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.

[The Speaker, Conservative, Andrew Scheer]

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

C-321, An Act to amend the Canada Post Corporation Act (library materials)—Chapter 10, 2013.

C-37, An Act to amend the Criminal Code—Chapter 11, 2013.

C-383, An Act to amend the International Boundary Waters Treaty Act and the International River Improvements Act—Chapter 12, 2013.

S-9, An Act to amend the Criminal Code—Chapter 13, 2013.

C-47, An Act to enact the Nunavut Planning and Project Assessment Act and the Northwest Territories Surface Rights Board Act and to make related and consequential amendments to other Acts —Chapter 14, 2013.

C-309, An Act to amend the Criminal Code (concealment of identity)—Chapter 15, 2013.

C-43, An Act to amend the Immigration and Refugee Protection Act—Chapter 16, 2013.

S-213, An Act respecting a national day of remembrance to honour Canadian veterans of the Korean War—Chapter 17, 2013.

C-42, An Act to amend the Royal Canadian Mounted Police Act and to make related and consequential amendments to other Acts—Chapter 18, 2013.

S-209, An Act to amend the Criminal Code (prize fights)—Chapter 19, 2013.

S-2, An Act respecting family homes situated on First Nation reserves and matrimonial interests or rights in or to structures and lands situated on those reserves—Chapter 20, 2013.

S-8, An Act respecting the safety of drinking water on First Nation lands—Chapter 21, 2013.

C-63, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2014—Chapter 22, 2013.

C-64, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2014—Chapter 23, 2013.

C-15, An Act to amend the National Defence Act and to make consequential amendments to other Acts—Chapter 24, 2013.

C-62, An Act to give effect to the Yale First Nation Final Agreement and to make consequential amendments to other Acts—Chapter 25, 2013.

S-14, An Act to amend the Corruption of Foreign Public Officials Act—Chapter 26, 2013.

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—Chapter 27, 2013.

S-15, An Act to amend the Canada National Parks Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and to make consequential amendments to the Canada Shipping Act, 2001—Chapter 28, 2013.

It being 4:24 p.m., the House stands adjourned until Monday, September 16, 2013, at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).

(The House adjourned at 4:24 p.m.)

(Bill S-17. On the Order: Government Orders:)

June 17, 2013—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--Minister of Finance.

Finance

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

Mr. Speaker, I have the honour to table, in both official languages, the 21st report of the Standing Committee on Finance on 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.

The committee has studied the bill and has decided to report the bill back to the House without amendment

Mr. Speaker, if you would just allow me, this bill was done in a very quick period. I would like to thank all three political parties in that committee, all members of that committee, for coming together in a very quick period. I would also like to thank all committee staff, especially our clerk, Christine, for all her efforts in putting this together very quickly.

[The Chair, Conservative, James Rajotte]

Mr. Hsu, do you have a comment on clause by clause? Okay.

Ms. Glover's time is up.

I don't have a certain time for clause by clause, so it depends.... We just have to finish the meeting by 2 p.m.

Monsieur Caron, is it a final round here then? I'm being very generous as chair, but we're really straying way beyond Bill S-17 in a lot of our questions and answers.

So if it's something germane to S-17....

[Brigitte Alepin]

I said in the opening statement, as you said, that I do not support Bill S-17. But at the close of my statement, I said that although I do not support it, I do realize that all the energy we are investing in trying to implement this system and the energy we are investing in trying to oppose it, as we presently do, may be a waste of time, considering the fact that maybe we should proceed in another way if we really want to stop this unfair system, whereby only a small group of taxpayers can take legal advantage of tax havens.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

We've talked an awful lot outside the scope of Bill S-17. Mr. Howlett has in particular.

You continue to talk about G-8, Mr. Howlett, and you speculate as to what may or may not occur. I always enjoy listening to you. I particularly enjoy when you make reference to my policing background, as you did with regard to search warrants. But one thing I might say is that when we receive information that leads to a search warrant, it's not obviously public, but it is recorded information, as far as informants go.

So as you sit here today and refer to, you know, “I've heard people in the U.S. say”, or “I've heard other countries say this about what Canada's proposing to do at G-8”, I take issue with it, because you haven't divulged who said this.

To be very frank with you, it's somewhat selective listening, so I'd like you to hear once again what the Prime Minister himself said about the G-8, which you haven't referenced. You have referenced people you haven't identified, but here in fact is what the Prime Minister of Canada said just yesterday.

The question by the reporter was about the fact that combatting international tax evasion would be one of the main themes discussed at the G-8 summit, with two key issues: the public registry on beneficial ownership and the automatic tax information-sharing agreements. The reporter asked the Prime Minister to give his thoughts or reservations, if any, on either of these two particular issues.

Here's what the Right Hon. Stephen Harper had to say about those two things, which you've talked about at great length here today, sir, without ever referencing this.

Here's what he said, and of course I'm reading from the transcript:

We’re very supportive of all three Ts of Prime Minister Cameron’s agenda.

The three Ts, of course, as everyone knows, are tax, trade, and transparency.

He goes on to say:

You know, tax evasion, there’s no upside to tax evasion. It’s bad policy, it’s bad politics, and governments lose revenue that governments should be getting.

He continued that we obviously believe in low tax rates in Canada, but that people need to pay the tax rates that we actually have. He added:

The only reservation we will obviously express is that in terms of implementation in Canada, we’re going to have to consult with our provinces because we are a federal state and they have taxation powers.

....It is important that we do it and that we do it together because when we’re dealing with tax evasion, we’re dealing with problems that cross borders. Even the most powerful governments of the world can’t deal with these things by themselves so I look forward to being part of the declaration and to making progress on this as we leave the summit.

I hear Mr. Rankin asking whether or not I have a question for him.

My intervention is basically to correct the record, sir, because you have mentioned absolutely nothing about what the Prime Minister of Canada has said. He has clearly said he intends to address the things that you question whether or not he intends to address.

So I think it's beneficial for Canadians to hear exactly what the Prime Minister of Canada has said, and to ask you, sir, to please divulge who these informants are that you continue to say have said he will not address it.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chair.

I think I'd like to ask Mr. Howlett a question first, and perhaps invite Mr. Deneault to respond, if he would.

I'd like to explore the relationship, as you did, between Bill S-17 and these double-taxation treaties and shell companies, and therefore beneficial ownership. You spoke a little bit about that, about the use of setting up shell companies and tax havens without knowing who the beneficial owners are of the shares of those companies. In a sense, my question is this: is there anything in these double-taxation treaties to address the problem of shell companies that you identified?

[Prof. Arthur Cockfield]

I am.

I raised concerns about these additional amendments, or protocols, or whatever you call them. They'll become part of Canadian law once Parliament adopts Bill S-17. Traditionally, you negotiate a treaty, and then you might have a protocol to amend the treaty, but these are notes that in any event are going to be part of the law, and they cut back on article 26 of the OECD model tax treaty.

As I mentioned, the commentary pursuant to this article says that it should envision three types of information exchange, whereas we have new language in these amendments, with the three treaties at least, that suggests we will only use information upon request. Again, that's understandable, given the bargaining power of each side and what Canada is trying to achieve. But for these amendments, presumably the parties would not have entered into an agreement with Canada.

Nevertheless, I do have concerns about the amendments.

[The Chair, Conservative, James Rajotte]

It's dealing with exchange of information. It's article 25 in Bill S-17. It's in schedule 1.

[The Chair, Conservative, James Rajotte]

Merci, Monsieur Deneault.

Merci, Monsieur Côté.

I just wanted to follow up with Professor Cockfield. I realize that your invitation here was given on very short notice, but you talked about automatic information exchange, request on demand, and spontaneous exchanges. Have you had an opportunity to review article 25 in Bill S-17?

[Murray Rankin, NDP, Victoria, BC]

Thank you.

Thank you to all of our witnesses for coming on such short notice. It's greatly appreciated.

I want to do a quick summary of what I thought I heard on a couple of key points. Then my questions will be for Ms. Alepin and Mr. Deneault.

I think I understood Mr. Deneault to say that Bill S-17 and the OECD model conventions were essentially inoperative.

Ms. Alepin, you said that you simply do not support Bill S-17, for the reasons you gave.

Mr. Rosenbloom said, talking about the information provisions, that he doesn't see them doing any harm. I would call that the “damning with faint praise” approach.

Essentially there's an opposition to this, as Mr. Cockfield's remark would seem to suggest, because in light of the “explosion”, to use his word, of automatic information exchange and things going on laterally, these seem to be very old-fashioned.

Ms. McLeod used the expression of it being a tool in the tool kit. It would appear to these witnesses to be a pretty dull tool, at best, in going after the problem of tax evasion.

My question is for Ms. Alepin and Monsieur Deneault, and it's about Hong Kong, just so that's clear.

You said, Ms. Alepin, that profits in Hong Kong could be 100% tax-free if subsidiaries set up in Hong Kong or elsewhere were involved. Monsieur Deneault said that non-resident trusts don't have to declare, don't have any information to exchange, because in Hong Kong that information doesn't have to be registered. So essentially, how could one ever obtain information and make this work on tax evasion issues with respect to Hong Kong?

Mr. Cockfield had similar things to say, noting that there's no requirement, that indeed there's no automatic exchange of information possible. I'm just not sure how it would ever work with Hong Kong.

I'd like Ms. Alepin and Monsieur Deneault to talk about how it might be possible to use this agreement, if at all, with respect to Hong Kong, for example, to curb tax evasion.

[H. David Rosenbloom]

Thank you.

My name is H. David Rosenbloom. I am a tax attorney and a professor of tax law. My area of specialization is international, or cross-border, taxation. I am a member of Caplin and Drysdale, a U.S. law firm. I am also director of the international tax program at New York University School of Law. In the late 1970s, I was the international tax counsel in the United States treasury department. In that capacity, I was the chief U.S. negotiator of the 1980 income tax convention between Canada and the United States.

I thank the committee for this opportunity to offer observations on Bill S-17, an act to implement conventions, protocols, and agreements between Canada and various countries. All of these agreements are for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes.

My comments are necessarily constrained by both my relative unfamiliarity with Canada's tax treaty policies and the extremely brief amount of time I have had to devote to a study of the bill. I am not a Canadian tax expert, and I was unaware of the bill prior to the afternoon of June 14. Furthermore, I have not been informed regarding the specific aspects of the bill on which I have been asked to comment.

My working assumption is that the committee may be most interested, not in the new conventions with Namibia and Serbia, parts 1 and 2 of Bill S-17, but rather in the convention with Poland and the agreement with Hong Kong, parts 3 and 4; with the protocol to the existing convention with Luxembourg, part 5; and the supplementary convention with Switzerland, part 6.

These last two parts deal with the subject of information exchange. Parts 3 and 4, on the other hand, are a convention and an agreement with jurisdictions, Poland and Hong Kong, that have been used by investors from other countries to invest outside those jurisdictions.

I thus confine these initial comments to the newly proposed exchange-of-information provisions with Luxembourg and Switzerland, and the agreements with the intermediary jurisdictions, Poland and Hong Kong.

I begin with information exchange. The protocol to the convention with Luxembourg appears consistent with the current practices of the Organisation for Economic Co-operation and Development and with the pending protocol to the income tax convention between the United States and Luxembourg.

There are some differences among these texts, but they are of a technical nature, and I assume of relatively little interest to the committee. I have some reservations about the efficacy of such provisions for achieving useful information exchange, but I cannot see them doing any harm.

The supplemental convention with Switzerland, on the other hand, relieves a requesting country from the need to provide a specific name to the requested country in order to obtain information about a person and in order to identify the person in possession of that information.

Since the requesting country is often in need of the name—that is the reason for the request in the first place—a requirement that the name be given in order to obtain the requested information might often render the information exchange provision nugatory. Thus, this supplementary convention responds to a real problem, and despite my abiding skepticism about information exchange via tax convention, I can see no substantial objection to it.

The agreement with Hong Kong and the new convention with Poland are a different and much larger and more complicated matter. A major concern with jurisdictions that lend themselves, and their treaty networks, to investors from elsewhere is the possibility that their conventions become in effect agreements with the entire world.

In the United States, we think that most tax conventions are bilateral in nature and that the benefits they confer should be confined to persons with a genuine connection with one of the treaty partners.

One means of implementing this policy is to simply not enter into conventions with jurisdictions that serve as intermediaries, especially if there is no demonstration of a genuine risk of double taxation. Regrettably, the United States has not always followed this route. We have, for example, conventions with Bermuda, Cyprus, and Barbados, to name but three examples of jurisdictions where the need for a U.S. tax convention would not appear compelling.

Apart from the strategy of not negotiating conventions with certain jurisdictions, the United States relies on certain measures both within the text of its conventions and drawn from its general jurisprudence to combat treaty shopping. A limitation on benefits article requiring a genuine nexus between the party claiming benefits and the treaty partner is now standard in all modern U.S. tax conventions. And the economic substance doctrine, recently enacted into statutory law but of lengthy vintage in our courts, has served as a potent weapon against at least some types of treaty shopping.

I note that paragraph 3 of article 26 of both the convention with Poland and the agreement with Hong Kong represent an abbreviated version of what has become, in the United States, the “limitation on benefits” article. The article 26 provision, which also appears in the conventions with Namibia and Serbia, effectively precludes foreign-owned entities from enjoying a more beneficial regime in the treaty partner than do domestically owned entities. This is where early versions of the U.S. limitation on benefits provision began, but the provision has since gone much further. Whether it has always been effective is an open question.

I conclude by citing a provision of this type that actually seems to work. It appears in the U.S. convention with Cyprus, and it contains two substantive rules of general relevance: first, that U.S. benefits are available only to Cypriot entities that are owned to a large extent, both legally and economically, by genuine individual residents of Cyprus or, in some limited circumstances, by citizens of the United States; and second, that such benefits are allowed when it is determined on a discretionary basis that the establishment, acquisition, and maintenance of the entity and the conduct of its operations did not have as a principal purpose obtaining benefits under the convention. The provision is general and, some might say, unacceptably vague. Yet for that very reason it seems to have succeeded in thwarting attempts by third-country investors to use the Cyprus convention to obtain inappropriate treaty benefits in the United States.

I would add two thoughts on the basis of what I have heard thus far in this hearing. I throw them out for further elaboration. One, I do suggest to the committee that you carefully distinguish between concern about corporate-level tax avoidance, the use of tax havens by multinational companies, and transfer pricing, things that concern the multinational company on the one hand, and things that concern individuals taxpayers on the other. For the most part there we're talking about offshore accounts, the use of offshore trusts, etc. I think we're talking about two related but distinct problems, and I think there ought to be different responses.

[Dennis Howlett, Executive Director, Canadians for Tax Fairness]

Thank you for the opportunity to share my views on Bill S-17.

The tax conventions and agreements included in Bill S-17 will be of very limited use in improving the recovery of taxes from those hiding their money in tax havens unless some key elements of the tax havens action plan proposed by British Prime Minister David Cameron at the G-8 summit are implemented. If Canada is serious about going after tax cheats who are using tax havens, then it should demonstrate this by fully supporting Prime Minister Cameron's action plan without trying to water down some of its key components.

In particular, the British proposals on beneficial ownership in multilateral automatic tax information exchanges are key to whether Bill S-17 will be a useful piece of legislation or a waste of time and effort.

Let me explain what I mean.

One of the problems with the tax conventions and agreements covered by Bill S-17 is that Canada needs to have quite a bit of information to begin with before it can request information under the current OECD bilateral agreement model that these agreements are based on, and we can clearly see this. If you look at the details in schedule 5 of Bill S-17, for example, you see all the steps that have to be taken in the case of Luxembourg to get the information Canada wants. It spells out quite clearly all the complicated steps involved.

It's similar to what the police have to go through to get a search warrant. As I'm sure Ms. Glover would be able to confirm from her experience, police have to have identified a suspect, and they need a fair bit of evidence in order to convince a judge to grant a search warrant.The challenge facing Canada Revenue Agency at the moment is that they have a very difficult time figuring out who their suspects might be and who they should be asking tax haven governments for more information on because of the banking secrecy that prevails in tax haven countries. How can Canada ask for information on a suspected tax evader if strict beneficial ownership rules are not applied? A tax evader can open trust accounts or set up shell companies in many tax havens without having to establish the ultimate beneficial owner. Without strong beneficial ownership rules in force, it's easy to hide your wealth offshore, and this facilitates not only tax evasion but also organized crime's money laundering, arms dealing, and financing of terrorism.

I am sure this government would not want to be accused of supporting such things.

The British G-8 tax haven action plan proposal on beneficial ownership calls for a public registry as well as much stronger rules to ensure the ultimate beneficial owner of any account. It's essential that beneficial ownership information be available in the public domain as opposed to being accessible only to police or tax authorities, because if it is available publicly it will be much easier for all countries to get access to this information. Multilateral automatic tax information exchange is the other key measure needed to make bilateral tax information exchange agreements useful. Proposals now under consideration at the G-8, G-20, and OECD would facilitate the exchange of basic information on account holders so that Canadian tax authorities would know when a taxpayer has not indicated on his or her tax return an offshore account in country X or Y, and then they would know who to go after, in terms of further investigation.

