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 bill was last introduced in the 41st Parliament, 1st Session, which ended in September 2013.

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

June 10, 2013 Passed That, in relation to Bill S-17, 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, not more than five further hours shall be allotted to the consideration of the second reading stage of the Bill; and that at the expiry of the five hours provided for the consideration of the second reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:25 p.m.
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Liberal

Jim Karygiannis Liberal Scarborough—Agincourt, ON

Mr. Speaker, it is indeed important that the member said that we should be debating issues that are important and this issue is certainly not less important than others.

Can the member can stand on his feet and say how many bills that are very important to this country the government has brought closure to and has tried to asphyxiate the rest of this chamber from talking about?

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:25 p.m.
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Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, I do not know where the question is coming from with respect to this legislation. However, there is an opportunity for the member to debate this legislation, and it is important because it deals with the rules of the road for investment.

Notwithstanding what the member and other members have said, there has been specific funding allocated to ensure that appropriate investigation takes place and that CRA has the finances to increase the size of the national audit program, in fact, by 40%. There is a $30-million investment to target international tax evasion and aggressive tax avoidance. That is what we are talking about and this legislation would provide for that. The government has taken some very concrete steps.

With respect to the member's question, which is not related to this legislation, when a particular piece of legislation does come before the House, he will have the opportunity to ask questions on that and he will get an answer. However, what he is talking about here has absolutely nothing to do with the legislation at hand and it does not matter how much he would—

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:25 p.m.
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NDP

Peter Julian NDP Burnaby—New Westminster, BC

Mr. Speaker, we are speaking about Bill S-17. The reality is, as the member full well knows, that it is also a question of how the Conservative government implements these tax treaties. That is why we want to have a full discussion.

As well, the reality is that the government has been a colossal failure both in terms of uncollected tax debt and tax havens. We have seen a skyrocketing. Over the seven years of the Conservative government's watch, we have seen a 57% increase in uncollected tax debt because the government is fumbling the whole file. We have seen a doubling, almost $170 billion, of money that is invested in 12 global tax havens.

Given the government's massive failure on both files, the question is very simple. In terms of Bill S-17, how can we trust the Conservative government to implement it properly when it has failed every other time?

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:25 p.m.
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Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, this agreement will be implemented and it will save a lot of dollars. However, I will address the question the member asked, which is not related to this bill.

Last year alone, over $40 billion in tax debt was recovered and $100 million collected in fines from 1,182 people who were convicted of tax violations. As well, in closing tax loopholes, the New Democratic Party opposed that legislation.

We are setting a culture that is taking place at several levels. Tax enforcement ensures that people are obligated to not only indicate what their income is so they can be taxed, but also that they pay their taxes when they are obligated to pay them. It is a culture of saying that not only should we get rid of tax avoidance, not only should we get rid of aggressive tax planning that tends to avoidance, but when we owe taxes, we also ought to pay them. It is a culture that says it is important to follow the rules and to pay when people ought to pay tax and not try to avoid that by putting money in an offshore account. I should have asked the other member about—

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:25 p.m.
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NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Speaker, from the outset, I wish to inform you that I will be sharing my time with my colleague from Brome—Missisquoi.

The NDP is in favour of this bill. For once, the Conservatives cannot accuse us of always being against the government. We are in favour of this bill, essentially because it is purely technical. It implements bilateral tax treaties with a certain number of countries, including Namibia, Serbia, Poland and Hong Kong, and makes amendments to treaties with Luxembourg and Switzerland.

This bill is worthwhile. It will make things easier for people who want to pay their taxes, who are not trying to defraud the government. Why would we be against virtue? We are pro-virtue. We are totally in favour of making it as easy as possible for people to pay taxes. However, I want to mention something important. Under Canadian tax law, any taxes paid in a foreign country are deducted from our nation's revenue. So much for savings.

This new rule makes it easier to pay taxes. Nothing more. If the government suddenly decided to harmonize tax regulations to make it easier for people filling out their tax returns, we would very much support that.

We disagree when the Minister of National Revenue and the Minister of State for Finance tell us that the bill is an important step in the fight against tax evasion. Nothing could be further from the truth, and that is dangerous. The head of our country's finances is telling us that this bill offers a way to combat tax evasion. That is not true. All this bill does is make it easier for people who want to pay taxes to file their tax returns.

