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

[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.

[An hon. member]

Not that much.

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

Not that much, no.

Under the Conservative government, the uber-rich in Canada actually pay less as a percentage of the overall tax pie than they did in 2006. The people in the 1% are getting hit less and less and the rest of us, the 99%, the ordinary Canadians, the ordinary working people of our country, are paying more.

[An hon. member]

That's unfair.

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

That is completely unfair. This legislation does not actually deal with that, but it does deal with the notion of taxes, taxes that should be fair and should be treated fairly. People should not be doubled taxed. Yet the woman and her son in Calgary are being double taxed because they will pay tax in the U.S. that they did not have to pay in Canada, which is not fair.

There is also spectre of the government now deciding that it is going to use technology, as the member for Don Valley East suggested, to go after the tax cheats. I had a phone call from a constituent just last week when he heard about the great tax cheats out there who made the mistake, he thinks, of writing to the Prime Minister because shortly after that he was audited. This is a senior on a fixed income.

That audit determined he owed $80 from three years ago. He got a letter from Revenue Canada saying that if he did not pay that $80, he could go to jail for five years. If he agreed with the CRA, he could pay the $80, he would be fined and maybe not have to go to jail, but if he disagreed, he certainly would go to jail. That is what he thought was going to happen. He ended up paying the $80 and a $150 fine. Why are we going after this little fish in this big fish pond? There are so many more people who are evading taxes by so much more than that. By spending the resources to go after a poor senior who apparently did not pay $80 three years ago is doing ourselves a disservice.

[Phil McColeman, Conservative, Brant, ON]

Mr. Speaker, listening to the member's speech and knowing the party he represents is quite interesting. He talks about the notion of tax cheats, people who do not pay their taxes. The NDP knows that full well because there are members of its caucus, one being the critic for this very file, who have not paid their taxes. When he puts those people in that category, he is putting his own colleagues in that category. They are members of the House of Commons who have not fessed up and the Leader of the Opposition has not taken any action at all to ask those people to pay their taxes back and remove themselves from the party while they do that. We have heard nothing.

What is the member's opinion of that cheat situation?

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

Mr. Speaker, it is one thing to park money offshore and avoid taxes, but it is quite another situation for individuals such as those the member referred to, who are in fact paying their taxes.

There was a dispute, and they are paying the taxes. There is no question that the money is getting paid.

Ordinary working Canadians are paying taxes. These people are paying taxes, as any ordinary working Canadian could and should. The issue is not that; it is that the $29 billion that is not being paid to our treasury would go a long way toward alleviating some of the difficulties the government is in after losing track of $3.1 billion.

[Jim Karygiannis, Liberal, Scarborough—Agincourt, ON]

Mr. Speaker, I wonder if my colleague would share his views on the taxes that should have been paid by former Conservative prime minister Brian Mulroney when he took the $300,000 and put it in the safe.

I wonder if he would also like to comment on whether Senator Mike Duffy should also be paying taxes on the $90,000 present that he got from the Prime Minister's Office.

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

Mr. Speaker, there are always good questions from that corner.

When a former prime minister admits to pocketing $300,000 in cash and not paying taxes on it until many years later, it calls into question some of what our tax system is all about.

The people being complained about are apparently not avoiding taxes, because eventually they paid it. The same is true of Mr. Duffy. If Mr. Duffy has received money in the form of a gift that he has not reported to the tax department, there are serious consequences.

[Niki Ashton, NDP, Churchill, MB]

Mr. Speaker, my colleague referred in his speech to the government's general doublespeak on issues, including tax fairness, and I would like to read into the record something that connects to the points he raised. It was said by Dennis Howlett, from the Canadians for Tax Fairness organization:

...the capacity of the CRA to go after tax cheats using tax havens needs to be increased significantly. While tax havens will require a concerted international effort, there is much more that Canada could be doing itself. The CRA internal audit document revealed that tax practitioners believe the CRA is not doing enough to catch or prosecute tax evaders.

Here we have a government that claims to be tough on tax fairness, when in fact we are hearing about significant cuts to the CRA and an inability to deal with the real issue of tax evasion and taxes being directed toward tax havens.

Could my colleague speak to that?