I know that the Canada Revenue Agency has come under a lot of criticism recently, including from our groups, but I actually have some sympathy for them given what they are up against. It's extremely difficult to undertake investigations on those who might be cheating on taxes using tax havens when they have very little to work with.

My final point is that there's a need to augment the capacity of the Canada Revenue Agency, especially given the recent leak of data that's now available to the Canadian government. The six or 10 additional people reported to have been assigned to a special unit will not be adequate to go through all the tax-leak data.

The CBC and the International Consortium of Investigative Journalists need to be commended for doing a major public service by exposing those who are using tax havens. It's imperative that Canada has the capacity to effectively follow up on that information.

Thank you.

[Brigitte Alepin, Chartered Accountant, Tax Expert, Tax Policy Specialist, Author, As an Individual]

Good morning. Thank you for the invitation. It's a privilege to be here today to talk about the merits of Bill S-17.

I do not support Bill S-17 because it represents an additional step toward the implementation of a global tax system where wealthy corporations or individuals can legally benefit from tax havens and avoid paying their fair share of taxes.

With the support of tax-optimization strategies, the Canada-Hong Kong tax treaty, for example, which Bill S-17 refers to, enables the legalization of a partially or totally tax-free corridor between Canada and a number of Asian countries.

This tax privilege does not come under the specific sections of the treaty, but relates to the simple fact that the Canadian tax system doesn't tax income from subsidiaries of Canadian multinationals in countries with which Canada has signed a tax treaty or an agreement to exchange tax information.

Given that the corporate tax rate is 16.5% in Hong Kong and about 25% in Canada, the Canada-Hong Kong treaty does more than avoid double taxation. It provides a 40% savings to Canadian multinationals that will export revenue to Hong Kong.

In addition, tax plans are already being developed to legally increase this 40% tax savings to a total tax exemption.

In a recent special report presented by Tax Analysts, an international think tank intended mainly for tax practitioners, the renowned Montreal tax specialist, Nathan Boidman, explains that revenue made in Hong Kong could be 100% exempt from Canadian and foreign taxation when subsidiaries set up in Hong Kong collect interest income, earnings gained from licensing or when corporate structures set up in Asia include a number of jurisdictions and where the revenue only passes through Hong Kong.

Thousands of tax agreements similar to the Canada-Hong Kong treaty currently exist between countries, so much so that they are being manipulated strategically. It is now legal for the world's wealthy corporations to pay 2% tax, if not no tax.

To compensate for the erosion of the tax base caused by this tax exemption for revenue exported legally to tax havens or jurisdictions that are taxed less, other taxpayers, the workers, the SMEs, major corporations here, all these immobile taxpayers are the ones who have to pay. And if they try to partially or totally avoid paying Canadian tax by using tax havens, like the wealthy corporations or individuals do, it is considered illegal for them. Moreover, as indicated in the various provisions of Bill S-17 relating to the exchange of information, the Canadian government is serious about its mission to corner those offenders.

I do not support Bill S-17. However, I wonder if the effort made to implement these bills or even to contest them is the optimal way of stopping the implementation of this preferential tax treatment reserved for the wealthy. I might invest as much of our limited resources as possible in trying to replace international tax competition, which is the very essence of our current global problem, with some tax co-operation.

Thank you for your attention. I would be happy to answer any questions you may have.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order. I want to thank our witnesses for appearing on very short notice. The committee appreciates that very much. With respect to our study of Bill S-17, we have five witnesses before us.

We have Brigitte Alepin. Welcome again.

We have Professor Arthur Cockfield from Queens University.

From the organization Canadians for Tax Fairness, we have Mr. Dennis Howlett. Welcome back.

By video conference from Washington, D.C., we have Mr. David Rosenbloom.

Mr. Rosenbloom can you hear me okay?

[Murray Rankin, NDP, Victoria, BC]

Okay.

The other thing we've talked about, aside from automatic information exchange, is the beneficial ownership rules. You're familiar with the notion of trying to find out who really is behind these shell companies that do business abroad and hide their money in tax havens.

Under the general provisions of Bill S-17, of article 25 and the like, which deal with information exchange, and the general broad rules, would it be possible without renegotiation to acquire beneficial ownership information?

[Murray Rankin, NDP, Victoria, BC]

I ask because some experts have said that they're really quite ineffective—and when we hear from them, I'm going to ask them this same question. “You don't know what to ask for, so how are you going to get anything back?” That's their simple position.

But you have no information. I'll ask the experts later.

I want to go back to the specifics of Bill S-17. You referred, for example, to Serbia and Poland, Mr. Castonguay, as being two countries with which we may be able to have automatic information exchange with. I just don't know how it works, if you will, bureaucratically or administratively.

We've negotiated this open agreement contemplating tax information exchange, as in article 25. We say that we'd like to now move to automatic exchange. They say they don't want to. What happens then?

[Alain Castonguay, Senior Chief, Tax Treaties, Department of Finance]

Thank you, Mr. Chair.

I would like to thank the committee for inviting us to appear this morning to talk about Bill S-17, Tax Conventions Implementation Act, 2013.

Canada has one of the most extensive networks of income tax treaties in the world, with 90 tax treaties currently in force. Bill S-17, once into force, will increase this number to 93, by implementing new treaties with Hong Kong, Namibia and Serbia. Bill S-17 will also implement a revised treaty with Poland, which will replace the existing treaty which dates back to 1987.

Further, Bill S-17 contains a protocol with Luxembourg and an agreement with Switzerland. In both cases, the agreements modify the provisions of the existing treaties with these countries relating to the exchange of tax information to ensure that they are consistent with the Organization for Economic Cooperation and Development standard for tax information.

Canada's tax treaties are generally patterned on the OECD model tax convention, modified to reflect the particularities of the Canadian tax system. Internationally, most tax treaties are generally patterned on the OECD model as well. Tax treaties are used for two main purposes: first, to eliminate tax barriers between two jurisdictions in order to promote bilateral trade and investment; and second, to prevent tax avoidance and evasion by encouraging the exchange of information for tax purposes between taxation authorities.

Allow me to expand slightly on each of these objectives and explain how the agreements in Bill S-17 support these objectives.

International double taxation can impose a barrier to cross-border trade and investment. Tax treaties prevent double taxation by providing greater certainty to taxpayers regarding their potential liability to tax in a foreign jurisdiction, by allocating taxing rights between two jurisdictions so that the taxpayers are not subjected to double taxation; by reducing the risk of "burdensome" taxation, which l will explain in a moment and which may arise because of high withholding taxes paid on certain payments; and, finally, by ensuring that taxpayers will not be subject to discriminatory taxation in the foreign jurisdiction.

Under our own domestic laws, payments of dividends, interest, and royalties made to non-residents are subject to rates of withholding equal to 25 per cent of the gross amount paid. Many of Canada's trading partners also have similar rates of withholding. 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 if the income were taxed on a net basis. That's what I referred to earlier as “burdensome” taxation, which is clearly an impediment to cross-border trade and investment.

Tax treaties alleviate this burden by setting maximum levels of withholding tax that a treaty partner may impose on these types of payments or by providing, in some cases, for taxation exclusively in the state of residence. For example, the tax treaty with Hong Kong would impose limitations on the rates of withholding to 5% on direct dividends, 15% on other dividends, and 10% on non-arm's-length interest and on royalties.

Hong Kong is one of the largest financial markets in Asia in terms of trade and an important destination of Canadian foreign direct investment. Once the treaty is in force, it is expected that it will further encourage trade and investment and solidify our bilateral links.

The second objective that I mentioned at the outset was the prevention of tax avoidance and evasion. A key element our tax treaties is the provision authorizing the exchange of information between the respective tax authorities. Better transparency and access to information are important tools for tax authorities to enforce their own domestic tax law and to prevent international tax evasion.

In order to enhance Canada's network of information sharing, budget 2007 required that all of Canada's new tax treaties and revisions to its existing treaties would include the standard developed by the OECD for the exchange of information. The six agreements in Bill S-17 contain exchange-of-information provisions that are consistent with the OECD standard. In fact, two of the agreements in the bill with Luxembourg and Switzerland deal exclusively with the exchange of information. These provisions mandate the tax authorities of the treaty partners to exchange information relevant to the administration of each country's respective tax laws in conformity with the standard. The provisions also ensure that the effective exchange of information is not impeded by bank secrecy laws that may exist in the other country.

I mentioned at the beginning of my remarks that Bill S-17 would contribute to increasing the extent of our tax treaties network, but it is as important to revise our tax treaties and to update them, where necessary.

The treaty with Poland is a good example. The need to negotiate and sign a new treaty with Poland was the fact that the existing treaty between Canada and Poland was signed in 1987, in a much different economic context than today. The new treaty with Poland reflects Canada's new policies regarding maximum withholding tax rates on payments of dividends, interest, and pensions. Of course, the agreement includes the most recent standards when it comes to the exchange of information.

Mr. Chair, this concludes my remarks. I am available to the committee to answer any questions.

Thank you.

[The Chair, Conservative, James Rajotte]

I call to order meeting number 129 of the Standing Committee on Finance.

Our orders of the day, pursuant to the order of reference of Monday, June 10, 2013, are for the study of 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.

Colleagues, I want to thank all of you for being here on very short notice. I sincerely appreciate it.

I also want to thank our guests, both here in Ottawa and by video conference, for appearing on very short notice. It is very much appreciated by our committee.

We have a three-hour meeting scheduled, from 11 till 2, and we are going to hear from officials from the Department of Finance first. Then we will have questions from committee members. I expect this will take 30 minutes minimum, or maybe a little longer. Then we will ask our witnesses to come forward and present their opening statements, and then we'll have questions from members.

At the time when members want to go to clause-by-clause consideration of the bill, they will indicate that to me, and we will do that.

For the other witnesses who are here with us and by video conference, you'll be able to hear the officials from the Department of Finance present their rationale for this bill as well.

First of all, from the Department of Finance, we have Mr. Ted Cook, who has been before our committee many times recently.

Welcome back to the committee, Mr. Cook.

We also have Monsieur Alain Castonguay.

Welcome to the committee.

Mr. Castonguay, I believe you have the opening statement for the officials. Then we'll have questions from members.

Please begin.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this time last week, I said that I hoped to have a substantial list of accomplishments to report to the House. Indeed, I do.

In just the last five days, thanks to a lot of members of Parliament who have been here sitting late at night, working until past midnight, we have accomplished a lot. Bill C-60, the economic action plan 2013 act, no. 1, the important job-creating bill, which was the cornerstone of our government's spring agenda, passed at third reading. Bill S-8, the safe drinking water for first nations act, passed at third reading. Bill S-2, the family homes on reserves and matrimonial interests or rights act, passed at third reading. Bill C-62, the Yale First Nation final agreement act, was reported back from committee and was passed at report stage and passed at third reading. Bill C-49, the Canadian museum of history act, was reported back from committee. Bill C-54, the not criminally responsible reform act, was reported back from committee this morning with amendments from all three parties. Bill S-14, the fighting foreign corruption act, has been passed at committee, and I understand that the House should get a report soon. Bill S-15, the expansion and conservation of Canada’s national parks act, passed at second reading. Bill S-17, the tax conventions implementation act, 2013, passed at second reading. Bill S-10, the prohibiting cluster munitions act, passed at second reading. Bill S-6, the first nations elections act, has been debated at second reading. Bill C-61, the offshore health and safety act, has been debated at second reading. Bill S-16, the tackling contraband tobacco act, has been debated at second reading. Finally, Bill C-65, the respect for communities act, was also debated at second reading.

On the private members' business front, one bill passed at third reading and another at second reading. Of course, that reflects the unprecedented success of private members advancing their ideas and proposals through Parliament under this government, something that is a record under this Parliament. This includes 21 bills put forward by members of the Conservative caucus that have been passed by the House. Twelve of those have already received royal assent or are awaiting the next ceremony. Never before have we seen so many members of Parliament successfully advance so many causes of great importance to them. Never in Canadian history have individual MPs had so much input into changing Canada's laws through their own private members' bills in any session of Parliament as has happened under this government.

Hard-working members of Parliament are reporting the results of their spring labours in our committee rooms. Since last week, we have got substantive reports from the Standing Committee on Public Accounts, the Standing Committee on Foreign Affairs and International Development, the Standing Committee on Agriculture and Agri-Food, the Standing Committee on Health, the Standing Committee on Procedure and House Affairs, and the Standing Committee on Government Operations and Estimates.

We are now into the home stretch of the spring sitting. Since I would like to give priority to any bills which come back from committee, I expect that the business for the coming days may need to be juggled as we endeavour to do that.

I will continue to make constructive proposals to my colleagues for the orderly management of House business. For example, last night, I was able to bring forward a reasonable proposal for today's business, a proposal that had the backing of four of the five political parties that elected MPs. Unfortunately, one party objected, despite the very generous provision made for it with respect to the number of speakers it specifically told us it wanted to have. Nonetheless, I would like to thank those who did work constructively toward it.

I would point out that the night before, I made a similar offer, again, based on our efforts to accommodate the needs of all the parties.

Today we will complete second reading of Bill S-16, the tackling contraband tobacco act. Then we will start second reading of Bill C-57, the safeguarding Canada's seas and skies act.

Tomorrow morning we will start report stage of Bill C-49, the Canadian museum of history act. Following question period, we will return to the second reading debate on Bill S-6, the first nations elections act.

On Monday, before question period, we will start report stage and hopefully third reading of Bill C-54, the not criminally responsible reform act. After question period Monday, we will return to Bill C-49, followed by Bill C-65, the respect for communities act.

On Tuesday, we will also continue any unfinished business from Friday and Monday. We could also start report stage, and ideally, third reading of Bill S-14, the fighting foreign corruption act that day.

Wednesday, after tidying up what is left over from Tuesday, we will take up any additional bills that might be reported from committee. I understand that we could get reports from the hard-working finance and environment committees on Bill S-17 and Bill S-15 respectively.

Thereafter, the House could finish the four outstanding second-reading debates on the order paper: Bill C-57; Bill C-61; Bill S-12, the incorporation by reference in regulations act; and Bill S-13, the port state measures agreement implementation act.

I am looking forward to several more productive days as we get things done for Canadians here in Ottawa.

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

Mr. Speaker, it is nice to have that level of civility. I congratulate my friend across the way.

Before asking the usual Thursday question and before the government House leader across the way starts to talk about how he has been able to abuse Parliament over the past week, I would like to make a small observation for all those listening.

Of all the bills I am sure he is about to mention that are important, not a single bill passed through this legislative process in anything resembling a normal fashion. Bills S-8, S-15, S-17, S-2, S-6, S-10, S-16, C-56 and C-60, every single bill we have debated in the past week, operated under time allocation. I might parenthetically add that seven of them came from the Senate. It seems like a strange place for the government to get its agenda: a bunch of unelected, under-investigation senators, but so be it. It is the government's choice.

We tried to work with the government to find ways to allow the House to debate bills and to do so expediently. A good example is the Sable Island as a national park bill. For example, we offered up about five or six speakers who wanted to address the merits of the bill, which would have allowed the passage of that bill after they had spoken. The reaction from the leader from the other side was to move time allocation, which in fact ended up taking up more time in the House than the offer the NDP had made would have taken.

The Conservatives' strategy is sometimes bizarre. In fact, it is hard to figure out whether it is a strategy or not. I would like the Conservative member to enlighten me on this, even though the Conservatives' responses have no merit.

We have spent more than 14 hours debating and voting on time allocation motions in the past two weeks alone. I find it ironic that the government allots only five hours of debate to the content of the bill under time allocation, when the vast majority of our time is spent debating and voting on the time allocation motions and not on the bills. That is the Conservatives' way of doing business.

When will the Leader of the Government in the House of Commons learn that a hammer is not the only tool available for getting the work done?

Could the leader of the government tell us what his plans are for this week and the week following?

Tax Conventions Implementation Act, 2013

[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.

[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.

[Chungsen Leung, Conservative, Parliamentary Secretary for Multiculturalism]

Mr. Speaker, I am thankful for this opportunity to speak at second reading of Bill S-17.

As members know, this bill would implement Canada's recently concluded tax treaties with Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. These new and updated fees would augment Canada's strong network of tax treaties.

Indeed, currently Canada has comprehensive tax treaties in place with 90 countries, one of the world's largest network of bilateral tax treaties. This is an important feature to Canada's international tax system, a feature that is key to our ability to compete.

As part of Canada's ongoing effort to update and modernize our network of income tax treaties, Bill S-17 would achieve two important objectives.

First, it would help combat tax evasion by ensuring Canada works with other countries to stop tax cheats. Clearly, I would hope that all parliamentarians and Canadians would agree that everyone should pay their fair share of taxes.

Second, it would help encourage global trade by preventing double taxation.