I want to point out to the House that Luxemburg and Switzerland are tax havens. These countries allow financial institutions to have numbered accounts and to be protected by banking secrecy. This enables people to hide money and do so secretly. This will continue to be allowed. Switzerland will co-operate if we present a warrant and proof of criminal charges. However, it will not tell us whether the main people involved in trafficking cocaine in Canada have bank accounts there. Let us be realistic: we cannot expect any co-operation from them. It is quite sad.

The Auditor General already indicated that Canada's tax debt has significantly increased. It has jumped from $18 billion to $29 billion. These are people who openly declare that they owe money. Quite often, if they do not pay it is not because they are dangerous criminals but because they simply cannot.

When you are stretched to the limit because you have to pay your mortgage and car and grocery bills, and maybe buy clothes for your children from time to time, you might not be in a position to pay taxes. Self-employed workers are a good example of that. When they get a cheque, they do not set part of it aside to pay taxes. When they get that cheque, it is already spent on everything they owe. They do not want to cut their electricity or telephone. So that is what they pay. That is what accounts for the $29 billion. That amount is absolutely not owed by people who have made use of tax havens. These are our neighbours, our friends and our parents who had a hard time paying taxes because they had too many other bills to pay. Paying taxes is an expense, just like groceries or the electricity bill.

This is a problem. When people cannot pay taxes, they are not able to pay all their other bills either. The $29 billion represent a lot of people who will file for personal bankruptcy. That is quite often the problem.

The second problem with the $29 billion is that the greater the debt, the less likely it is to be repaid. This bill does not solve this problem, and that is truly unfortunate. The bill is being presented as a significant piece of legislation that will get results. In fact, I do not deny its positive effects for people who are willing to pay taxes. Rather, the problem I see concerns those people who are unable to pay taxes either because they do not earn income or because they have too many bills to pay. The household debt ratio is now at 163%. The bill will not mitigate this problem.

There are huge numbers of tax havens, and Canadians have put their money in well-known tax shelters. Indeed, $53 billion has been invested in Barbados, $25 billion in the Cayman Islands and $23 billion in Ireland. A total of $13.8 billion has been invested in Luxembourg, a country with which we have treaties. Bermuda has received $13.2 billion in Canadian investments. This represents 51% of Canada's foreign bank investments. This figure has doubled since 1987.

What was the government's response? It decided to cut the Canada Revenue Agency's budget by $250 million. Europe, Spain, Italy, Portugal and Greece are in a deep economic slump, largely because they did not collect the taxes owed to the government. Not paying taxes is a national sport in those countries.

The level of debt in those countries shows that these people are particularly adept at tax evasion. Why do they do it? Simply put, it is because tax equality is non-existent. Why ask someone to work 40 or 60 hours a week to make ends meet and pay taxes when he knows full well that a mafia member in Sicily, a crooked politician in Greece or a flashy real estate developer in Spain will not pay taxes?

Why ask someone to keep paying taxes for services when the rich are not paying those same taxes? The poor man is paying the rich man's share. That lack of tax fairness is the main reason people in certain European countries avoid taxes and shirk their responsibilities. This government is leading us down exactly the same path.

Instead of saying that they will do things differently since Spain's and Italy's economies have tanked, the Conservatives are following the worst examples. Then they say that they are doing well, that they are among the best. They should not be following the worst examples then. This problem will not go away overnight. Tax evasion requires two things. First, it requires the means to do it without getting caught. Second, it requires motivation, which exists when tax fairness does not.

The NDP has proven its good faith by supporting technical measures such as this bill. However, do not try to tell us that this law will solve the problem of tax evasion. That is untrue.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:40 p.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I thank my colleague, the member for Marc-Aurèle-Fortin, for his very persuasive speech. Clearly the numbers are no longer a mystery to him.

Speaking of numbers, there is one that grabbed my attention. According to Statistics Canada, $146 billion—one-quarter of our direct foreign investment—is hidden away in tax havens. That is money the government should be collecting, money that is not being spent here on infrastructure and services to improve our social safety net.

I would like my colleague to comment on the following two observations: people who do not have the means to use tax havens are the ones footing the bill, and people who are not paying their fair share are often the very same ones telling us that we have to cut spending.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:40 p.m.
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NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Speaker, a similar observation was made in the United States.

