Bill C-82 (Historical)

Multilateral Instrument in Respect of Tax Conventions Act

An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

This enactment implements a multilateral instrument in respect of conventions for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
The multilateral instrument is an international treaty developed as part of the G20 and OECD’s project to tackle base erosion and profit shifting (BEPS). The purpose of the multilateral instrument is to modify, in their application, tax conventions between two or more parties to the multilateral instrument so as to further the objectives of the tax convention. The multilateral instrument operates alongside tax conventions to modify them in their application; it does not directly modify the text of the tax conventions. The multilateral instrument will apply to a Canadian bilateral double tax convention only if both parties to the convention notify the depositary that the convention is intended to be covered by the multilateral instrument. The Secretary-General of the OECD is the depositary of the multilateral instrument. The implementation of the multilateral instrument requires the enactment of this Act.

Multilateral Instrument in Respect of Tax Conventions Act

[The Speaker, Liberal, Geoff Regan]

There will be 10 minutes for questions and comments following the member for Carleton's speech when the House next resumes debate on this topic.

It being 1:30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

The House resumed from September 28 consideration of the motion that Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, be read the second time and referred to a committee.

[The Deputy Speaker, Conservative, Bruce Stanton]

When the House last took up debate on this question, the hon. member for Carleton was to have a full 10 minutes for questions and comments.

We will now go to questions and comments, the hon. member for Carleton.

[Tom Lukiwski, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Mr. Speaker, I wonder if my colleague from Carleton could expand a little bit on his thoughts about tax evasion in general and what Canada should be doing but has not been doing in terms of trying to recover some of this lost revenue.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, there is no question that the governing side has some expertise on this. We have a finance minister who, after increasing income taxes that took effect January 1, 2016, deliberately carried out a massive sale of shares just a month before that tax increase would take effect so that he would not have to pay higher taxes on his capital gain.

This is the same finance minister who registered his shares for a Toronto company in Alberta, even though he lives in Toronto, so that he could pay the lower corporate tax rate in Alberta, rather than paying the same tax rate as everyone else in the province in which he lived.

This is the same finance minister who set up a subsidiary for his family business, Morneau Shepell, in Barbados, which is a jurisdiction notorious for allowing corporations to avoid paying their fair share of taxes.

Then, of course, we have the Prime Minister, who despite being a multi-millionaire recipient of trust fund money from his family, has accepted hundreds of thousands of dollars of speaking fees and other benefits that other Canadians could not dream of receiving.

They are the trust fund twins, the finance minister and the Prime Minister, wanting to tell us that they are going to bring tax fairness to Canadians. It is just a little bit rich.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, as the Conservatives and particularly the member across the way want to continue the personal attacks on members of this House, this government will continue to be focused on what really matters to Canada's middle class and those who aspire to be a part of it.

An interesting question about tax fairness is this. Exactly what did the Conservative Party do? The member in one sense is correct when he says that there was a special tax put on Canada's 1% wealthiest, something which the Conservative Party voted against. The members across the way need to be reminded of that. When it came time to have a decrease for Canada's middle class, the Conservative Party voted against that tax break.

I wonder if my friend from across the way can tell Canadians why he voted against the increase to the taxes for Canada's wealthiest 1% and the tax break for Canada's middle class.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, I did no such thing. In fact, according to the CRA, the wealthiest 1% paid $4.5 billion less in the first year after the government's tax changes took effect. According to the renowned and objective Fraser Institute, the middle class paid $800 more as a result of the tax changes by the government. Therefore, as a result of the tax changes by the government, the wealthiest 1% are paying $4 billion less, while a middle-class family is paying $800 more. That is the sum total of their changes.

What did the Conservative Party do? That was my colleague's other question.

According to the Parliamentary Budget Officer, the previous Conservative government reduced taxes by $30 billion with a preponderance of that money going to low- and modest-income families. That is why poverty fell by almost one-third during the previous Conservative government and middle-class incomes were up by over 11% after tax and inflation, the largest increase of any government in the last 40 years. That is what the Conservative Party did.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I want to give the member for Carleton an opportunity to answer this. I am going to make the question as simple as possible to follow up on the last one, because I know he is very good at doing that during question period. He wants a direct question so that he can get a direct answer. I am going to ask the direct question that he did not answer from the previous question.

Why did he and the Conservative Party vote against cutting taxes for the middle class and increasing taxes for the 1%? Why did they vote against it? I would like an answer to that question.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, the answer is that we did not. The government introduced changes to the tax system that had the effect of lowering taxes on the wealthiest 1%. This is CRA data. If the government does not like the CRA, then it should talk to the officials there.