In my time today, I would like to focus specifically and in greater detail on what the tax treaties with Namibia, Serbia, Poland, Hong Kong mean.

First I will speak about Namibia.

Canada's proud and active engagement with Namibia dates from 1977 to 1982 negotiations on the United Nation settlement plan. Canada actively supported Namibia's independence in 1989-90 and provided military peacekeepers, police monitors, election supervisors and technical experts.

On the global stage, there are a number of areas in which Canada and Namibia actively co-operate. These include the Kimberley process, to control the trade in conflict diamonds, initiatives to control high seas overfishing and the commercial seal harvest.

Bilateral merchandise trade between Canada and Namibia was $238.2 million in 2011, with Canadian imports from Namibia accounting for $230.3 million of that, largely uranium oxides and Canadian exports to Namibia include cereals and machinery.

There are significant opportunities for investment in Namibia. Currently, the major focus for Canadian investors is mining, particularly diamonds and uranium. Cumulatively, Canada's foreign direct investment in Namibia reached $20 million at the end of 2010, most of which was in the mining sector.

The impetus for the convention with Namibia, signed on March 25, 2010, the official term for tax treaty, was to contribute to the elimination of tax barriers to trade and investment between Canada and Namibia and to help solidify the existing economic and financial dealings between the two countries.

It is consistent with the government's commitment, as announced in the 2008 Speech from the Throne, to seek out new investment and trade opportunities for Canadians and to promote greater global prosperity.

The convention generally follows the pattern of other tax treaties already concluded by Canada. Accordingly, it generally follows the format and language of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development, OECD.

Most countries, including Canada and Namibia, tax their residents on their worldwide income. Moreover, where a resident of a particular country, known as the “country of residence”, derives income from sources in another country, for example, from a business located there, it is not uncommon for that other country, known as the “country of source”, to subject that income to tax.

The convention recognizes this international taxation dynamic and sets out under what circumstances and to what extent Canada and Namibia may tax the earnings of one another's residents.

The convention also provides that where income, profit or gains may be taxed in both countries, the country of residence, if it taxes, is to allow relief from double taxation against its own tax for the tax imposed by the country of source.

In the case of Canada, effect is given to the relief obligations arising under the convention by application of the general foreign tax credit system provisions of Canada's domestic law or relevant exemption provisions of the law where applicable.

Again, let me recap and expand the highlights of the convention.

The convention sets a maximum withholding tax rate of 5% for dividends paid to a company that holds directly at least 25% of the share capital of, or controls directly or indirectly at least 25% of the voting power in the company that pays the dividend and a maximum rate of 15% in all other cases.

The convention also limits to 10% the maximum withholding rate on interest and royalties, except that no tax may be withheld on interest paid to the government or a pension fund or in respect of debt finance by Export Development Canada or a debt of a government.

It also includes a provision that limits the potential for double taxation arising from the application of Canada's taxpayer migration rule without restricting Canada's ability to tax its departing residents on their pre-departure gains. It also includes the latest standard of the OECD on exchanges of tax information in order to assist Canadian tax authorities in the administration of the Canadian tax law.

Let me talk about Serbia. Relations between Canada and Serbia, formerly with Montenegro, part of the Federal Republic of Yugoslavia, and the state union of Serbia and Montenegro, redeveloped quickly following the overthrow of Slobodan Milosevic's regime in October 2000. In 2006, Canada welcomed Serbia's admission into NATO's partnership for peace program and to La Francophonie as an observer.

Canada is encouraged by the democratic and economic transformation of Serbia and its commitment to achieving greater integration and co-operation with the European Union and its institutions. The international community, including Canada, is helping Serbia make a successful transition to a free market democracy, develop strong regional co-operation with its neighbours and maintain its own citizens' security. Canada and Serbia enjoy strong people-to-people relationships and benefit from cultural and academic exchanges. In 2006, Canada and Serbia signed a readmission agreement and later that year an air transport agreement, which allowed for the resumption of direct flights between the two countries in June 2007.

In 2010, the two countries signed a memorandum of understanding on the prosecution of war crimes, crimes against humanity and genocide.

Canada-Serbia trade has increased almost tenfold over the past five years. In 2009, bilateral trade in goods totalled just under $60 million. In addition, Canada's investment commitments in the region, including Montenegro, reached more than US$500 million in 2007 and have been increasing steadily. Important Canadian investments have recently been made or committed in the areas of real estate and construction, tourism, agriculture, informatics, and energy and mining, among others. Opportunities for further Canadian investment include road, rail and urban transportation infrastructure upgrading and construction.

As such, the impetus for the convention with Serbia signed on April 27, 2012, which is the official term for the tax treaty, was to contribute to the elimination of tax barriers to trade and investment between Canada and Serbia and to help solidify the economic links between the two countries. It is also consistent with the Canadian government's commitment, as outlined in the 2008 Speech from the Throne, to seek out new investment and trade opportunities for Canadians and to promote global prosperity.

Like Namibia, the convention generally follows the pattern of other tax treaties already concluded by Canada. Accordingly, it generally follows the format and language of the model tax convention on income and on capital of the Organisation for Economic Co-operation and Development.

Also like Namibia, most countries, including Canada and Serbia, tax their residents on their worldwide income. Moreover, as I described earlier, where a resident of a particular country derives income from sources in another country it is not uncommon for that other country to subject that income to tax. The convention recognizes this international taxation dynamic and sets out under what circumstances and to what extent Canada and Serbia may tax the earnings of one another's residents.

Let me recap the highlights from the convention: it sets the maximum withholding tax rate of 5% on dividends paid to a company that controls directly at least 25% of the voting power of the company that pays the dividends and a maximum withholding tax rate of 15% will apply to dividends paid in all other cases.

The convention also limits to 10% the maximum withholding tax rate on interest and royalties, except that no tax may be withheld on interest paid to the government or the central bank. The convention also limits to 15% the maximum withholding tax rate on payments of pension income.

Clearly, members will notice that the provisions for both Namibia and Serbia were very similar, if not identical, and this is an extremely important point as it demonstrates how routine and standard this legislation and its provisions are and what they represent.

However, I would like now to conclude by talking about Hong Kong and here we will notice some minor variations on what I have laid out for Serbia and Namibia. Let me first talk about Canada's special relationship with Hong Kong. Our bilateral relationship with Hong Kong reflects long-standing and comprehensive political, commercial and people-to-people ties.

I should also note that even though Hong Kong is a special administrative region of the People's Republic of China, it is governed under the “one country, two systems” approach set out in the Basic Law, a document often referred to as the Hong Kong mini-constitution. Under this approach, Hong Kong is guaranteed its own legislature, legal and judicial systems and economic autonomy under a capitalist system and a way of life for at least 50 years.

Overall, the Basic Law provides Hong Kong with a degree of autonomy. Indeed article 151 of the Basic Law provides that Hong Kong may on its own conclude and implement an agreement with foreign states in fields such as economic, trade and financial fields, including tax treaties.

Canada and Hong Kong enjoy good co-operation on a large range of topics including public health, legal matters, and trade and investment. Relations are further bolstered by formal agreement initiatives on issues such as mutual legal assistance in criminal matters, air services, film and television co-operation and Internet learning. Canada and Hong Kong also enjoy productive co-operation in the context of multilateral organizations to which they are both members such as the Asia-Pacific Economic Co-operation forum, APEC, and the World Trade Organization.

In terms of trade with Canada, Hong Kong is the third largest financial market in Asia and an important source of foreign direct investment to Canada. As of 2011, Hong Kong was the second largest destination in Asia after Japan for Canadian foreign direct investment, larger than both China and India. Hong Kong is Canada's tenth largest export market and is also Canada's third largest export market in the world for beef and fourth largest market for fish and seafood.

In addition to natural resources and agricultural products, Canadian exports to Hong Kong include everything from telecommunications devices to train signalling systems, to educational and financial services. I should also note that the Canadian Chamber of Commerce in Hong Kong is one of the largest Canadian chambers outside Canada with over 1,200 members. There are over 180 Canadian companies in Hong Kong, 15 of which have established their regional headquarters in the city with a further 33 maintaining regional offices and 44 more with local offices.

Like Serbia and Namibia, the impetus for the agreement with Hong Kong signed on November 11, 2012, was to contribute to the elimination of tax barriers to trade and investment between Canada and Hong Kong and to help solidify the economic links between the two jurisdictions.

The new agreement also generally follows the pattern of other tax treaties already concluded by Canada and the OECD model, like Serbia and Namibia. The agreement also provides that where income, profits or gains may be taxed in both countries, the country of residence is to allow double tax relief against its own tax for the tax imposed by the country of source like Serbia and Namibia. The one variation is on resident taxation.

Unlike most jurisdictions, which tax their residents on their worldwide income, Hong Kong administers a territorial tax system under which residents and non-residents are taxed only on income arising in, or derived from, Hong Kong. Consequently, the residence articles of the treaty as regards Hong Kong reflects this state of affairs.

Capital gains are generally not taxable in Hong Kong, unless they are derived from a transaction in the nature of trade, in which case they are taxed as ordinary income at the regular applicable corporate or personal income tax rate. Moreover, there is no withholding tax imposed in Hong Kong on interest payments or dividend distributions made to non-residents.

Royalty payments made to non-residents are deemed to be taxable in Hong Kong if such payments are for the use of, or a right to use intangibles in Hong Kong or outside Hong Kong and where such royalty payments are deductible for income tax purposes in Hong Kong. In such cases, a withholding tax of 17.5% is imposed on 30% to 100% of the gross amount of the royalty payment.

For these reasons that I have highlighted today related to the three countries I have mentioned and many others, Bill S-17 will increase our ability to compete and to harness the opportunities of a vibrant, modern global economy. I urge the House to support this bill.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, I have to reject the premise on which my hon. colleague placed his question. First, he talked about $90,000 of taxpayer money. The understanding of the House, to the best of our knowledge and the information we have, is that was paid by a private individual. It is being addressed through audits and through various sources, including the ethics commissioner, and those issues will be addressed.

I hear him on living in glass houses. The only problem is that tonight we are living in a glass House of Bill S-17 and talking about tax treaties. Quite frankly, his question has no bearing whatsoever on that.

The House resumed consideration of the motion that 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, be read the second time and referred to a committee.

[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.

[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.

[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?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, my question for the member for Souris—Moose Mountain is this.

I am well aware that we are here tonight to debate Bill S-17 and that it deals with tax treaties. I have not heard a single member of this place suggest that they do not want to vote for it. I find it strange that on a treaty and a bill of no consequence, which everyone supports, we have time for debate and we have committee hearings, but on something that threatens the sovereignty of Canada, such as the Canada-China investment treaty, we have neither had hearings nor adequate time for debate.

Would my hon. friend from Souris—Moose Mountain like to join me in urging that we still have time for debate before that treaty is ratified?

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, it gives me pleasure to rise today in the House to speak to Bill S-17 the tax conventions implementation act, 2013, at second reading. This is technical legislation that would implement Canada's recently concluded tax treaties with Namibia, Serbia, Poland and Hong Kong, as well as tax agreements with Luxembourg and Switzerland.

The conversation has gone far and wide and far beyond the extent of the treaties and what we are discussing today with respect to the legislation itself.

Bill S-17 is part of Canada's ongoing efforts to update and modernize its network of income tax treaties with other countries, which is one of the most extensive of any country in the world.

Canada has comprehensive tax treaties in place with 90 countries, and our government is hard at work on agreements with other jurisdictions in connection with tax evasion, if we want to call it that. The double taxation that we spoke of relates to occurrences between countries and to movements of income, capital and properties between countries.

I want to make it clear that Bill S-17 does not represent any new or significant change in policy and should be considered standard and routine, but very important, legislation. In fact, tax treaties covered by this bill, like their predecessors, are patterned on the OECD model tax convention, which is accepted by most countries around the world. The pattern has been set, and these treaties are negotiated along that line.

As respected international tax commentator Jeffrey Owens, current senior policy adviser at Ernst & Young and former director for tax policy at the OECD, has noted, “Quite simply, the OECD model has established itself as the means of settling the most common problems that arise in the field of international taxation”.

Once again I would remind members we are talking about international taxation and not taxation within the country and the residents of that country itself. Therefore, it goes without saying that the provisions in these particular treaties comply with international norms and are based on standards that are generally acceptable.

The tax treaties in this bill have been designed with three goals in mind.

The first is to prevent double taxation and provide a level of certainty about tax rules that will apply to particular international transactions. That is important. Every business wants to know what the rules are. Businesses want to have a measure of certainty and know what to expect, and of course we want to do away with double taxation to ensure that appropriate investments take place.

The second goal is to prevent avoidance and evasion of taxes in various forms of income flows between the treaty partners. If the income flow is simply done to avoid tax, it needs to be dealt with.

The third goal is to facilitate international trade and investment, both incoming and outgoing.

These goals are consistent with the findings of the 2008 report of the advisory panel on Canada's system of international taxation, convened by our government to make recommendations to enhance Canada's international tax advantage. Not only is Bill S-17 consistent with the findings of that report, but the panel's observations helped clarify the importance of today's legislation for the Canadian economy. This allows for investment to take place, it allows for jobs to be created, and it allows for the long-term prosperity of Canada.

According to the report:

Canada's system of international taxation is important to our country's competitiveness. At the global level, competitiveness is crucial to attracting high-value activities, spurring innovation, and creating skilled jobs. ... Improving the international tax system will enhance Canada's advantage to the benefit of all Canadians.

I will speak further about this legislation's specific objectives, but first I would like to highlight how the tax treaties help contribute to a competitive tax system in Canada.

As members will know, our government is committed to expanding Canada's network of tax agreements with other countries. Better transparency and information exchange for tax purposes are critical to ensuring that Canadian taxpayers report their income earned from all sources and pay the right amount of tax in Canada.

We are serious about combatting tax evasion through the negotiation of tax treaties and tax information exchange agreements, sometimes known as TIEAs.

Since 2007, our government has brought into force 16 such agreements, signed three others and is actively negotiating with 11 other jurisdictions, including negotiations launched last year with Panama. Not only that, but we have provided the Canada Revenue Agency with even more tools to conduct international tax audits and enforcement.

As a direct result of action taken by our government, Canada continues to contribute actively to the efforts of both the OECD global forum on transparency and exchange of information and the G20, in order to further support the effective implementation of the OECD standard by all jurisdictions.

Our government understands the importance of open markets and full participation in the global economy and has shown continued leadership on the world stage by opposing protectionism and trade-restrictive measures. Canada believes open markets create jobs and economic growth for people around the world.

Indeed, the advisory panel identified the importance of trade as a key driver in improving Canada's system of international taxation. As the report noted:

Cross-border business investment has become central to the world economy. Global two-way trade is important to Canada’s prosperity, as it is to that of other countries. New competitors are emerging, notably from developing economies. ... Canadian businesses need to be able to compete with them for investment on both the outbound and inbound fronts.

To support Canadian business investment abroad, attract foreign business investment at home, and strengthen our open economy, tax policy must keep pace with global trends.

Our government strongly supports cross-border trade and investment, but we must ensure that cross-border investment is not used to avoid taxes with complicated tax schemes. In this spirit, the advisory panel identified a type of cross-border transaction, generally referred to as “foreign affiliate dumping”, as being abusive. These kinds of transactions reduce the Canadian tax base without providing any significant economic benefit to Canadians and need to be dealt with by legislation.

The panel recommended that a targeted measure be introduced to curtail these transactions while ensuring that legitimate transactions are not affected.

Foreign affiliate dumping transactions often involve a Canadian subsidiary using borrowed funds to acquire shares of a foreign affiliate from its foreign parent company.

Consistent with the advisory panel's recommendation, economic action plan 2012 announced rules to curtail foreign affiliate dumping transactions while at the same time preserving the ability of Canadian subsidiaries of foreign parents to undertake legitimate expansions of the Canadian-based businesses.

What we are trying to do is set the rules to ensure that people pay the tax they ought to pay and are not double-taxed, but also that they are not using means or mechanisms to create expenses or obviate income so that they do not have to pay taxes.

The new foreign affiliate dumping rules, where certain conditions are met, deal with deemed dividends to be paid by a Canadian subsidiary to its foreign parent to the extent of any debt funding incurred by the Canadian subsidiary, or other non-share consideration given by the Canadian subsidiary, for the acquisition of the shares of a foreign affiliate. Any dividend that is deemed a dividend in that fashion would be subject to non-resident withholding tax, which would generally be reduced to 5% of the gross amount of a dividend by an applicable tax treaty.

Going forward, our government will continue to monitor developments in this area to determine whether further action is required.

Now I will return to the measures contained in the legislation before us today and speak further to the importance of tax treaties, a vital part of the government's overall approach to improving the tax system. Indeed, they are an integral element of our economic action plan to bring jobs, growth and long-term prosperity to all Canadians.

Tax treaties like those in Bill S-17 directly affect cross-border trade in goods and services with our tax treaty partners, which in turn impacts Canada's domestic economy. In fact, over 40% of Canada's annual GDP can be attributed to exports. Moreover, Canada's economic wealth each year also depends on foreign direct investment as well as inflows of information, capital and technology.