For example, multi-billionaire Warren Buffett said it does not make sense for him to make millions while being taxed at a significantly lower rate than his secretary. That man pays his taxes. He does not try to evade taxes. When the government tries to get people to pay their taxes, it does not have much credibility.

Those who pay their taxes are the very ones whose services are being cut. That is a problem. The government is constantly asking people to pay. They are not getting the services they need, but they still have to foot the bill. If the Auditor General proved anything, it is that they, not the very rich, are the ones targeted by the CRA.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:40 p.m.
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NDP

Peter Julian NDP Burnaby—New Westminster, BC

Mr. Speaker, I want to congratulate the hon. member for Marc-Aurèle-Fortin on his excellent speech. As usual, he brings a wealth of experience as a lawyer and financial expert every time he speaks in the House.

Outstanding taxes are a real problem. As we know, the Conservatives have been completely incompetent when it comes to this issue. When they came to power in 2006, there was $18 billion in outstanding taxes. Now there is $29 billion, because they are not even capable of managing the issue of outstanding taxes.

What does my colleague think of the Conservative government's competence when it comes to managing issues such as outstanding tax accounts, which should be pretty easy to manage?

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:40 p.m.
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NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Speaker, this is particularly interesting, and I thank the hon. member for his question. This shows that he read the Auditor General's report carefully.

The Auditor General made an observation. He said that the CRA is targeting individuals and has put a system in place to collect taxes. However, this system does not apply to businesses. Oops.

The other problem has to do with people who have a lot of taxes to pay. I am talking about tax bills over $10 million. The government's batting average is practically a big, fat zero. As for the little old lady who owes $800, I guarantee she will be taken to the cleaners. The government has the resources to collect from her and it has no problem doing so.

The Conservatives call this double standard, which is an integral part of their economic policies, tax fairness. However, this is not tax fairness. The Conservatives are betraying the people who elected them. That is serious.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:40 p.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I will use Bill S-17 to talk about tax evasion.

People take advantage of our excellent economy, our extraordinary education system and our infrastructure to make money, but some refuse to pay their fair share. They keep their profits in offshore bank accounts in order to avoid paying taxes in Canada. According to the OECD, an estimated $10 trillion is hidden in tax havens around the world.

Every year, this scourge deprives Canada of $5 billion to $8 billion in revenues. According to Statistics Canada, between 2003 and 2008, Canadian investment in tax havens went from $94 billion to $146 billion. This is a quarter of our direct foreign investment.

As I already said, this is money that is owed to Canada. It is money that is not being spent here to renovate infrastructure or pay for services that would allow Canada to have a better social safety net. In the meantime, those who do not have the means to use tax havens are the only ones paying the bills. That is what my colleague calls tax fairness. Those who do not pay their fair share are often those who say we need to reduce spending. It is a great injustice that undermines the very foundation of our society. Tax evasion is one of the greatest challenges the federal government must face. Bill S-17 is a step in the right direction, but the step is far too small. Even though we will vote in favour of the bill, it is woefully inadequate.

Bill S-17 implements four tax treaties with Namibia, Serbia, Poland and Hong Kong. It also implements amendments to the treaties between Canada and Luxembourg and Canada and Switzerland. The purpose of the tax treaties is to avoid double taxation and prevent tax evasion. We support harmonizing tax laws and complying with OECD standards, and that is why we will support the bill. However, the government could do more.

Bill S-17 does not make any changes to Canada's policy. It is considered standard legislation of a routine nature.

To hear the Minister of Finance tell it, this bill is a major step forward in the fight against tax evasion. While it does contain provisions that will be useful to the government, it does not make up for the government's failure to take the major tax haven problem seriously.

The last budget was proof that the government is not taking the problem seriously. On March 20, 2013, 900 Canada Revenue Agency employees, including 400 tax auditors, received notices that they were in danger of losing their jobs because of budget cuts.

The Canada Revenue Agency's budget will be cut by about $460 million by 2015. How is the agency supposed to fight tax evasion with fewer employees and resources?

My NDP colleagues on the Standing Committee on Finance proposed several recommendations to combat tax evasion. I would like to share some of those recommendations.

First, the Canada Revenue Agency should require Canadian corporations and all of their subsidiaries to disclose all taxes paid in other countries. This measure would result in greater transparency concerning their activities in offshore tax shelters.

