

The Conservatives may well introduce yet another bill that is very routine. I cannot stress this word enough. We support this bill, although they are using it as an excuse to wax poetic about all their achievements on the international stage. However, the facts do not lie. This is what was in the news this morning. Among other things, the government is completely absent from the conversations taking place among countries with which Canada supposedly has good relations. These are countries like Great Britain, countries that are our allies and could easily help us create conditions that would lead to a solution.

To conclude, I would like to say that we support this bill and I am very pleased to have the opportunity to speak on this issue. Indeed, as I indicated, this issue is of great concern to my constituents. This evening I was able to answer some of the letters they have written me in recent months. The most common issues they raised related to equity between the middle class—the workers, the 98%, to use the popular term—and the very affluent people, those who have a lot of money and obviously benefit from tax evasion. This is a reminder that recovering this money can help people who work hard pay their taxes and benefit from the systems we put in place, the various democratic, social and other institutions established to help them. We recognize how important this is.

The first question has to do with fiscal fairness, but the other question the people of Chambly—Borduas often ask me has to do with Canada's actions on the international stage. That is why I focused so much on what we are seeing here this evening and in general. The government likes to talk about the grand gestures it is making internationally to fight the various negative situations, such as tax evasion, but unfortunately, it just cannot walk the talk. The people of my riding and from across Canada, I am sure, would like to see a lot more good faith on the part of the government, relationships that are much more multilateral and much more positive and constructive on the international scene. That would be good for everyone. This would largely solve the tax evasion problem and many other problems, I am sure.

I look forward to questions and comments from my colleagues.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is fair to say that Canadians want to see tangible results. It was not that long ago when former prime minister Paul Martin brought forward in a budget a commitment of $150 million to deal with tax evasion. That $150 million ultimately led to an impact of somewhere in the neighbourhood of $2.5 billion, which is a great deal of money.

The member makes reference to the legislation and, yes, we all support it. However, could he contrast the investment in providing financial resources to draw out more of that money that is being taken away from the tax base and what the government is doing in cutting back on resources to Canada Revenue Agency today?

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, although this is rare, I must admit that I agree with my Liberal Party colleague on the issue of resources.

However, I would not dare to comment on any potential impact, because we have not had a chance to see any concrete results. It is still a problem. I do not know what this means for the long term. However, one thing is certain: the point he raises regarding the lack of resources is the other problem.

He talked about the fact that all parties support the bill. As I have already said and I will say again and again, the bill does not represent a real gesture or a new gesture on this issue. The government must continue making updates.

The Conservatives need to stop trying to convince us that the bill is a new measure that will suddenly produce the financial and human resources needed to fight tax evasion, because that is completely false.

[Pierre Jacob, NDP, Brome—Missisquoi, QC]

Mr. Speaker, I would like to thank the member for Chambly—Borduas for his energetic and fiery speech.

I would like to ask him a question. In addition to the social justice it would create, why is it important that everyone pay their fair share and why is it important that the money not be invested in far-off tax havens? I would like the member to explain how that works, whether in relation to the social safety net or infrastructure.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I would like to thank the member for his question. I am happy to know that he thinks I am energetic, even at this hour. That is a good sign.

His question is very relevant, and I will repeat the response given by the leader of the official opposition, the NDP, this morning on the radio during the interview that I mentioned during my speech. He spoke about people who make millions of dollars, billions even, in Canada and who put that money in tax havens. What is interesting is that in the majority of cases, these people have made their money and earned a living by benefiting from existing systems in society. Those systems are there to serve them, thanks to the government and taxpayers.

When someone lives in a society, a community or a country and makes money or earns a living because of those systems, that person has a responsibility to invest in that same society, in that same community. However, the exact opposite happens with tax evasion. It is extremely alarming, and it poses a problem. I would go so far as to say that it shows a certain amount of contempt for the public.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, one of the things our friends in the third party suggested was that there had been some money spent on collecting from tax cheats. However, the Auditor General in fact said that at the end of 10 years of Conservative rule until 1994 and then again at the end of 13 years of Liberal rule in 2006, the amount of money being escaped from taxes was actually growing and growing significantly.

Could he comment on this?

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, that is precisely the problem. The situation gets worse every year. It is a downward spiral. There is no light at the end of the tunnel. Every year, the government seems to make more and more cuts and does nothing concrete.