In other words, the tax treaties contained in Bill S-17 would benefit Canadian businesses and individuals with operations and investment in the countries covered by this legislation, not only for their investments abroad but also for those investments that come into our country and bring all of what I mentioned with them.

Not only that, but tax treaties foster an atmosphere of certainty and stability for investors and traders that can only serve to enhance Canada's economic relationship with each country.

Another important aspect of these treaties is that they include a mechanism to settle problems encountered by taxpayers, in particular when double taxation arises. It is very important that if there is a dispute, there is a way to settle it, and there is provision in these agreements as to how that might happen, not only with respect to the taxpayer but also with the two countries involved as well. Under this mechanism, taxpayers can bring to the attention of taxing authorities issues that arise from the interaction of our tax system with that of the other treaty partner and seek a resolution to the issue.

Eliminating administrative difficulties and unnecessary tax impediments is an important priority for the Government of Canada and an important component of international tax treaties. In short, these treaties will provide individuals and businesses in Canada and other treaty partner countries with predictable and equitable tax results in their cross-border dealings, which can bring only positive outcomes for the Canadian economy.

As is common for tax treaties legislation, Bill S-17 would address double taxation issues, which occur internationally when two or more countries impose taxes on the same income for the exact same time period. Obviously that can happen, given the tax regimes of each country, and when it does, it needs to be dealt with. This would obviously be extremely unfair. Double taxation is not something that anyone would like and no parliamentarian would endorse, except, perhaps, the NDP, which is interested in spending and taxing on just about everything, not to mention the $26-billion carbon tax.

Addressing this issue, it is an non-partisan one. It is very common for tax treaty legislation. I want to underline that by reading verbatim from a speech given by the current member for Scarborough—Guildwood, who was the parliamentary secretary to the minister of finance under the former Liberal government in 2004. I will quote at some length, because I think he establishes the premises of why these treaties are as important as they are. He said:

The first, and probably the most important, objective of tax treaties is to avoid double taxation and provide a level of certainty about the tax rules that apply to international transactions.

Again, I want to re-emphasize that we are talking about international transactions. The member continued:

Relief from double taxation is so very necessary and deserves to be discussed in some detail. The potential arises when a taxpayer lives in one country and earns income in another. Without a tax treaty, both countries could claim tax on the income without providing the taxpayer with any measures of relief for the tax paid in the other country. This is simply unfair.

To alleviate the potential for this happening, a tax treaty between the two countries allocates taxing authority with respect to a given item of income in one of three ways: first, the income may be taxed exclusively in the country in which it arises; second, it may be taxed in the country in which the taxpayer resides; or, it may be taxable in both the source country and the residence country, with relief from double taxation provided in some form, usually the country of residence.

The member was saying that there are a lot of factors at play and we want to establish that these are the rules of the game. If a person earns income, he or she will be taxed only once, in one place, by one country and if that does not happen, here is the mechanism that can correct that.

I also want to speak about withholding taxes, because a lot of this deals not only with earning income, but with dividends, the disposition of shares, the disposition of capital property and so on. Another way to ensure that double taxation does not exist is to lower or reduce something called "withholding taxes". This is another common feature of tax treaty legislation. Obviously, it can be burdensome, with a lot of red tape and hassle, not to mention tying up huge sums of money by virtue of withholding.

These taxes are levied in one country on a certain income earned in that country and are paid to residents in another country. Again, I am quoting from the member for Scarborough—Guildwood from when he was the parliamentary secretary to the minister of finance under the formal Liberal government, who said:

Withholding taxes are a common feature of the international taxation system. In Canada's case, they are levied on certain payments that Canadian residents make to non-residents. These payments include interest, dividends and royalties, for example. Withholding taxes are often levied by a country on the gross amount of certain types of income paid to non-residents and such taxes normally represent the non-resident's final obligation with respect to income tax payable in that country with respect to that particular income.

There are obligations in the other country, there is withholding tax here, usually equally to what might be paid over there, when there are fairly large amounts of money being held. Tax treaties are important because they reduce the rates of withholding taxes and help to avoid double taxation.

Specifically with regard to Bill S-17, the treaties with Namibia, Serbia, Poland and Hong Kong provide for a maximum withholding tax on dividends between the affiliated companies at 5%. In respect to all other dividends, the treaties in Bill S-17 provide for a rate of withholding tax set at 15%. I should note that reductions also apply in respect of interest and royalties.

Our government is working with other countries to address the problem of double taxation. Another problem it is working on is to address tax evasion and avoidance, both tremendously unfair and steps that are harmful to our economy. The loss of revenue resulting from tax avoidance and evasion has the potential to adversely affect the efforts of governments in reaching important policy objectives.

Of course there will be certain sharing of information between the countries with respect to tax evasion, and that will help. Not only that, but tax evasion obviously places a disproportionate share of tax burden on honest taxpayers as has been mentioned in the House here earlier today. The government recognizes that one key component of the defence against international tax avoidance and evasion is through improved and expanded mechanisms for international co-operation and information sharing.

To facilitate that goal, treaties like those found in Bill S-17 permit the exchange of tax information between revenue authorities in accordance with standards developed by the OECD, and in doing so help them to identify cases of tax avoidance and evasion, and to act on them.

In conclusion, I would like to remind all members that Bill S-17 is not controversial, nor does it contain any surprises or contentious issues. There is little doubt that its benefits are clear. The treaties covered in this proposed legislation will promote certainty, stability and a better business climate for taxpayers and businesses in Canada and in these treaty countries.

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

They provide the rules of the road for foreign investment, for foreign movement of capital and income. This is something that investors and business would expect Parliament to deal with. It is important that Parliament deals with it at this stage, because the take-effect date is someplace down the road. We would like to see this particular legislation passed into law before the summer break.

I would ask all members to support this legislation.

[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.

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

Mr. Speaker, clearly Bill S-17 is looking to improve on the situation we currently have and looks forward to dealing with the various tax situations between the countries to capture more of the taxes and return them to Canada.

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

Mr. Speaker, hopefully we can bring this discussion back to the bill that we are looking at.

I appreciate this opportunity to discuss 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.

Before I begin, I would like to take this opportunity to thank all the members of the banking, trade and commerce committee in the Senate for their thorough and timely review of this piece of legislation recently. I would also like to extend my thanks to the Minister of State for Finance for his appearance at the Senate committee as well as the other officials and witnesses for their attendance. Their insightful testimony on this subject, which can often be technical, was greatly appreciated.

I think I am speaking for all in saying that the information they provided was invaluable in helping Canadians obtain a clear understanding of how Canada's network of taxes, treaties and information exchange agreements functions. As Cyndee Cherniak of LexSage Professional Corporation, a leading international trade firm in Canada, told the Senate banking, trade and commerce committee earlier this year, and I quote:

Bill S-17 is a good law and should be supported....Tax treaties facilitate trade. Tax treaties are symbols of cooperation, trust and friendship between nations. Tax treaties prevent double taxation.... They improve stability, transparency, fairness, procedural fairness and tax certainty relating to international trade and transactions. Tax treaties are good for Canadian businesses with activities abroad through branches, subsidiaries and other business enterprises. Tax treaties are good for individuals, employers, directors of corporations, students, shareholders, et cetera.

I could not agree more. Tax treaties are a vital part of a government's overall approach to improve the tax system.

Currently, Canada has comprehensive tax treaties in place with 90 countries and continues to work on agreements with their jurisdictions. Bill S-17 is part of Canada's ongoing effort to update and modernize our network of income tax treaties, which helps prevent double taxation and tax evasion. In the past, Parliament adopted many similar tax treaties. In fact, beginning in 1976, governments, both Liberal and Conservative, brought forward 30 such pieces of legislation, and most recently, those concerning Colombia, Greece and Turkey. I should note that Canada maintains one of the world's largest networks of bilateral tax treaties. This is an important feature of Canada's international tax system, a feature that is key to promoting our ability to compete.

At the same time, the system must ensure that everyone pays their fair share of taxes. It is not appropriate that some corporations, both foreign-owned and Canadian, take advantage of Canada's tax rules to avoid taxes and that some wealthy individuals use offshore jurisdictions to help them hide income and evade taxes. In all of these cases, working Canadians and small businesses, among others, are left having to pay more taxes than they otherwise should. This is simply not fair.

To detect and deter the concealment of income, the Canada Revenue Agency needs information from foreign governments. To this end, Canada supports the international consensus to encourage jurisdictions to meet and implement the Organisation for Economic Co-operation and Development standards for international tax information exchange. That standard is implemented under the bilateral tax treaties and tax information exchange agreements, like those being discussed today.

Here at home, our Conservative government continues to work hard to keep our tax system up to date and competitive so that Canada can remain a leading player in the global economy. Action in support of a more competitive tax system is essential to create an environment that enables Canada's visionary entrepreneurs and industries to excel and that does not stand in the way of their success. Moreover, tax treaties are an integral element of our plan to improve the standard of living of all Canadians.

Tax treaties, like those in Bill S-17, directly affect cross-border trade in goods and services with our tax treaty partners, which in turn impacts Canada's domestic economic performance.

Over 40% of Canada's annual gross domestic product can be attributed to exports. Moreover, Canada's economic wealth each year also depends on foreign direct investment as well as the inflows of information, capital and technology.

In other words, the tax treaties contained in Bill S-17 would benefit Canadian businesses and individuals with operations and investments in countries covered by this legislation. Tax treaties foster an atmosphere of certainty and stability for investors and traders that can substantially enhance Canada's economic relationship with each country.

Another important facet of these treaties is that they include a mechanism to settle problems encountered by taxpayers, in particular where double taxation arises. Under this mechanism, taxpayers can bring to the attention of taxation authorities issues that arise from the interaction of our tax system with that of other treaty partners and seek a resolution on the issue.

In short, tax treaties provide individuals and businesses in Canada and other treaty partner countries with predictable and equitable tax results in their cross-border dealings. This can only have a favourable effect on the Canadian economy.

Likewise, the tax treaties in the bill have been designed with three goals in mind: first, to facilitate international trade and investment; second, to prevent double taxation and provide a level of certainty about the tax rules that apply to particular international transactions; and third, to prevent avoidance and evasion of taxes on various forms of income flows between the treaty partners.

Today's legislation is part of Canada's ongoing effort to update and modernize its network of income tax treaties, which will help prevent taxation and tax evasion.

Let me go on to the issue of double taxation for a moment. Double taxation in an international sense arises as a result of imposition of taxes in two or more states on the same taxable income for the same period of time. This overlap between taxation by the country where the income is generated and taxation by the country where the taxpayer resides can have obvious adverse and unfair consequences for the taxpayer. Nobody wants to have their income taxed twice, nor should it be, but without a tax treaty such as those contained in today's bill, this is exactly what could happen.

Tax treaties ensure that double taxation relief is provided where both countries claim taxes on the same income. Tax treaties also allocate tax rights between two countries as a means of protecting taxpayers against potential double taxation. In some cases, the exclusive right to tax particular income is granted to the country where the taxpayer resides. This precludes taxation in the state of source and, therefore, double taxation.

For example, if a Canadian resident employed by a Canadian company were sent on a short-term assignment for, say, three months to any one of the treaty countries covered by the bill, Canada would have the exclusive right to tax that person's employment income. On the other hand, if the same person were employed abroad for a longer period of time, say one year, then the country where the person works could also tax the employment income. However, in this case under the terms of the tax treaty, through the foreign tax credit mechanism, Canada must credit that tax paid in the other country against the Canadian tax otherwise payable on the income. This is an example of how the allocation of taxing rights between countries and between bilateral tax treaties would ensure that individuals and businesses are taxed fairly.

One way to reduce the potential of double taxation is to reduce withholding taxes. These taxes are a common feature in international taxation. They are levied by a country on certain items of income earned in that country and paid to the residents of the other country. The types of income normally subjected to withholding taxes would include, for example, interest, dividends and royalties.

Withholding taxes are levied on the gross amount paid to the non-resident and represent the final obligation with respect to Canadian income tax. Without tax treaties, Canada usually taxes this income at the rate of 25%, which is a set rate under our own legislation for income tax.

Withholding tax rates in other countries are often as high or even higher. Tax treaties reduce rates for withholding taxes. For example, the treaties with Namibia, Serbia, Poland and Hong Kong in Bill S-17 would provide for a maximum withholding tax rate on dividends between affiliated companies at 5%. In respect to other dividends, those treaties would provide for a rate of withholding taxes set at 15%.

Reductions would also apply in respect of interest and royalties. Again, 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.

Moreover, these treaties would help to secure Canada's position in an increasingly competitive world of international trade and investment. Clearly, having modern international tax conventions, such as these contained in Bill S-17, is a key component of that goal.

Canada remains committed to maintaining a tax system that will continue to help Canadian businesses in their drive to be world leaders. Tax treaties like those in Bill S-17 would directly support cross-border trade in goods and services, which in turn helps Canada's domestic economic performance.

Moreover, Canada's economic wealth each year also depends on foreign direct investment, as well as inflows of information, capital and technology. In fact, during the committee's examination of this legislation, well-respected tax professional Nick Pantaleo, of PricewaterhouseCoopers, remarked that:

...a key objective of the Canadian government is to pursue new and deeper international trade and investment relationships.... In my view, tax treaties contribute toward the success of such global trading arrangements.

This is not surprising given that more than 60% of the Canadian economy and 1 in 5 jobs in Canada are generated by trade. 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 creating jobs for Canadians here at home. That is especially the case with the agreement with Hong Kong.

Our government considers Hong Kong a priority in Canada's global trade efforts. Hong Kong is our third largest financial market in Asia and an important source of direct investment. It is Canada's 10th largest export market, including everything from telecommunications devices to train signalling systems to educational and financial services.

An example of the importance of Hong Kong in our trade efforts is an agreement between Canada and Hong Kong for the avoidance of double taxation, which the Prime Minister announced when he was in Hong Kong last November.

Of course the region itself is a key market for us, which is why Canada is at the negotiating table for the trans-Pacific partnership, which would open up new markets and increase Canadian exports to fast-growing markets throughout the Asia-Pacific region.

Our government is also working hard to forge stronger links through such multilateral organizations such as the Asia-Pacific Economic Cooperation and the World Trade Organization to which Canada, China and Hong Kong all belong.

The Canada-Hong Kong tax treaty would truly foster an atmosphere of certainty and stability that would enhance Canada's economic relationship with Hong Kong.

As the Canadian Manufacturers and Exporters noted of the Hong Kong tax treaty included in Bill S-17:

Hong Kong holds tremendous potential for Canadian businesses looking to establish a strong presence in China and...across all of Asia, and this Agreement will help fulfill this potential....

(It) reduces barriers to two-way trade and investment between Canada and Hong Kong.

Listen to the words of the Investment Industry Association of Canada, again in reference to the Hong Kong tax treaty included in Bill S-17, who said it would expand:

....savings and capital flows between our two markets....

Moreover, the attraction of Canadian equities would benefit Canadian financial firms expanding their wealth management business in Hong Kong and, through Hong Kong, to a market of over one billion Chinese.

To conclude, the treaties covered in this proposed legislation would promote certainty, stability and a better business climate for taxpayers and businesses in Canada and in these treaty countries.

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

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, Bill S-17 deals with tax treaties, as we know, with a number of countries. It is an interesting collection: Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland.

However, relative to collecting on tax debt, I was prompted by the member's comments about cutting back on staff at CRA. I am wondering if he is familiar with the train of reports we have had since 2006 from the auditor general pointing out that the CRA seemed to have a very poor understanding of where the tax debt was and why it was rising. It was failing to use its risk assessment models properly. The auditor general, for years, has found that CRA staff tends to go after smaller debts, harassing what I think of as regular folks, and leaving aside the millionaires. The large, low-hanging fruit is with the millionaires. Does the hon. member have any comments on the pattern of CRA tax collection?

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

Mr. Speaker, I am pleased to rise to speak to Bill S-17. I would have been much happier if this did not come on the heels of another time allocation motion moved by the government.

The government does not want us to debate the principles of this bill. That is what I want to focus my comments on during the 20 minutes I have been given, because this aspect is extremely important. Today, by presenting Bill S-17, the government is telling us that it has everything all worked out.

The Senate had the chance to debate the bill, but I will not get into the credibility of senators for now. The Conservatives think that by introducing this bill, they are accomplishing something. The sad thing is that the opposite is true.

First, let us start off with the issue of what we are talking about here. We have had a number of Conservatives who have tried to raise the issue of tax debt. It is true that on any given occasion, in fact, in every one of the ridings of the Conservatives who are here today, about 6% of Canadians fall behind on their tax debt. As they are Canadians, they endeavour to catch up and pay their taxes. There are those who fall behind and they are Conservatives, Liberals and New Democrats. The important thing is that those individuals eventually catch up. That is part of the $29 billion in uncollected tax debt that is being paid back.