Second, the auditor general should evaluate, on a regular basis, the success of the Canada Revenue Agency in prosecuting and settling cases of tax evasion.

Third, the federal government should create an efficient system to identify tax evasion enablers including accountants, lawyers and other professionals.

Last, the federal government should to move towards a system of automatic tax information exchange with other countries. This would be a much more effective way to fight tax havens than the bilateral agreements covered in this bill.

We made clear recommendations to ensure tax fairness for all Canadians. They deserve to know how much tax evasion is going on.

Despite our repeated requests, the Conservatives are refusing to measure how much tax fraud costs us. The Conservatives' failure to collect lost revenue means that Canadians who do pay their taxes are on the hook for a larger share of the cost of government programs.

Why do the Conservatives insist on doing the bare minimum with respect to the serious problem of tax evasion and tax havens?

We hope that the government will introduce major changes to solve this serious problem instead of giving us routine measures like Bill S-17. This bill will not solve the problem. As I illustrated earlier, tax evasion is serious. The government must act now. I urge the government to consider our recommendations.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:50 p.m.
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NDP

Peter Julian NDP Burnaby—New Westminster, BC

Mr. Speaker, I really liked my colleague from Brome—Missisquoi's speech. He takes a very smart approach to this file, and it is always interesting to hear him speak in the House.

Under the Conservatives, Canadian investments in tax havens have nearly tripled. This is another Conservative failure. Before the Conservatives came to power, very few Canadians parked their money in tax havens. Now, under the Conservatives, these types of investments have soared. The Conservatives seem to want to encourage investments in tax havens.

Does my colleague from Brome—Missisquoi think that this is intentional on the part of the Conservatives or is it simply a result of their incompetence in managing this file?

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:50 p.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I thank my hon. colleague for his question, which is excellent, as always.

I would not go so far as to say that this situation is a result of the Conservatives' incompetence, but it is a result of their interference and gross mismanagement. They are protecting their interests, big oil companies and big banks, as usual. The working poor are left out in the cold, as always. That is why we are standing up for workers.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:50 p.m.
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NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Speaker, I cannot help but notice government members' enthusiasm for talking and asking questions about a bill that will clearly not get the results that they want and that they promised to Canadians.

I could very well be reading out a muffin recipe and they would not even notice. That is how much they care about listening when we are talking about the tax and economic issues that affect our constituents.

My constituents are honest. They pay their taxes. When people do not pay, it is often because they are bankrupt, they are unable to pay or they are unemployed and so poor that they do not owe any taxes.

My question for my colleague is about the exact nature of bank transfers and how Canadian institutions are complicit but nothing ever happens to them.

Could he expand on that and tell us what an NDP government would do to prevent Canadian financial institutions from being complicit in making our country poorer?

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:55 p.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I thank my colleague from Marc-Aurèle-Fortin for his excellent question.

The NDP wants everyone to pay their fair share, whether we are talking about big or medium-sized companies, but especially the big companies that have the means. The big oil companies must pay their fair share and contribute to Canada's growth. We want SMEs and employees to pay their fair share. We want everyone to do their part. That is the only way we can achieve social justice and equity within our current economic system.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 9:55 p.m.
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Conservative

John Carmichael Conservative Don Valley West, ON

Mr. Speaker, I am honoured to add my voice in support of today's important debate on the 2013 income tax convention implementation bill, Bill S-17, another step toward lower taxes for all Canadians.

Today, on tax freedom day, I would like to place Bill S-17 into the larger context. Over the years, our Conservative government has really devoted considerable effort to keeping taxes low for Canadian families and small business. Indeed, since 2006, we have cut taxes over 150 times, reducing the overall tax burden to its lowest level in 50 years. We have cut taxes in every way government collects them—personal taxes, consumption taxes, business taxes, excise taxes and much more. We cut the lowest personal income tax rate to 15%, increased the amount Canadians can earn without paying tax, introduced pension income splitting for seniors, which was certainly well received by seniors in this country, and reduced the GST from 7% to 6% to 5%, putting an estimated $1,000 back in the pockets of an average family.

Clearly, we believe that Canadian families should keep their hard-earned money. They know better what to do with it than does government.

We introduced and enhanced the working income tax benefit. We introduced the tax-free savings account, the most important personal savings vehicle since RRSPs. We increased the age credit amount by $2,000. We doubled the pension income credit to $2,000. We increased the amount recipients of the guaranteed income supplement, the GIS, can earn through employment, without any reduction in GIS benefits, from $500 to $3,500. Finally, we increased the age limit for RRSP to RRIF conversion to 71 years of age from 69.