I will now come back to what I was saying in my speech. Not only is the government not making the necessary investment and giving CRA the resources it needs to fight tax evasion, but it passes up the opportunity to take part in multilateral discussions at the international level. This has been going on for years. Everyone seems to have the answer, but no one seems to know the results.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, we are dealing again with another closure motion. The most important thing we could ever face in the government right now is that we sign six fairly routine international tax treaties with six different countries.

Canada's international reputation with treaties is not good. Canada's international reputation with treaties is that we sign them and then we break them, or we sign them and we do not keep them up, or we sign them and ignore them. An example is the tax treaty we have now with the United States. If people are American citizens or people that the United States deems to be American citizens, because even people who are born here are deemed by the United States to be American citizens, if they come to Canada after the age of 14 and have children in Canada, those children are now American citizens.

A woman in Calgary wrote to me because she was experiencing some serious financial pressures as a result of the lack of updating of the tax treaty with the United States.

She had a disabled son who the U.S. determined was a U.S. citizen because she came from the United States when she was 15. That U.S. citizen son had taken advantage in Canada of the disability tax credit. She had taken advantage of it and he had taken advantage of it. As a result, they had some tax savings in Canada.

However, when they filed their U.S. taxes, they discovered that the U.S. government did not recognize Canada's disability tax credit and did not recognize the disability caregiver tax credit. As a result, any savings that they had were lost. Plus, they had to pay accountants $2,000 each time to file these taxes with the U.S.

Canada has not taken any action on that. We are by far the furthest behind when it comes to these treaties with the U.S., our biggest trading partner. By far, the greatest number of Canadians who are of American descent and who are accidental Americans, as it turns out, are affected by that, yet here we are under closure dealing with these treaties which are routine. They are not, as the government has suggested, going to provide wealths of money to the Canadian government.

Therefore, this is part of a series, I think, of treaties that the Canadian government has signed that are not necessarily being kept up by the government.

I wonder whether these treaties actually go far enough and whether they will be kept up by the Canadian government, whether we will go after people who are trying to cheat on taxes in any systematic or realistic way.

We also have the examples of the Kyoto accord, which was an international treaty that was signed and then abandoned.

We have the UN Convention on the Rights of Persons with Disabilities, which was signed in 2010 and the government promised the UN that it would provide a report card in March 2012. We are still waiting and the UN is still waiting. This is another example of an treaty that was signed internationally and that was abandoned.

It is bad for Canada's reputation, a country that wants to sign tax treaties with other nations, that wants to be a progressive part of the tax system in the world, not just for tax purposes but for all kinds of purposes, for trade purposes, for environmental purposes, to have the ability to convince the United States to run a pipeline down through the U.S.

That is just a smattering of the examples of ways that Canada's reputation, internationally, has been suffering under the Conservative government.

Switzerland is one of the countries that is part of this bill. Right now, Geneva is hosting the United Nations Human Rights Council as we speak, which is looking into the issue of violence against women. We understand that Canada is reported to be disregarding recommendations on taking action against sexual violence against women and to be opposing sexuality education programs

Those reported actions are part of a trend of the government that I have noticed, which is leaving women out of economic action plan ads, leaving women out of suggesting that women's training should be equal to men, that women should be only trained as hairdressers and nail salon people. That is another example of the kind of attitude the government brings to these kinds of things. Women pay taxes, too. Women deserve the same kind of rights as men. Women should not be left out of the equation.

The government suggested that today was Tax Freedom Day, whatever the heck that means. I went on the Fraser Institute website to see what Tax Freedom Day means and, in fact, in 2009 Tax Freedom Day was last Friday. Therefore, we are going backward. We are paying more tax now under the current government. How did that happen? It was earlier in the year in 2009. Is it a mistake maybe? It is all lies, damned lies and statistics when it comes to facts and figures.

The government has also suggested that Canadians, on average, are paying $3,200 less in tax. Again, the Fraser Institute says that the average Canadian is paying $3,100 more in tax now than in 2006. Where does the Conservative government get these unabashed statistics about taxes? It is part of the government's responsibility to deal with these tax treaties with other countries and this is a fairly routine thing that we support, although we do not want the government to try to take credit for this bill doing more than it would actually do. This bill would not find a way to solve a tax cheat problem.

If $29 billion of money is waiting to be collected by the government, why is it not collecting it? More than signing this treaty, why is it not doing something about finding that money and putting it back in the coffers of the government? Can anyone imagine what the tax savings would be for ordinary Canadians if the government could find that $29 billion? Can anyone imagine the amount of good that could come from it? We could almost afford the Senate—no, we could not.