I would like to speak to a broader issue which is the issue of the uncollected tax debt that Revenue Canada is seemingly unable to follow-up on. My colleague from Surrey North mentioned a few minutes ago the issue of the government saying that it was going to take on tax havens and that it was getting that uncollected tax debt. However, at the same time it would be cutting cut one-quarter of a billion dollars out of Revenue Canada's overall expenditures, cut 3,000 employees and somehow this time, even though Conservatives have screwed up pretty well everything else they had over the last seven years, they would get it right.

The Auditor General had something to say about that in the report that came out this spring. It is important to note, when we talk about what the Auditor General referenced, that he has seen his department cut back severely under the government. The government does not seem to like independent thought around issues of financial accountability and fiscal transparency. Even though the Auditor General's department has been cut back, here is what he said:

The level of tax debt is driven by the economic climate, tax policy, taxpayer behaviour, and the Agency’s efforts to collect taxes in a timely manner. In Canada, 94 percent of individuals...pay their taxes to the Agency on time. However...there is always a balance of unpaid taxes...

Those taxes get paid later on. As I mentioned earlier, in every one of our ridings, about 6% of our constituents have fallen behind. For Conservatives to denigrate those people who are endeavouring to catch up is something that is quite disrespectful. However, the reality is in each and every riding we are looking at about 6% of Canadians who work to catch up.

However, the Auditor General found on the corporate sector it was actually 90% where the taxes that were owed were paid on time. Therefore, there is a much bigger problem in the corporate sector.

It gets worse when we talk about large tax debts. This is obviously why the Conservatives wanted to shut down debate on this. As we bring forward the pathetic Conservative record in terms of tax debt in the corporate sector, Conservatives are understandably embarrassed by their inability to put in place a tax sector that functions.

This is what the Auditor General said about the Canada Revenue Agency, and we are talking about the mega accounts of tax debt. He said:

When we reviewed the additional criteria for accounts over $10 million, we found that the Agency did not meet its targets for danger of loss reviews; they were either missing or not adequately documented in [about half]...the...accounts that required them. A danger of loss review is important, since it will allow the Agency to act quickly where the taxpayer may be disposing of assets instead of paying a tax debt.

That is very interesting. Among ordinary Canadian families, there is a fall of about 6%, but when we are talking about the large accounts, the $10 million accounts, Conservatives failed about half the time. That is fascinating. Half the time they failed. This is interesting, because when we talk about the overall issue of uncollected tax debt, it should be no surprise to any of us that the Conservatives' failure on this is one reason there has been a substantial increase in uncollected tax debt. You will recall, Mr. Speaker, that they have now slashed 3,000 of the positions of hard-working public servants in the Canada Revenue Agency, so it is going to get even worse.

In other words, in 2006, the Conservatives came into power, and there was about $18 billion in uncollected tax debt. What is it after seven years of the Conservatives mismanaging pretty well everything they touch? I would say that they cannot even run a peanut stand, but that actually would be doing a disservice to people who run peanut stands. We saw how they incredibly botched the F-35 debacle, with $8 billion moving up to somewhere around $40 billion, and apparently that was without engines. When we see that kind of fiscal mismanagement, we have to just shake our heads.

On uncollected tax debt, it is the same kind of thing. The Conservatives started with $18 billion, and after seven years of Conservative mismanagement, we are now up to $29 billion. That is an increase of 57% in uncollected tax debt. If people say they are surprised and cannot believe that the Conservative government would be this awful and ineffectual, and they ask why it is that there is that substantial increase, they would have to come back to the Auditor General's report. In the Auditor General's report, we see that even in the case of danger of loss reviews for accounts over $10 million, the Conservatives are simply incapable of getting the job done.

A very wealthy man owing $10 million, according to these Conservatives, will get off scot-free. It is not a problem if people owe millions of dollars. The Conservatives just say that it is fine, that they will slash the jobs of the people who are supposed to collect that money, because the Conservatives do not really care. That is why they have had a 57% increase in uncollected tax debt over the course of just a few years. My goodness. Since Conservative governments cost all Canadians so much in terms of quality of life and the fiscal mismanagement they are showing, we simply cannot afford too many more years of Conservatives. Fortunately, in 2015, Canadians will put an end to this, and they will be putting in place an NDP government that actually knows how to manage the tax system.

What do we mean when we talk about going beyond the uncollected tax debt? We have seen Conservative failure there. That is why the Conservatives prudently say, since the New Democrats would be talking about this for the next few days, that they will just invoke closure and shut down the debate so that hopefully, Canadians will not find out how badly they have botched the issue of uncollected tax and how much worse it will be because of the slashing and the cuts to the Canada Revenue Agency.

We have to ask about the money that has been put in tax havens. That has not even been calculated. We understand that. They have gone from $18 billion to $29 billion, an increase of 57%. That is the uncollected tax debt we know about. However, let us look at tax havens and the level of investment being pumped into tax havens. In 2011, about 24% of Canadian investment overseas went into tax havens. Going back a few years, it was in the single digits, but under the Conservatives, we have now moved to a situation where about a quarter of overseas investment goes into tax havens.

Given how badly the Conservatives have botched the issue of uncollected tax debt, one can imagine that the issue of tax havens is of major concern. However, what we have is a Conservative government that seems to be unwilling to deal with this fundamental issue. We are talking about tens of billions of dollars invested in tax havens overseas. The Conservatives just do not seem to care very much about that.

I have just a little aside. My grandmother was orphan. She came from England. She came to Canada to start a new life in her 20s. It was quite brave at the time. She had to take a ship across the Atlantic Ocean and take a train all the way across Canada. This was a young woman who decided that she wanted to start her new life in Canada.

She had an expression she loved to use. She would say that somebody who is not thinking very far ahead is being penny wise and pound foolish. Of course, that is a reference to English currency. Penny wise and pound foolish is what applies to this Conservative government.

It cut back and slashed $250 million from Revenue Canada. It slashed 3,000 positions and says that it is being penny wise. Yet it is being pound foolish when we see the billions of dollars of uncollected tax debt that has accumulated under the Conservative government and the tens of billions of dollars that are now flowing freely offshore into tax havens.

Members will recall that the NDP raised this a few years ago, even before the lightning breakthrough in 2011 that gave the NDP official opposition status, with 100 strong NDP members of Parliament, who come from all walks of life and really reflect the diversity of this country in a way that has never been reflected on the floor of the House of Commons. Even before that, we were raising this issue of tax havens on the floor of the House of Commons.

Members will recall the famous Canada-Panama trade agreement the Conservatives brought forward. We raised concerns at committee, and not only the NDP but also a number of other people who were concerned about Panama's status as a tax haven. It was not just me speaking. The Internal Revenue Service in the United States said very clearly that Panama does not have the transparency that is required. It is a tax haven.

At the time, we had Todd Tucker, of the Public Citizen's Global Trade Watch, come forward and say that Panama was one of the world's worst tax havens and that the Panamanian government had deliberately allowed Panama to become one of the worst tax havens in the world.

The Conservatives got it in their heads to actually put in place the Canada-Panama free trade agreement that would worsen that issue of tax haven status. Members will recall that the Liberals were just going along for the ride, as they usually did. They were the accomplices pushing along with the Conservatives saying that it was a great idea. Only the NDP caucus stood up and said that we could not sign a trade deal until we had an official tax treaty with Panama, because otherwise, we would be worsening the situation and would be making even worse the possibility of money transferred from Canada to Panama simply going into a tax haven, one of the worst tax havens in the entire world.

That was in January 2011. I dare say, two years later, yet again, the NDP has been proven right. We were right to say that it was the wrong thing to do.

I think, implicitly, the Conservatives are trying, through their Prime Minister's Office talking points, to say that they now want to somehow take action against tax havens. I think what the Conservatives are really saying is that the NDP members were right and that the Conservatives were wrong and are sorry. We accept the apology from the Conservatives, but that is not good enough. What they actually have to do is make things right, and that means not signing these types of free trade deals when what they actually do is enhance the tax haven status of these countries they are signing deals with.

Here is the real problem. We have a situation whereby hundreds of Canadians are now sending their money offshore. Again, those are estimates that come from a variety of sources. This is an increasing problem that is more and more manifest right across Canada. We are seeing tens of billions of dollars flowing offshore now. A quarter of our investment in this country is going offshore to tax havens.

We are seeing an additional $170 billion, it is estimated by the Canadians for Tax Fairness, going into 12 global tax havens. That means a difference of about $8 billion a year in tax income. Yet we are seeing the Conservative government do nothing except offer Bill S-17. It has signed a few agreements, yes. That is good. We support that on this side of the House, but that does not resolve the problem in any way, shape or form.

What it does, in this case, is allow a bit of cover for the Conservative government. It may have messed up with the Canada Revenue Agency. It may have messed up by cutting thousands of positions that would have allowed it to go after tax evaders in the corporate sector that are taking money offshore with impunity. Having messed up on the uncollected tax debt, having messed up, as well, on the whole issue of money going into tax havens, the government now presents Bill S-17. It is saying that it resolves all the various problems that exist on the issue of tax havens and uncollected tax debt.

New Democrats actually have a different and smarter idea about the kinds of things needed to resolve this issue. As is our normal practice, Mr. Speaker, having been a member of Parliament with long experience, you know that what the NDP always does is bring forward a wide variety of solutions to resolve issues, because we get the job done. I wanted to get in another plug, because I know it particularly embarrasses my Conservative friends. It is not meant unkindly.

This morning we had the debate on the parliamentary budget officer that was proposed by the member for Outremont and the leader of the official opposition. We had a chance, yet again, to talk about the fiscal period returns issued by the ministry of finance that have shown, for 20 years running, that NDP governments are by far the best at managing money, balancing budgets and paying down debt.

That is not me speaking. That is the federal ministry of finance, which is surely not a hotbed of social democrats yet, but it will be. It will be a hotbed of social democrats in a couple of years, and that means that we will have even better financial management than we have shown at the provincial level. We are number one provincially. Just imagine an NDP federal government, with all those social democrats with all that great experience of being number one at balancing budgets and paying down debt, then being able to change the priorities of the federal government so that Canadian families actually benefit. We would have the housing we need, the kind of health care system we need, high-paying jobs for Canadians rather than low-paying jobs for temporary foreign workers, which is where the government seems to love to put the emphasis, and perhaps, more importantly, a transparent, accountable government that actually honours and respects Canadian taxpayers.

At the finance committee level, New Democrats offered a whole range of amendments. We talked about the federal government studying and measuring, to the greatest accuracy possible, Canadian tax losses to international tax havens and tax evasion to determine the Canadian federal tax gap. Australia has done that. The United Kingdom has done that. The U.S. has done that. It is time for Canada to actually measure the tax gap.

We talked about greater transparency and telling Canadian corporations that they have to disclose all taxes paid in other jurisdictions. We also said that the Auditor General should evaluate the success of the Canada Revenue Agency in prosecuting and settling cases of tax evasion. We put all those forward, and the Conservatives rejected every single one.

New Democrats are going to vote for Bill S-17. The reality is that if we really want an effective income tax system, in which everybody pays according to what they earn, and there are not these tax havens and growing tax debt, then Canadians have to elect an NDP government in 2015, and that is what they are going to do. I have no doubt about that.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Mr. Speaker, Bill S-17 includes tax treaties with certain countries because some are renegotiated treaties, which is a step forward.

I was speaking about the Canada-Poland treaty, which is an improvement from the previous treaty that was negotiated in 1987. It reflects the new worldwide situation and new regulations in both countries. When the previous agreement was signed, Poland did not have personal income tax. It adopted personal income tax in 1991, which was four years after the previous treaty was signed. Of course this had to be reflected.

Therefore, for all those treaties, when they are renegotiated and up for improvements, we move forward and improve the situation.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Mr. Speaker, I appreciate the opportunity to speak today to the second reading of Bill S-17, the tax conventions implementation act, 2013.

Over the years, our government has worked hard at signing many tax treaties to help improve our system of international taxation. Bill S-17 would add to Canada's ongoing measures to update and modernize its network of income tax treaties with other countries, which is one of the most extensive in the entire world. Canada has tax treaties in place with a whopping 90 countries, including most of our major trading partners, and is working on agreements with other jurisdictions. Bilateral income tax treaties like the one before us today help us to prevent double taxation, thus creating tax fairness for all Canadians, and ensure everyone pays their fair share, something we know we must do.

Tax treaties also eliminate tax barriers to trade and investment. As we noted in the economic action plan 2013, deeper trade and investment relationships in more overseas markets help support jobs and growth in Canada. In this respect, Bill S-17 would provide benefits to both taxpayers and governments by setting out clear rules that would govern tax matters relating to cross-border trade and investments. The treaties covered in Bill S-17 would promote certainty, stability and a better tax climate for taxpayers and businesses in Canada and these treaty countries. While these treaties would help to secure Canada's position in the increasingly competitive world of international trade and investment, they would also help combat tax evasion.

While Bill S-17 is a relatively standard, routine and innocuous piece of legislation, these new and updated treaties would strengthen Canada's already-strong network of tax treaties. Bill S-17 proposes to implement tax conventions, either new or updated, with Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. With these six new and updated treaties adding to the 90 tax treaties already in existence, we could be proud that Canada boasts one of the largest networks of bilateral tax treaties, ensuring a fair and competitive international tax system.

I mentioned previously why the legislation before us today is a standard fare, but it is nonetheless very important in achieving the above goals. Bill S-17 would help to stop tax cheats and help to combat tax evasion. It would create tax fairness and prevent double taxation. Finally, it would help improve international trade and investment.

Cyndee Todgham Cherniak of LexSage Professional Corporation said this recently to the Senate banking committee:

Tax treaties facilitate trade. Tax treaties are symbols of cooperation, trust and friendship between nations. Tax treaties prevent double taxation.... They improve stability, transparency, fairness, procedural fairness and tax certainty relating to international trade and transactions. Tax treaties are good for Canadian businesses with activities abroad through branches, subsidiaries and other business enterprises. Tax treaties are good for individuals, employers, directors of corporations, students, shareholders, et cetera.

We can all agree on the importance of working with other countries to provide tax fairness for Canadians, and the bill before us today would do just that.

Tax treaties like those in Bill S-17 complement our Conservative government's overall commitment to a more competitive tax system, one that improves the standard of living of all Canadians. Tax treaties like those in Bill S-17 directly support and encourage cross-border trade in goods and services, which in turn helps Canada's domestic economic performance.

Moreover, Canada's wealth as a proud trading nation depends on a strong global marketplace where information, investment and technology flow with ease.

In fact, during the Senate committee's examination, Nick Pantaleo, a well-respected tax expert with 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 towards the success of such global trading arrangements.

Accordingly, the tax treaties contained in Bill S-17 are a critical tool in strengthening Canada's trade and investment relationships, creating jobs for Canadians here at home.

How does Bill S-17 do that? I would like to take a moment and discuss one particular issue dealt with in this legislation and tax convention implementation through the years, preventing something called double taxation.

Double taxation in the international sense arises as a result of the imposition of taxes in two or more countries on the same taxable income for the same period of time. The treaties in Bill S-17, through bilateral rules, would help avoid double taxation and ensure that taxpayers pay tax on the same income only once.

The Canadian income tax system generally taxes residents on their worldwide income. However, in recognition of the fact that a foreign country may also have a right to tax income earned in that country by a Canadian resident, Canada will provide a credit for foreign income taxes paid, and vice versa. Indeed, if this rule did not exist, there would be unfair consequences for taxpayers, who would be punished for trying to grow or expand their Canadian businesses internationally.

Simply put, nobody should have their income taxed twice—at least, this is what we think on this side of the House. The exception may be the high-tax NDP. Unfortunately, without a tax treaty like those contained in Bill S-17, that is exactly what would happen, and I am happy this legislation will address that problem.

In the time I have left today, I would like to single out how Bill S-17 would be beneficial to Canada's relationship with its dear friend, Poland.

Canada and Poland enjoy a close relationship, including growth in trade and investments as well as increasing military co-operation and academic relations programs. Canada is home to a vibrant community of nearly one million Polish-Canadians, and since 2008, Poles can travel to Canada visa-free with their e-passports, further expanding people-to-people ties among our citizens.

In February 1998, Canada was the first North Atlantic Treaty Organization country to ratify Polish accession to the organization. Since then, Canada has become a leader among NATO countries in language and peacekeeping training in Poland, with hundreds of Polish officers and senior general staff having received training in Canada and Poland.

Further, Canada and Poland co-operate closely through multilateral initiatives as valuable partners in NATO, in Canada-EU relations and across a wide range of United Nations organizations and initiatives, including the International Security Assistance Force in Afghanistan.

With regard to academic relations, there are seven Canadian studies programs in Polish universities that conduct research, offer courses and organize conferences on Canada. Some have extensive library holdings and are a rich source of information for Polish students, researchers, academics and the general public.

Finally, Canada and Poland are also seeing rapid growth in our cultural relations. Canadian artists frequently entertain audiences in Polish cities.