Our strong record of tax relief has meant savings for a typical family of four of over $3,200 annually. Not only that, but this action has resulted in over one million low-income Canadians being removed from the tax rolls.

However, the good news does not end there. Our government has introduced a number of tax relieving measures for small business. After all, our Conservative government recognizes the vital role small business plays in the economy and job creation. That is why we are committed to helping them grow and succeed. Over 90% of business in Canada is small business.

Indeed, since 2006, our government has taken significant action to support small businesses, including reducing the small business tax rate from 12% to 11%; increasing the small business limit to $500,000; and eliminating the corporate surtax for all corporations in 2008, which was particularly beneficial to small business corporations, as the surtax represented a larger portion of their overall payable tax. There was much more.

Overall, our Conservative government low tax plan has resulted in savings of $28,600 for a typical small business since 2006. That is about a 34% cut in their total tax bills.

There is another part of this low tax plan, and that includes establishing tax treaties to help improve our system of international taxation, and this is precisely what Bill S-17 will do.

Bilateral income tax treaties, such as the one before us today, are utilized to eliminate tax barriers to trade and investment. Such treaties achieve that purpose in a number of ways. Allow me to explain how. First, they provide greater certainty to taxpayers regarding their potential liability to tax in foreign jurisdictions. Second, they allocate taxing rights between the two jurisdictions so that the taxpayer is not subject to double taxation. Third, they reduce the risk of burdensome taxation that may arise because of high withholding taxes. Finally, they ensure that taxpayers are not subject to discriminatory taxation in the foreign jurisdiction.

These are the great benefits Bill S-17 would bring to the market. It would provide benefits to both taxpayers and governments by setting out clear rules that would govern tax matters relating to cross-border trade and investment.

This is extremely technical legislation, and I apologize in advance. Nevertheless, it is important for the flow of predictable global commerce. For instance, tax treaties permit a multinational business based in one country to be taxed in another country if that business has a substantial presence in that other country. In general terms, if the branch operations in a foreign country are well established and significant, the country where those activities occur will, in most cases, have primary jurisdiction for that taxation. In other cases, where the operations in the foreign country are relatively minor, tax treaties provide that the home country retains the exclusive right to tax its residents. Tax treaties also allocate taxing rights between the two countries as a means of protecting taxpayers from potential double taxation.

This takes several forms, and again, this is all very technical. First, treaties generally include a mechanism for resolving the issue of dual residency of an individual or company, where the individual or company would otherwise be considered to be a resident of both countries. Second, treaties assign the primary right to tax to one country, usually the country in which the income arises, and the residual right to tax to the other country, usually the country of residence of the taxpayer. Third, treaties provide rules for determining which country will be treated as the source country for each category of income. Fourth, and finally, treaties provide rules limiting the rate of tax the source country can impose on each category of income and establishes the obligation of the residence country to eliminate double taxation that otherwise would arise from the exercise of concurrent taxing jurisdiction by the two countries.

In addition to these substantive rules regarding allocation of taxing rights, tax treaties also provide a mechanism for dealing with disputes or questions of application that arise after the treaty enters into force. In such cases, designated tax authorities of the two governments consult with a view to reaching a satisfactory solution under which the taxpayer's income is allocated between the two taxing jurisdictions on a consistent basis, thereby preventing the double taxation that might otherwise result.

In addition to reducing potential double taxation, treaties also reduce burdensome taxation by reducing withholding taxes that are imposed at source. Under Canadian domestic law, payments to non-resident persons of certain passive forms of income, such as dividends, interest and royalties, are subject to withholding tax equal to 25% of the gross amount paid. Many of Canada's trading partners also impose, under their domestic tax laws, similar levels of withholding tax on these types of income. Because the withholding tax does not take into account expenses incurred in generating the income, a taxpayer frequently will be subject to an effective rate of tax that is significantly higher than the rate that would be applicable to net income in either the source or residence country. The taxpayer may be viewed, therefore, as having suffered burdensome taxation. Tax treaties alleviate this burden by setting maximum levels for the withholding tax the treaty partners may impose on these types of income or by providing for exclusive residence-country taxation of such income through the elimination of source-country withholding tax.