Given our two countries' close ties, in 2009 two important agreements between Canada and Poland came into force: the social security agreement, which coordinates pension benefits between the two countries, and the youth mobility agreement, which allows youth from Canada and Poland to travel and work in the other country for up to one year.

In May 2012, during Polish Prime Minister Donald Tusk's visit to Canada, a new tax convention that will reduce tax barriers and encourage increased trade and investment between the two countries was signed.

This convention is a significant element of Bill S-17, which will further develop and facilitate Canada and Poland's mutual economic relationships and will eliminate double taxation with respect to taxes on income and on capital.

The impetus for the new convention with Poland, which was signed on May 14, 2012, was the need to replace the existing tax convention signed in 1987 in order to reflect current Canadian tax treaty policies.

The new convention will continue to contribute to the elimination of tax barriers to trade and investment between Canada and Poland and will help further solidify the economic links between us.

This convention remains consistent with the government's long-standing commitment to seek out new trade and investment opportunities for Canadians and to promote economic prosperity.

In addition to the close relationship Poland and Canada share, we also enjoy excellent trade relations. Poland is Canada's largest merchandise trading partner in central and eastern Europe. In 2011, the value of bilateral trade was $1.69 billion.

Canadian exports to Poland amounted to $251 million and included primarily machinery, electrical and electronic equipment, mineral ores, scientific and precision instruments and vehicles.

Canadian imports from Poland were valued at $1,439 million in 2011, with top sectors being machinery, furniture and bedding, aircraft and spacecraft products and electrical machinery.

EU membership, coupled with Poland's resilience during the recent global economic slowdown, makes it an attractive investment destination for Canadian companies.

Canadian cumulative direct investment in Poland totalled $411 million in 2011. Major Canadian investors in Poland include such companies as Pratt and Whitney Canada and Bombardier Transportation.

Hon. members, this convention also modernizes the income tax system between our two nations. Most countries, including Canada and Poland, tax their residents on their worldwide income. Moreover, when a resident of a particular country derives income from sources in another country, it is not uncommon for that other country to subject that income to tax.

The convention recognizes this international taxation dynamic and sets out under what circumstances and to what extent Canada and Poland may tax the earnings of one another's residents.

The convention also provides that when income, profits or gains may be taxed in both countries, the country of residence is to allow double tax relief against its own tax for the tax imposed by the country of source.

Specifically, the convention sets a maximum withholding tax rate of 5% for dividends paid to a company that holds directly at least 10% of the capital in the company that pays the dividends, and a maximum rate of 15% in all other cases.

The convention also generally limits to 10% the maximum withholding tax rate on interest and royalties. As well, the convention limits to 15% the maximum withholding tax rate on payments of pension income.

It includes a provision that limits the potential for double taxation arising from the application of Canada's taxpayer migration rules without restricting Canada's ability to tax its departing residents under pre-departure gains.

Finally, it includes the latest standard of the Organisation for Economic Co-operation and Development on exchange of tax information in order to assist Canadian tax authorities in the administration of Canadian tax laws.

In conclusion, trade and foreign investment are major engines of economic growth. Canada relies on open markets as a source of opportunity and a stimulus to efficiency, which in turn contributes to economic growth and rising incomes. Openness to trade, investment and global economic engagement are thus critical to Canada's long-term prosperity.

Bill S-17 is another step forward in ensuring the reduction of trade and investment barriers with our close ally, Poland. Considering the close relationship Canada and Poland have, it is only fitting that we ensure that our tax policies reflect the same mutual advantages. Further, Bill S-17 adds to Canada's low-tax commitment, ultimately allowing Canadians to keep more of their hard-earned money.

Since 2006, we have introduced more than 150 tax relief measures for Canadian families, individuals and businesses. The overall federal tax burden is the lowest it has been in 50 years. As a result, the average family of four now receives over $3,200 in extra tax savings. Going forward, we will continue to open markets and keep taxes low in pursuit of our main objective of increasing jobs, growth and long-term prosperity.

With that, I urge all members to vote yes on Bill S-17 and yes to closer Canada-Poland relations, stronger international trade relations and tax fairness.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is a pleasure to rise to speak to Bill S-17. Taxation and taxes is always a hot topic. No matter what day of the year it is people always want to talk about taxes. One thing that they like to tie to taxes is the idea that it is an absolute necessity. Government has to generate revenues and part of those revenues is taxes. I will make reference to a multitude of different types of taxes shortly.

I will first start off from the whole aspect of what I made reference to earlier today. There are some bills that I believe are fairly straightforward, standard and receive a considerable amount of support. When we look at Bill S-17, we find there is substantial support of all entities in the House to see the bill ultimately pass. The objections are reasonable in what it wants to accomplish. I do not think we have too many advocates suggesting that we should be creating tax havens. We might hear some differences in whether the government is doing enough. Again, I will provide some further comment on that point shortly.

First and foremost, what I want to start off with is why we have Bill S-17 before us today and the manner in which the government has brought it forward. It concerns me because even though the bill we have before us is relatively non-controversial, the government has made it more controversial. The reason why we might want to speak to it that much more is because of the manner in which the government has chosen to bring in the legislation.

I have been a parliamentarian for a number of years and have had the opportunity to negotiate session wind-ups, albeit at the provincial level, but it is a parliamentary system very similar to the type of procedures that happen in the House of Commons. As we look to our days winding down here, in my beloved home province of Manitoba the legislature is winding down its session. However, it looks as though its session will go on well into July if we believe some of the reports. What is interesting about that with respect to the relevancy of that bill is that it is all about taxes.

In Manitoba, the NDP government of the day is increasing the provincial sales tax from 7% to 8%. There is an issue surrounding the balanced budget legislation. There was supposed to be a referendum, but that was not held. I suspect the reason being is that the government would likely lose the referendum because there is no appetite to see the provincial sales tax increased, especially when the province next door is decreasing its sales tax and that gap continues to grow. The bottom line is there is a bit of a stalemate happening there.

As much as I might not necessarily be a strong advocate for the New Democrats in the province of Manitoba, I do respect the fact that they are going through a process and are not yet putting in limits in the form of closures, from what I understand. This is with respect to a bill that is exceptionally controversial and no doubt will receive hours of debate and go into committee, which is a different system. I believe there are close to 200 Manitobans who have expressed an interest in wanting to talk about taxes in that legislation. Therefore, there is what I classify as due process. There they have controversial legislation where there is no unanimity within the legislative chamber.

Contrast that to Ottawa, where we have a bill, subject matter, taxes, tax evasion and tax havens. We seem to have wide support for the bill and its passage. Yet we have a government that has brought in time allocation. This is not the first time it has brought in time allocation. I believe this is already the 40th, 41st or 42nd time that the government has brought in time allocation. I have had the opportunity on numerous occasions, probably 30 times or even more than that, to stand in my place to talk about the serious nature of time allocation. It is serious, when we have a majority government making a decision before the House to define the amount of time to be allocated for debating Bill S-17.

When I listened to the Minister of State for Finance, he indicated that we have had a piece of legislation before the House for 100 days, trying to give people who may be following the debate the impression that for 100 days, we have actually been debating Bill S-17, and that the government is doing us a huge favour by bringing in time allocation.

Nothing could be further from the truth. We might have had a few hours, not even a full day of real debate inside the House of Commons on this issue. Yet it is the perception. The government has made the decision that it will limit the amount of opportunities for members of Parliament to address the issue of taxes.

When I had the opportunity to review Bill S-17, I had the opportunity to talk about taxes in general and the whole issue of fair taxation, spending smarter and so forth. I believe that is what the constituents of Winnipeg North would want me to do, to express concerns I might have on the legislation and to talk about taxation policies.

We have 300-plus members of Parliament, and the government has said that it wants a very limited number of MPs allowed to speak to this legislation. I am grateful to my party. It made sure I was afforded the opportunity to express my concerns. On this bill, I suspect that if there was any goodwill coming from the government House leader, maybe even working with the Minister of Finance and approaching opposition parties, negotiating, talking about what kind of legislation it is, how many hours would we like, then respective caucuses could work with their colleagues to get a sense of how long the debate could or should be.

We have all sorts of ways to enable legitimate, full, wholesome debate on bills that are deemed important, where members of Parliament want to stand up and address their concerns. The government, through this whole time allocation addiction it has, is preventing that.

The unfortunate things is that in principle we support Bill S-17 because of its objectives and what it hopes to accomplish. I suspect it may not even have required five hours of debate. I do not know, because we had no sense of interest within our own caucus or whether it was brought to our caucus; I have no idea how many New Democrats would have chosen to speak to it.

Even though in principle I support the bill we are talking about, what upsets me is the fact that the government continues to use time allocation in order to get through its legislative agenda.

I want to emphasize how important it is that we recognize that we have seen a significant change in attitude in the Prime Minister ever since he received his majority Conservative/reform government. It has been a significant shift in attitude. He has been very disrespectful toward individual members when it comes to their participation in debate.

The government has invoked time allocation, another form of closure, on legislation that definitely should have had a lot more debate. As a result of the government's inability to negotiate in good faith, now we find that every time it introduces a bill, either one day later or even sometimes on the same day, a time allocation motion is invoked. We are seeing that again today on Bill S-17. That lack of respect for proper procedure inside the House of Commons is going to hurt the government. Conservative members may not realize that today, but at the end of the day, it will have an impact.

Canadians respect our democratic system. They appreciate the fact that there is a proper process to be followed. The degree of the Conservative government's lack of respect for due process will become better known. It is an issue I plan to raise significantly going forward, because the frequency is the greatest insult to the House.

I will conclude my remarks on the issue of the process by saying very clearly that no government in the history of Canada has used time allocation in the fashion the Conservative government has, and we are only two years in to a majority government. I want to emphasize that particular point.

Let me get to taxation.

When we look at what the bill would ultimately do, we think of achieving bilateral agreements. What we are attempting to do is ratify them through this legislation. We can have as many of these bilateral agreements as ultimately can be developed and passed through the House, but that will not really address the issue to its fullest degree. If we want to deal with the issue of tax avoidance or people hiding money or not paying their fair share, then we have to look at resources and to what degree we are allocating resources to those authorities, such as the Canada Revenue Agency, and its ability to go after those individuals who feel they do not have to pay their fair share of taxes.

Former prime minister Paul Martin allocated $150 million to combat international tax evasion. We took the issue of tax evasion very seriously, so $150 million was put in the Liberal Party's last budget in order to combat tax evasion. If we follow that through, in 2009 we could ultimately argue that $150 million had a fiscal impact of about $2.5 billion. When we think of how effective that $150 million was in terms of being able to return $2.5 billion to the coffers in some fashion or another, that shows very clearly and decisively just how effective it would be to allocate the appropriate resources in order to avoid tax evasion. That is very important.

The other issue is with respect to bilateral information. At the end of the day, bilateral information or establishing some sort of an exchange framework is one way to deal with this. Those who participate in tax evasion are very creative: they come up with different ways to avoid having to pay taxes. Working toward the larger, multilateral information exchange framework is ultimately the next best way, I would argue, to clamp down on those companies that are participating in tax evasion.

I want to very briefly comment on the issue of taxation, in general.

We all know that governments need to have revenue in order to function. What I would like to see, and I believe what most Canadians want to see, is that the money collected is in fact being spent smart. As a taxpayer, I want, number one, to pay my fair share. I do not want to have to pay more, but I am prepared to pay my fair share. I think a vast majority of Canadians have that attitude. The other concern is that they want the sense that those tax dollars are being spent wisely.

On both of those fronts, there is a wide belief that this is not taking place today. It does not matter what level of governance, there is this suspicion that the government is just not doing enough. I think what we need is the Prime Minister and his government to take the issue of tax evasion more seriously and look at how we can have multilateral agreements to ensure that those who try to avoid paying taxes are held accountable. The government, the Canada Revenue Agency, must be empowered to do what is necessary to ensure that people pay their fair share. I believe that is quite reasonable.

When I look at Bill S-17, it is a step forward. However, I do not believe that the government is doing enough. All we need to do is look at the last Paul Martin budget where there was a huge investment of tax dollars to deal with the issue of tax evasion. The return for that $150-million investment was overwhelmingly positive.

If the government had its priorities right, I think that there is so much more out there that we could benefit from. A more aggressive government would ensure that all Canadians paid their fair share.

I will save my comments in terms of spending that money in a better fashion for another debate on another bill. For now, suffice it to say, there needs to be a lot more improvement.

I will conclude my remarks by saying when we talk about taxes, it is important that we recognize that taxes come in many different forms, whether it is hiking up tariffs, the PST, income tax and many others. I look forward to this bill passing. If there are any questions, I am more than happy to answer.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I rise today to speak to Bill S-17, which is a lengthy statute to deal with certain double taxation conventions between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. This is second reading debate. I want to say at the outset that the official opposition supports the bill.

I would like to divide my comments into four parts: first, the process that led us here; second, the issue of time allocation; third, just what double taxations are designed to achieve; and fourth, comments about international tax avoidance and tax evasion and why the bill is such a baby step in that direction.

Bill S-17 is 103 pages long. The bill started in the Senate, and lest anyone say this represents a great illustration of the utility of the other place, the government itself has acknowledged that this is routine legislation, and I note that since 1976, there is a convention that bills of this sort, dealing with tax convention legislation, originate in the Senate. In fact, there have been 30 different pieces of tax convention legislation in front of Parliament since 1976.

The bill is designed to bring into effect certain bilateral income tax conventions with the countries I mentioned. It is not a bill that represents significant, staggering, revolutionary change. On the contrary, I think the Parliamentary Secretary to the Minister of Finance accurately characterized the bill as a routine housekeeping type of statute. That was confirmed by the member for Pickering—Scarborough East who said in this place on second reading, “I am delighted and pleased to rise...to kick off the debate on a rather technical and routine piece of legislation”, to which I say that is entirely accurate.

Let me set the stage by saying the New Democratic Party supports harmonization and greater clarity for taxation laws and likes to bring into force these kinds of tax treaties, which as I will describe, are based upon a model tax treaty convention that the OECD generated many years ago and renewed quite recently.

The parliamentary secretary, while in the other place, referred to this as somehow a major step forward in the fight against international tax evasion. For reasons I will describe, that is entirely not accurate.

Let me speak to the second point I wanted to raise, which is the issue of time allocation. The government today, in a rather embarrassing stunt, decided that 43 times it would use what is in effect a closure motion, time allocation, to deny the House the opportunity to scrutinize a bill. It is embarrassing for democracy and shameful. When asked to justify it during the debate on time allocation, the Parliamentary Secretary to the Minister of Finance asked why we do not just pass it, since we support it. He said something about how this is a very important bill dealing with tax havens.

The bill is important. It is routine. However, it takes baby steps to deal with the crisis in tax havens and international tax avoidance, a matter I would like to speak about later in my remarks.

I presume the government is anxious to tell its base that the New Democratic Party, the official opposition, is somehow made up of unreasonable people who refuse to co-operate, and that is why it has to allocate time to debate the matter. We support the bill, and I guess I am just too new here to understand why it needs time allocation when we support this measure. He also said that there had been 100 days of debate on this measure. Surely that is not accurate. Surely he means that maybe it has been before the Senate for 100 days. If that is what he means, I wish to say that the official opposition has no members in that place and I hope it never does.

What is this legislation about? Canadians might not be familiar with double taxation conventions of this sort, so let me say a few things about the nature of this important legislation.

There are perhaps 90 tax conventions Canada has entered into since the 1920s. They have been a routine feature of international law since then. What are they for? The taxation treaties are designed to avoid imposing double taxation in both what is called the source country and the country of the taxpayer's residence. This is distinct from what the government is trumpeting as a great success, which is what are called TIEAs, tax information exchange agreements.

The Conservative government just did one in March, to great fanfare, with Panama. That was said to be a great step forward in the fight against tax evasion and international tax havens. I have news for the government. Panama is a notorious tax haven made up of many banks with lots of drug money, and Canada thinks that by entering into a tax information exchange agreement with that country, it is a great step forward.

One has to know what to ask for under these tax information exchange agreements. That is the basis of some of the provisions of the bill before us, which we are debating today. Many speakers before the finance committee said that they were essentially useless.

Yes, there are some good reasons for these tax conventions, such as the need to promote investment in various countries where the non-resident invests or works, and in fairness, to prevent Canadians and others from paying tax on the same income in two different countries. The concept is very simple. The concept is to avoid paying taxes twice and to set certain standards as to how income from those things will be treated. Dividends are treated differently than interest. Royalties are treated differently than capital gains.

The OECD, of which Canada has long been a member, has entered into a tax convention treaty that sets down these types of standards with fairly, by now, routine amounts of tax for different kinds of income. That is precisely what this double taxation treaty has done. That, as I said, is by now commonplace.