Our government's goal is simple, to establish tax treaties that substantially reduce or, in the case of certain types of income, eliminate withholding taxes by the source country. In addition, we must include provisions that ensure that cross-border investors do not suffer discrimination in the application of the tax laws of the other country.

By delivering a favourable tax environment for Canadian businesses, we help them to compete and win internationally, increase investment and create jobs for Canadians.

Tax treaties like those in Bill S-17 would directly support cross-border global trade in both goods and services, which in turn would help Canada's domestic economic performance. The more foreign direct investment that flows into our country, the more investment in capital and in technology. This, in turn, results in more high-quality jobs for Canadians.

In fact, during the committee's examination, Nick Pantaleo, of PricewaterhouseCoopers LLP, remarked that:

...a key objective of the Canadian government is to pursue new and deeper international trade and investment relationships. This is not surprising given that more than 60 per cent of the Canadian economy and one in five jobs in Canada are generated by trade. In my view, tax treaties contribute toward the success of such global trading agreements.

He went on to add that:

It is important that Canadian businesses be provided with greater unfettered access to foreign markets, foreign investment protection and fair tax treatments in foreign nations.... These factors are critical to Canadian business decision making and competitiveness. Access to more and bigger markets will help Canadian companies simply to be more productive.

It would seem clear that the tax treaties contained in Bill S-17 are a critical tool in strengthening Canada's trade and investment relationships and in helping Canadian businesses stay competitive and successful.

However, there is another critical part to these tax treaties. I have already mentioned that keeping taxes low is an important objective for our government and an important part of these tax treaties. However, keeping taxes low also means that all taxpayers should pay their fair share of taxes owing and not be able to hide their income offshore.

Better transparency and the effective exchange of information for tax purposes between taxation authorities are key to ensuring that Canadian taxpayers report their foreign income and pay the right amount of tax in Canada.

We are absolutely committed to combatting tax evasion through the negotiation of tax treaties, as well as tax information exchange agreements or TIEAs. Under the tax treaties and the TIEAs, the competent authority of one country may request from the competent authority of the other country such information as may be necessary for the proper administration of the country's tax laws.

The requested information will be provided, subject to strict protections on the confidentiality of taxpayer information. Because access to information from other countries is critically important to the full and fair enforcement of Canada's tax laws in order to combat tax evasion, the inclusion of an information exchange provision that is consistent with the standards set out in the Organisation for Economic Co-operation and Development, OECD, is an important component of Canada's tax treaty policy.

While TIEAs and tax treaties are critical tools in combatting tax evasion, our government has a number of other tools in its arsenal and a proven record. Overall, since 2006, and including the measures announced in economic action plan 2013, our government will have introduced more than 75 measures to improve the integrity of the tax system.

These measures will help close tax loopholes, address aggressive tax planning, clarify tax rules and combat international tax evasion. In fact, this action will result in closing $2.5 billion in tax loopholes.

Additionally, economic action plan 2013 announced the stop international tax evasion program. This new program would allow the CRA to pay individuals with knowledge of major international tax non-compliance a percentage of the tax collected as a result of information provided. Other measures include, one, requiring Canadian taxpayers with foreign income or properties to report more information and extending the amount of time the CRA has to reassess those who have not properly reported this income; two, streamlining the process for the CRA to obtain information concerning unnamed persons from third parties, such as banks; and third, requiring certain financial intermediaries, including banks, to report their clients' international electronic funds transfers of $10,000 or more to the CRA.

It is measures like these that would help to maintain the integrity of Canada's income tax system. This is important because, when everyone pays their fair share, Canada's tax rates can remain competitive and low. This means that Canadian families and businesses would pay less tax overall, keeping more of their hard-earned money.

To conclude, in an increasingly globalized economy where investment capital is highly mobile, a competitive business tax system is crucial. While Canada has performed relatively well in today's uncertain global economy, we cannot afford to become complacent. The treaties covered in this proposed legislation would promote certainty, stability and a better business climate for taxpayers and businesses in Canada and in the treaty countries. More importantly, these treaties would help to secure Canada's position in today's increasingly competitive world of international trade and investment.

For the reasons I have highlighted today and many others, Bill S-17 would increase our ability to compete and harness the opportunities of a vibrant modern economy. For these reasons, I urge hon. members opposite to support this bill.