A country like Canada enters into these solemn conventions, and it is very hard, and should be very hard, to get out of them. One can enter into a protocol that has to be negotiated if it is to be modified. Indeed, there are a couple of protocols in this bill dealing with changes to the longstanding arrangements with Switzerland and Luxembourg. Frankly, the protocols can be changed, but there is still a solemnity. It takes some time. People intend at the international level to enter these for long periods of time, and they should be, and are, difficult to change.

The treatment of different kinds of income I have already described, and the OECD has made that very clear. The details I can confirm in this statute are entirely consistent with what other tax conventions of this kind have done for these different kinds of income. However, there are many other ways and progressive things going on in the world that the bill has nothing to do with. Let me give an example.

There was a recent agreement between the United Kingdom and Switzerland such that British nationals who have money in a Swiss account are subject to the Swiss government determining if they are British nationals, and if so, remitting to the U.K. tax authorities 30% in taxes of the amount in that Swiss account. It is much like a withholding tax. The British person could agree to self-identify and say, yes, he or she is a British citizen, and pay a lower amount of 5% or 10%. Thus, it is an incentive to self-identify if someone has money in a tax haven. Why does Canada not do something like our allies are doing? Nothing like this exists in this fairly routine statute.

What is the bill not about? The parliamentary secretary has told us that it is about international tax evasion and tax havens. I do not think so. It is not about international tax avoidance.

Next week, the G8 is meeting in Northern Ireland. The leader of the United Kingdom, Prime Minister David Cameron, has made it one of his three key priorities to address this crisis in tax havens. It is estimated that we are talking about between $10 trillion and $30 trillion in tax havens abroad.

It is estimated that the Canadian treasury is losing perhaps $7.8 billion every year to tax havens. Canadians need to understand that this is not arcane tax law. It is money that could be in our treasury to pay for goods and services for Canadians. Other Canadians are not paying their fair share, therefore requiring us to do more.

People are outraged by these abuses. Fortunately, the press has done a great job in recent months to show the enormity of this problem. The figures are staggering, the cost is enormous and people are demanding action. I salute the Prime Minister of the United Kingdom for his leadership. I regret that the Canadian government is very much the caboose on that train.

New Democrats will continue to push the Conservatives to take real action on tax havens. We did a supplemental report to the finance committee's study on tax havens and brought out a dozen or so recommendations for meaningful change, not radical change, which, of course, the government resisted. They were the kinds of changes our allies are bringing forward to address this crisis.

While we support the routine negotiating and updating of tax treaties such as this, we will continue to push harder against Conservative policies that have failed to protect the integrity of our tax system and that are furthering the erosion of our tax base.

Let us talk about the priorities of the government in going after tax havens. As I said, the parliamentary secretary would have us believe that there is real action going on in Canada and that we are really serious about this. That may be so, except for the fact that the statistics speak for themselves.

I quote an order paper question, Q-1174, of February 14 of this year, because there has been a lot of misinformation about whether there are cuts at Canada Revenue Agency. The minister reported that after the budget, which we dealt with today, Bill C-60, 2,568 full-time equivalents will be lost to the Canada Revenue Agency. They trumpet two areas: the international audit program and the aggressive tax planning program of the Canada Revenue Agency. In the last four or five years, the government confirmed, in the order paper question I just mentioned, there have been cuts in those as well.

Therefore, the notion that somehow we are serious about tax cheats, that we are out there with both feet and doing our thing like our allies is demonstrably not so. If they could characterize this as an investment, perhaps they could understand the enormous amount of money that could be made if they got serious, just as our allies have. I will provide examples of that in a moment.

Joseph Stiglitz, the Nobel Prize winning economist, wrote in The Guardian on May 27, 2013:

Our multinationals have learned how to exploit globalisation in every sense of the term—including exploiting the tax loopholes that allow them to evade their global social responsibilities.

He talks about transfer payments, whereby, as he says firms "make up" the prices of goods of services that they charge each affiliated entity and so forth to avoid paying their fair share of taxes. We have seen that. We have seen that the Cirque du Soleil uses a subsidiary in Luxembourg, a low-tax jurisdiction, to not pay its fair share of taxes in Canada. The Irving family is notorious for this. Of course, there is Apple, Starbucks and Google, and the list goes on. People are outraged.

Canadian firms are just as involved in the creative use of tax havens to avoid paying their fair share. It is the kind of thing that finally seems to be getting attention, albeit not from the Conservative government.

What can be done? What have the French done? They have published a black list of tax havens with bank-secrecy laws. They are simply saying that their French development agency will not operate in the 17 countries that are on the list. Is there any such list in Canada? I do not think so.

They have signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters and have agreed to share information, on request, from other countries—and here is the punchline—with the optional provision for automatic tax information exchange. What does that mean? Luxembourg, Singapore and Austria, all sensitive, traditional bank-secrecy jurisdictions, are among the 50-some countries that have agreed to automatically exchange tax information to help foreign nations clamp down on tax debtors and allow countries to conduct wide-ranging, multi-party tax investigations.

The Globe and Mail reported yesterday, as did the Financial Post today, that Canada is opposing the automatic tax information exchange agreements. To use my analogy again, if there is a train, we barely make the caboose on that train.

Let me talk about what the OECD Secretary-General, Ángel Gurría of Mexico, has recently said about the kind of things this convention deals with:

The [international tax] rules which we have built since the 1920s were meant to avoid double taxation....The problem is we've moved from double taxation to double non-taxation.

I will continue the quote:

Now we don't tax anybody because we've built a set of codes and regulations and law...and culture...where we facilitate the fact that co-operations, through transfer pricing practises, put their profits in low-tax jurisdictions and therefore do not pay what would be considered to be their fair share.

He also said that taxing IT companies such as Google and Amazon had become especially difficult, as they are apparently based in the “ether”.

You can move anywhere and it doesn't matter where you originate the information or where you register the company, basically the consistency is that they [the companies] want to pay less tax.

This is hurting developing countries a great deal as well, as their wealth is taken to tax havens, and Canada has not been aggressive on that score either.

I said I would talk about what other countries are doing. I have given some examples.

The Swiss government and the Americans have been involved in serious negotiations involving their bank secrecy and enablers that come to that country to get Americans to not pay their fair taxes. In 2009, UBS, the largest Swiss bank, agreed to enter into a deferred prosecution agreement with the United States. The bank eventually turned over 4,450 client names. It paid a $780-million fine after admitting criminal wrongdoing and selling tax evasion services to wealthy Americans.

Do we think Canadians are not part of that? We know that they are. Do we think the Canadian government is putting in the energy to deal with this crisis it should? Of course it is not.

That is why the NDP's supplementary report to the finance committee lists a number of things we think need to be done. The government refuses to measure this problem, as our allies have done. The measurement of the tax gap and the like they scoff at as being irrelevant.

I wish it could finally follow the practice of the French, the Australians and the British in doing the right thing, but it does not seem to want to. It cut services. CRA does not have the warm bodies to do the job that is required, and we are supposed to believe that this is different.

We support the bill. We think it is a bill that is in line with modern tax practice in avoiding double taxation. It makes sense at one level. However, when it is sold as something it is not, we have to stand and tell the government that the emperor has no clothes.

It is a great housekeeping bill. I am glad we have a deal with Serbia. I am glad we have a deal with Namibia. I am glad we have a deal with countries that are our allies. However, why can we not see the need to really get serious about tax evasion?

I note that the government has been given information recently, that it had the information from the international consortium that was doing the tax evasion studies and that it had the opportunity to move forward, and it did not. It said in this House that it will take all measures to do so. It did not.

I am hoping, when our government is in the G8, that it shows a tiny bit of leadership on this issue and gets on board with Mr. Cameron, gets on board with the Americans, gets on board, indeed, with all of the G8 and says, “Canada is here to play as well. We're not simply going to take a back seat or ride in the back of the train, in the caboose, on such an important issue”.

The House resumed from June 3 consideration of the motion that 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 be read the second time and referred to a committee.

Bill S-17—Time Allocation Motion

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, that was a rather mythological sort of question, I would suggest. I am not presuming that my hon. friend across the way would not be precise and concise in his presentation. I have listened to him on many occasions. I listened to him in the leadership debate for his party, and he was very articulate. We encourage him to continue with that. He will have time during this debate to actually bring the concerns of his constituents forward.

Forgive me if I repeat myself, but we have listened to many speeches in this House that are basically a mirror image of the speech that was just presented. I do not think that is a good use of those hon. members' time or of members' time on this side. We actually want to move forward with the protection of the tax system in this country and in the countries we are dealing with in Bill S-17.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, we are not actually talking about Bill S-17 at the moment. We are talking about the government's motion to limit debate so that we cannot talk about Bill S-17.

Over the last number of weeks, what we have heard from the government is that if we disagree with it, we are anti-Canadian and traitors. If members do not speak properly, then the Conservatives are going to move time allocation on these various bills.

It is not up to the member to determine how I am going to present myself in the House. It is up to my constituents. I am here because the people of Dartmouth—Cole Harbour who voted for me decided that they wanted me to come here to speak to bills, such as Bill S-17.

With its tendency to bring in time allocation, the government is suggesting that it is going to decide how much time I am going to have to speak on it, regardless of what I want to say. The member opposite now suggests that if he decides that I am not articulate enough or am not getting to the point quickly enough, as he would identify it, the government is going to bring in time allocation on that basis. I have wondered why it is that it will not agree to abolish the Senate, but now I understand that it wants to abolish this chamber. It wants to eliminate all free speech for the commoners, for the people of Canada.

[Ted Menzies, Conservative, Minister of State (Finance)]

moved:

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.

Bill S-17—Notice of time allocation motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I would like to advise that agreement could not be reached under the provisions of Standing Order 78(1) or 78(2) with respect to the second reading stage of 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.

Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of the proceedings at the said stage.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I do want to start by reviewing what our House has accomplished over the preceding five days since I last answered the Thursday question.

Bill C-51, the safer witnesses act, was passed at third reading. Bill C-52, the fair rail freight service act, was passed at third reading. Bill C-63 and Bill C-64, the appropriations laws, passed at all stages last night as part of the last supply day of the spring cycle.

Bill S-2, the family homes on reserves and matrimonial interests or rights act, has been debated some more at third reading. Bill C-60, the economic action plan 2013 act, no. 1, was passed at report stage. Bill S-8, the safe drinking water for first nations act, was passed at report stage, was debated at third reading, and debate will continue.

Bill S-14, the fighting foreign corruption act, was passed at second reading. Bill C-56, combating counterfeit products act, was debated at second reading. Bill S-15, the expansion and conservation of Canada’s national parks act, was debated at second reading. Bill S-17, the tax conventions implementation act, 2013, was debated at second reading.

On Bill C-62, the Yale First Nation final agreement act, we adopted a ways and means motion, introduced the bill, passed it at second reading and it has since passed at committee. I anticipate we will be getting a report from the committee shortly.

Bill S-16, the tackling contraband tobacco act, was given first reading yesterday after arriving from the Senate. Bill C-65, the respect for communities act, was introduced this morning.

Substantive reports from four standing committees were adopted by the House.

On the private members' business front, the House witnessed three bills getting third reading, one being passed at report stage, two being reported back from committee and one was just passed at second reading and sent to a committee.

Last night was the replenishment of private members' business, with 15 hon. members bringing forward their ideas, which I am sure we will vigorously debate.

The House will continue to deliver results for Canadians over the next week. Today, we will finish the third reading debate on Bill S-8, the safe drinking water for first nations act. Then we will turn our collective attention to Bill S-15, the expansion and conservation of Canada’s national parks act, at second reading, followed by Bill S-2, the family homes on reserves and matrimonial interests or rights act, at third reading.

Tomorrow we will have the third reading debate on Bill C-60, the economic action plan 2013 act, no. 1. The final vote on this very important job creation and economic growth bill will be on Monday after question period.

Before we rise for the weekend, we hope to start second reading debate on Bill C-61, the offshore health and safety act.

On Monday, we will complete the debates on Bill S-15, the expansion and conservation of Canada’s national parks act, and Bill S-2, the family homes on reserves and matrimonial interests or rights act.

Today and next week, I would like to see us tackle the bills left on the order paper, with priority going to any bills coming back from committee.

As for the sequencing of the debates, I am certainly open to hearing the constructive proposals of my opposition counterparts on passing Bill S-6, the First Nations Elections Act, at second reading; Bill S-10, the Prohibiting Cluster Munitions Act, at second reading; Bill S-12, the Incorporation by Reference in Regulations Act, at second reading; Bill S-13, the Port State Measures Agreement Implementation Act, at second reading; Bill S-16, at second reading; Bill S-17, at second reading; Bill C-57, the Safeguarding Canada's Seas and Skies Act, at second reading; Bill C-61, at second reading; and Bill C-65, at second reading.

Mr. Speaker, I am looking forward to having another list of accomplishments to share with you, and all honourable members, this time next Thursday.

Suffice it to say, we are being productive, hard-working and orderly in delivering on the commitments we have made to Canadians.

There having been discussions among the parties that it will receive unanimous consent, I would like to propose a motion. I move:

That, notwithstanding any Standing Order or usual practices of this House, the member for Peace River be now permitted to table the Report of the Standing Committee on Aboriginal Affairs and Northern Development in relation to Bill C-62, An Act to give effect to the Yale First Nation Final Agreement and to make consequential amendments to other Acts.

Tax Conventions Implementation Act, 2013

[Corneliu Chisu, Conservative, Pickering—Scarborough East, ON]

Mr. Speaker, I am delighted and pleased to rise in the House to kick off the debate on a rather technical and routine piece of legislation, Bill S-17, the tax conventions implementation act, 2013.

Before I begin, I would like to take this opportunity to thank the Senate for its initial work on this bill. I especially want to thank the members of the Senate banking, trade and commerce committee for its thorough review of Bill S-17 earlier this year. I would also like to extend thanks to all the witnesses who appeared at that Senate committee, for their appearance and their high-quality testimony on a subject that can often be technical. For those wondering why this bill started in the Senate first, I should note that, going back to 1976, the convention has been to bring tax convention legislation to the Senate first. In fact, there have been 30 different pieces of tax convention legislation in front of Parliament since 1976.

As members are aware, Bill S-17 proposes to implement tax conventions or tax treaties, either new or updated, with Canada and the following countries: Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. These new and updated treaties would augment Canada's strong network of tax treaties. Indeed, currently Canada has comprehensive tax treaties in place with 90 countries, one of the world's largest networks of bilateral tax treaties. This is an important feature of Canada's international tax system, a feature that is key to promoting our ability to compete.

What is more, we continue to work on agreements with other jurisdictions, as demonstrated in today's legislation. As part of Canada's ongoing effort to update and modernize our network of income tax treaties, Bill S-17 would achieve two important objectives. First, it would help combat tax evasion by ensuring Canada works with other countries to stop tax cheats. Second, it would help encourage global trade by preventing double taxation. Clearly, I would hope that all parliamentarians and all Canadians would agree that everyone should pay their fair share of taxes.

I think we are all agreed that it is not appropriate that some corporations would take advantage of Canada's tax rules to avoid paying their fair share, or that some wealthy individuals would use an offshore account to hide income tax or evade tax. We are against tax cheats because those tax cheats are essentially hiking taxes on honest Canadians. Honest, hard-working Canadians and small-business owners are left having to pay more taxes when cheats do not pay their fair share, and that is simply not fair.

However, to detect and deter those tax cheats, the Canada Revenue Agency needs to work with and share information with foreign tax agencies around the world. To this end, Canada supports the international consensus to work through the Organisation for Economic Co-operation and Development, or OECD, to set an international tax information exchange standard. That standard is implemented under bilateral tax treaties and tax information exchange agreements like those new and updated treaties included in Bill S-17.

The second objective I mentioned referenced encouraging global trade by preventing double taxation. Here at home, our government has worked hard to cut taxes. In fact, we have done it 150 times, in every way government collects taxes, from the GST to personal tax to business tax and much more. We firmly believe that a more competitive tax system helps create an environment that enables Canada's entrepreneurs to excel, not a tax system that punishes entrepreneurs and stands in the way of their success, both here in Canada and abroad.

After all, if we want higher wages, more jobs and a higher standard of living, we need entrepreneurs to succeed and grow. That creates investment, jobs and helps make our--

[Peter Van Loan, Conservative, York—Simcoe, ON]

moved that 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, be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, now that we have been sitting for a week under our Conservative government's plans for a harder-working, productive and orderly House of Commons, I would remind all hon. members of what we have been able to achieve since just Victoria Day.

Bill C-48, the technical tax amendments act, 2012, was passed at report stage and third reading. Bill C-49, the Canadian museum of history act, was passed at second reading. Bill C-51, the safer witnesses act, was passed at report stage and we started third reading debate, which we will finish tonight. Bill C-52, the fair rail freight service act was passed at report stage and, just moments ago, at third reading. Bill C-54, the not criminally responsible reform act, was passed at second reading. Bill C-60, the economic action plan 2013 act, No. 1, was reported back from committee yesterday.

Bill S-2, the family homes on reserves and matrimonial interests or rights act, was passed at report stage and we started third reading debate. Bill S-6, the first nations elections act, was debated at second reading. Bill S-8, the safe drinking water for first nations act, which was reported back to the House this morning by the hard-working and fast running member for Peace River, has completed committee. Bill S-10, the prohibiting cluster munitions act, was debated at second reading. Bill S-12, the incorporation by reference in regulations act, was debated at second reading. Bill S-13, the port state measures agreement implementation act, was debated at second reading. Bill S-14, the fighting foreign corruption act, was debated at second reading.

We will build on this record of accomplishment over the coming week.

This afternoon, as I mentioned, we will finish the second reading debate on Bill C-51. After that, we will start the second reading debate on Bill C-56, Combating Counterfeit Products Act.

Tomorrow morning, we will start report stage on Bill C-60, now that the hard-working Standing Committee on Finance has brought the bill back to us. After I conclude this statement, Mr. Speaker, I will have additional submissions for your consideration on yesterday's point of order.

After question period tomorrow, we will get a start on the second reading debate on Bill S-15, Expansion and Conservation of Canada’s National Parks Act. I am optimistic that we would not need much more time, at a future sitting, to finish that debate.

On Monday, before question period, we will debate Bill S-17, Tax Conventions Implementation Act, 2013, at second reading. In the afternoon, we will hopefully finish report stage consideration of Bill C-60, followed by Bill S-2 at third reading.

On Tuesday, we will return to Bill S-2 if necessary. After that, I hope we could use the time to pass a few of the other bills that I mentioned earlier, as well as the forthcoming bill on the Yale First Nation Final Agreement.

Wednesday, June 5 shall be the eighth allotted day of the supply cycle. That means we will discuss an NDP motion up until about 6:30 p.m. This will be followed by a debate on the main estimates. Then we will pass to two appropriations acts.

Next Thursday, I would like to return back to Bill C-60, our budget implementation legislation, so we can quickly pass that important bill for the Canadian economy.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, as you know, our government has moved forward this week to conduct business in the House of Commons in a productive, orderly and hard-working fashion, and we have tried to work in good faith.

We began the week debating a motion to add an additional 20 hours to the House schedule each week. Before I got through the first minute of my speech on that motion, the hon. member for Skeena—Bulkley Valley interrupted with a dubious point of order to prevent the government from moving forward to work overtime. His was a bogus argument and the Speaker rightly saw the NDP delay effort as entirely devoid of merit and rejected it outright.

During its first speech opposing the motion to work hard, the NDP then moved an amendment to gut it. That amendment was defeated. The NDP then voted against the motion and against working overtime, but that motion still passed, thanks to the Conservatives in the House.

During the first NDP speech on Bill C-49 last night, in the efforts to work longer, the NDP moved an amendment to gut that bill and cause gridlock in the House. I am not kidding. These are all one step after another of successive measures to delay. During its next speech, before the first day of extended hours was completed, the NDP whip moved to shut down the House, to go home early. That motion was also defeated. This is the NDP's “do as I say, not as I do” attitude at its height.

Take the hon. member for Gatineau. At 4 p.m., she stood in the House and said, “I am more than happy to stay here until midnight tonight...”. That is a direct quote. It sounded good. In fact, I even naively took her at her word that she and her party were actually going to work with us, work hard and get things done. Unfortunately, her actions did not back up her words, because just a few short hours later, that very same member, the member for Gatineau, seconded a motion to shut down the House early.

I am not making this up. I am not kidding. She waited until the sun went down until she thought Canadians were not watching anymore and then she tried to prevent members from doing their work. This goes to show the value of the word of NDP members. In her case, she took less than seven hours to break her word. That is unfortunate. It is a kind of “do as I say, not as I do” attitude that breeds cynicism in politics and, unfortunately, it is all too common in the NDP.

We saw the same thing from the hon. member for Davenport, when he said, “We are happy to work until midnight...”, and two short hours later he voted to try to shut down the House early. It is the same for the hon. member for Algoma—Manitoulin—Kapuskasing and the hon. member for Drummond. They all professed an interest in working late and then had their party vote to shut down early. What is clear by their actions is that the NDP will try anything to avoid hard work.

It is apparent that the only way that Conservatives, who are willing to work in the House, will be able to get things done is through a focused agenda, having a productive, orderly and hard-working House of Commons. This afternoon, we will debate Bill C-51, the safer witnesses act, at report stage and third reading. After private members' hour, we will go to Bill S-12, the incorporation by reference in regulations act, at second reading.

Tomorrow before question period, we will start second reading of Bill S-14, the fighting foreign corruption act, and after question period, we will start second reading of Bill S-13, the port state measures agreement implementation act.

Monday before question period, we will consider Bill S-2, the family homes on reserves and matrimonial interests or rights act. This bill would provide protection for aboriginal women and children by giving them the same rights that women who do not live on reserve have had for decades. After question period, we will debate Bill C-54, the not criminally responsible reform act, at second reading, a bill that makes a reasonable and needed reform to the Criminal Code. We are proposing to ensure that public safety should be the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. It is time to get that bill to a vote. We will also consider Bill C-48, the technical tax amendments act, 2012—and yes, that is last year—at third reading.

On Tuesday, we will continue the debates on Bill C-48 and Bill C-49, the Canadian museum of history act.

On Wednesday, we will resume this morning's debate on Bill C-52, the fair rail freight service act, at third reading.

On Thursday, we will continue this afternoon's debate on Bill C-51. Should the NDP adopt a new and co-operative, productive spirit and let all of these bills pass, we could consider other measures, such as Bill S-17, the tax conventions implementation act, 2013, Bill C-56, the combating counterfeit products act, Bill S-15, the expansion and conservation of Canada’s national parks act, and Bill C-57, the safeguarding Canada's seas and skies act.

Optimism springs eternal within my heart. I hope to see that from the opposition.

Extension of Sitting Hours

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I will pick up where I left off. Obviously my hon. friend did not hear this and has not read the motion. I will respond to his macho riposte at the end of his comments by pointing out that the motion would do three things: first, it would provide for us to sit until midnight; second, it would provide a manageable way in which to hold votes in a fashion that works for members of the House; and third, it would provide for concurrence debates to happen and motions to be voted on in a fashion that would not disrupt the work of all the committees of the House and force them to come back here for votes and shut down the work of committees.

Those are the three things the motion would do. In all other respects the Standing Orders remain in place, including the Standing Orders for how long the House sits. Had my friend actually read the motion, he would recognize that the only way in which that Standing Order could then be changed would be by unanimous consent of the House.

The member needs no commitment from me as to how long we will sit. Any member of the House can determine that question, if he or she wishes to adjourn other than the rules contemplate, but the rules are quite clear in what they do contemplate.

As I was saying, the reason for the motion is that Canadians expect their members of Parliament to work hard and get things done on their behalf.

Canadians expect their members of Parliament to work hard and get things done on their behalf.

We agree and that is exactly what has happened here in the House of Commons.

However, do not take my word for it; look at the facts. In this Parliament the government has introduced 76 pieces of legislation. Of those 76, 44 of them are law in one form or another. That makes for a total of 58% of the bills introduced into Parliament. Another 15 of these bills have been passed by either the House or the Senate, bringing the total to 77% of the bills that have been passed by one of the two Houses of Parliament. That is the record of a hard-working, orderly and productive Parliament.

More than just passing bills, the work we are doing here is delivering real results for Canadians. However, there is still yet more work to be done before we return to our constituencies for the summer.

During this time our government's top priority has been jobs, economic growth and long-term prosperity. Through two years and three budgets, we have passed initiatives that have helped to create more than 900,000 net new jobs since the global economic recession. We have achieved this record while also ensuring that Canada's debt burden is the lowest in the G7. We are taking real action to make sure the budget will be balanced by 2015. We have also followed through on numerous longstanding commitments to keep our streets and communities safe, to improve democratic representation in the House of Commons, to provide marketing freedom for western Canadian grain farmers and to eliminate once and for all the wasteful and inefficient long gun registry.

Let me make clear what the motion would and would not do. There has been speculation recently, including from my friend opposite, about the government's objectives and motivations with respect to motion no. 17. As the joke goes: Mr. Freud, sometimes a cigar is just a cigar. So it is with today's motion. There is only one intention motivating the government in proposing the motion: to work hard and deliver real results for Canadians.

The motion would extend the hours the House sits from Monday through Thursday. Instead of finishing the day around 6:30 or 7 p.m., the House would sit instead until midnight.

This would amount to an additional 20 hours each week. Extended sitting hours is something that happens most years in June. Our government just wants to roll up our sleeves and work a little harder, earlier this year. The motion would allow certain votes to be deferred automatically until the end of question period, to allow for all honourable members' schedules to be a little more orderly.

As I said, all other rules would remain. For example, concurrence motions could be moved, debated and voted upon. Today's motion would simply allow committees to continue doing their work instead of returning to the House for motions to return to government business and the like. This process we are putting forward would ensure those committees could do their good work and be productive, while at the same time the House could proceed with its business. Concurrence motions could ultimately be dealt with, debated and voted upon.

We are interested in working hard and being productive and doing so in an orderly fashion, and that is the extent of what the motion would do. I hope that the opposition parties would be willing to support this reasonable plan and let it come forward to a vote. I am sure members opposite would not be interested in going back to their constituents to say they voted against working a little overtime before the House rises for the summer, but the first indication from my friend opposite is that perhaps he is reluctant to do that. Members on this side of the House are willing to work extra hours to deliver real results for Canadians.

Some of those accomplishments we intend to pass are: reforming the temporary foreign workers program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity; enhancing the tax credit for parents who adopt; and extending the tax credit for Canadians who take care of loved ones in their home.

We also want to support veterans and their families by improving the determination of veterans' benefits.

Of course, these are some of the important measures from this year's budget and are included in Bill C-60, economic action plan 2013 act, no. 1. We are also working toward results for aboriginals by moving closer to equality for Canadians living on reserves through better standards for drinking water and finally giving women on reserves the same rights and protections other Canadian women have had for decades. Bill S-2, family homes on reserves and matrimonial interests or rights act, and Bill S-8, the safe drinking water for first nations act would deliver on those very important objectives.

We will also work to keep our streets and communities safe by making real improvements to the witness protection program through Bill C-51, the safer witnesses act. I think that delivering these results for Canadians is worth working a few extra hours each week.

We will work to bring the Technical Tax Amendments Act, 2012, into law. Bill C-48 would provide certainty to the tax code. It has been over a decade since a bill like this has passed, so it is about time this bill passed. In fact, after question period today, I hope to start third reading of this bill, so perhaps we can get it passed today.

We will also work to bring Bill C-52, the fair rail freight service act, into law. The bill would support economic growth by ensuring that all shippers, including farmers, are treated fairly. Over the next few weeks we will also work, hopefully with the co-operation of the opposition parties, to make progress on other important initiatives.

Bill C-54 will ensure that public safety is the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. This is an issue that unfortunately has affected every region of this country. The very least we can do is let the bill come to a vote and send it to committee where witnesses can testify about the importance of these changes.

Bill C-49 would create the Canadian museum of history, a museum for Canadians that would tell our stories and present our country's treasures to the world.

Bill S-14, the Fighting Foreign Corruption Act, will do just that by further deterring and preventing Canadian companies from bribing foreign public officials. These amendments will help ensure that Canadian companies continue to act in good faith in the pursuit of freer markets and expanded global trade.

Bill S-13, the port state measures agreement implementation act, would implement that 2009 treaty by amending the Coastal Fisheries Protection Act to add prohibitions on importing illegally acquired fish.

Tonight we will be voting on Bill S-9, the Nuclear Terrorism Act, which will allow Canada to honour its commitments under international agreements to tackle nuclear terrorism. Another important treaty—the Convention on Cluster Munitions—can be given effect if we adopt Bill S-10, the Prohibiting Cluster Munitions Act.

We will seek to update and modernize Canada’s network of income tax treaties through Bill S-17, the Tax Conventions Implementation Act, 2013, by giving the force of law to recently signed agreements between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland.

Among other economic bills is Bill C-56, the combating counterfeit products act. The bill would protect Canadians from becoming victims of trademark counterfeiting and goods made using inferior or dangerous materials that lead to injury or even death. Proceeds from the sale of counterfeit goods may be used to support organized crime groups. Clearly, this bill is another important one to enact.

Important agreements with the provinces of Nova Scotia and Newfoundland and Labrador would be satisfied through Bill S-15, the expansion and conservation of Canada’s national parks act, which would, among other things, create the Sable Island national park reserve, and Bill C-61, the offshore health and safety act, which would provide clear rules for occupational health and safety of offshore oil and gas installations.

Earlier I referred to the important work of committees. The Standing Joint Committee on the Scrutiny of Regulations inspired Bill S-12, the incorporation by reference in regulations act. We should see that committee's ideas through by passing this bill. Of course, a quick reading of today's order paper would show that there are yet still more bills before the House of Commons for consideration and passage. All of these measures are important and will improve the lives of Canadians. Each merits consideration and hard work on our part.

In my weekly business statement prior to the constituency week, I extended an offer to the House leaders opposite to work with me to schedule and pass some of the other pieces of legislation currently before the House. I hope that they will respond to my request and put forward at our next weekly meeting productive suggestions for getting things done. Passing today's motion would be a major step toward accomplishing that. As I said in my opening comments, Canadians expect each one of us to come to Ottawa to work hard, vote on bills and get things done.

In closing, I commend this motion to the House and encourage all hon. members to vote for this motion, add a few hours to our day, continue the work of our productive, orderly and hard-working Parliament, and deliver real results for Canadians.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue the debate on today’s opposition motion from the NDP. Pursuant to the rules of the House, time is allocated and there will be a vote after the two-day debate.

Tomorrow we will resume the third reading debate on Bill S-9, the Nuclear Terrorism Act. As I mentioned on Monday, I am optimistic that we will pass that important bill this week.

Should we have extra time on Friday, we will take up Bill C-48, the Technical Tax Amendments Act, 2012, at report stage and third reading.

When we come back from constituency week, I am keen to see the House make a number of accomplishments for Canadians. Allow me to make it clear to the House what the government's priorities are.

Our government will continue to focus on jobs, growth and long-term prosperity. In doing that, we will be working on reforming the temporary foreign worker program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity and parents who adopt; extending tax credits for Canadians who take care of loved ones in their homes; supporting veterans and their families by improving the balance for determining veterans' benefits; moving closer to equality for Canadians living on reserves through better standards for drinking water, which my friend apparently objects to; giving women on reserves the rights and protections that other Canadian women have had for decades, something to which he also objects; and keeping our streets and communities safer by making real improvements to the witness protection program. We will of course do more.

Before we rise for the summer, we will tackle the bills currently listed on the order paper, as well as any new bills which might get introduced. After Victoria Day, we will give priority consideration to bills which have already been considered by House committees.

For instance, we will look at Bill C-48, which I just mentioned, Bill C-51, the Safer Witnesses Act, Bill C-52, the Fair Rail Freight Service Act, and Bill S-2, the Family Homes on Reserves and Matrimonial Interests or Rights Act, which I understand could be reported back soon.

I look forward also to getting back from committee and passing Bill C-60, , the economic action plan 2013 act, no. 1; Bill S-8, the safe drinking water for first nations act; and Bill C-21, the political loans accountability act.

We have, of course, recently passed Bill C-15, the strengthening military justice in the defence of Canada act and Bill S-7, the combating terrorism act. Hopefully, tomorrow we will pass Bill S-9, the nuclear terrorism act.

Finally, we will also work toward second reading of several bills including: Bill C-12, the safeguarding Canadians' personal information act; Bill C-49, the Canadian museum of history act; Bill C-54, the not criminally responsible reform act; Bill C-56, the combating counterfeit products act; Bill C-57, the safeguarding Canada's seas and skies act; Bill C-61, the offshore health and safety act; Bill S-6, the first nations elections act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the port state measures agreement implementation act; Bill S-14, the fighting foreign corruption act; Bill S-15, the expansion and conservation of Canada’s national parks act, which establishes Sable Island National Park; and Bill S-17, the tax conventions implementation act, 2013.

I believe and I think most Canadians who send us here expect us to do work and they want to see us vote on these things and get things done. These are constructive measures to help all Canadians and they certainly expect us to do our job and actually get to votes on these matters.

I hope we will be able to make up enough time to take up all of these important bills when we come back, so Canadians can benefit from many parliamentary accomplishments by the members of Parliament they have sent here this spring.

Before taking my seat, let me formally designate, pursuant to Standing Order 81(4)(a), Tuesday, May 21, as the day appointed for the consideration in a committee of the whole of all votes under Natural Resources in the main estimates for the final year ending March 31, 2014. This would be the second of two such evenings following on tonight's proceedings.

Tax Conventions Implementation Act, 2013

[Bal Gosal, Conservative, Bramalea—Gore—Malton, ON]

moved for leave to introduce 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.

(Motions deemed adopted and bill read the first time)

Message from the Senate

[The Acting Speaker, Conservative, Bruce Stanton]

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