The CRA has reported that in the first year after these tax changes took effect, the wealthiest 1% paid $4.6 billion less in income taxes while middle-class Canadians paid $800 per family more. How did they pay more? They lost the children's fitness tax credit. They lost the transit tax credit. They lost the education tax credit. They lost the textbook tax credit, in addition to the overall tax burden. That does not even include the carbon tax and the increases in payroll taxes that are expected to take effect on January 1 of this coming year and in the year following that.

Even without those additional forthcoming tax increases, middle-class people are already paying more while wealthy people are paying less. That is what we voted against.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I wonder if our hon. colleague could expand on the comparison between the current Liberal government and the record of our previous Conservative government.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, Conservatives were obsessed with lowering taxes for the people who needed it the most, the working poor, the struggling middle class.

We cut the GST from 7% to 6% to 5%. We brought in the working income tax benefit, which gives a 25% pay raise to people who earn between $3,000 and $11,000 a year. We raised the personal exemption so that one million of our poorest working people would no longer pay income tax at all. We lowered the payroll tax, which is one of the most regressive taxes that targets the working poor, our youth, and our disabled. The people who need the money the most were able to keep the most under our government.

According to the Parliamentary Budget Officer, under the Conservative government, tax reductions amounted to $30 billion and the preponderance of those savings went to low- and modest-income people. We allowed the working poor to springboard into the middle class and that is why poverty was down almost one-third while the Conservatives were in government.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is like looking over there and seeing Stephen Harper all over again. That has to scare a lot of Canadians.

The reality is that there was legislation and there were budgets. It is unbelievable that the Conservatives are trying to deny factual history. Do not let the facts get in the way of a good speech seems to be their motto.

The Conservatives voted against tax breaks for Canada's middle class. There is no two ways about it. The record will show that. The Conservatives voted against having a special tax on Canada's wealthiest. The member talked about poverty. Through the Canada child benefit, our government lifted hundreds of thousands of children out of poverty, not to mention what we did with the guaranteed income supplement, which lifted thousands of seniors out of poverty.

Where does the member get his facts from?

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, I am glad that the member asked that question. I get my facts from the Canada Revenue Agency, which says that the wealthiest 1% are paying $4.6 billion less under the Liberal government. Should we really be surprised, when we have the trust fund twins, the Prime Minister and the finance minister, making tax policy?

One of them received a multi-million dollar trust fund from his grandfather's petroleum empire, and I speak now of the Prime Minister, and yet he had the audacity to take money from charities for speaking fees that all members of Parliament typically give for free. He then forced middle-class and working poor Canadians to pay for his $30,000 worth of nanny services. This is someone who has lived in government-funded mansions for the better part of his life.

Then there is the finance minister, who registers his assets in Alberta even though he lives in Ontario, so that he can avoid paying the taxes that everyone else pays.

What else would we expect from the trust fund twins but more breaks for the wealthy, which is exactly what the Liberal government has delivered?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I will be splitting my time with my friend and colleague from the east coast from the riding of Sackville—Preston—Chezzetcook. It is great to see him in the House this morning.

It is great to be back in the House this morning and to hear some of the debate. It is not so great to hear the level of discourse coming from members on the other side, the opposition benches, where they will stay for a very long time if they continue as such. I say that through you, Mr. Speaker, to my friend from Carleton, who I sit on the finance committee with.

Bill C-82, an act to implement a multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting, is one of those international accords we can all applaud. We can also applaud the tax cut for nine million Canadians, which brought about $20 billion in tax savings over a four-year period, or about $550 per year per couple. To a working couple benefiting from our tax cut for middle-class Canadians, $550 is a substantial amount of money. It helps pay for many activities for their kids. It helps put gas in their vehicle and to buy groceries and so forth. It is too bad the Conservatives voted against that, and I think they need to be held to account for that. It is too bad they also voted against the Canada child benefit, which benefits nine out of 10 Canadian families, representing an average of $2,300 more. In my riding of Vaughan—Woodbridge, I consistently hear about how the Canada child benefit is helping families fund their kids' day-to-day activities.

It was also noted about what is called “refundable” or “non-refundable” tax credits. A lot of the boutique tax credits the opposition party member referenced in his comments were ones working middle-class Canadians could not take advantage of because they did not have taxes payable, and only benefited wealthier working Canadians. It is a little fact that was missed.

Turning to Bill C-82, OECD Secretary-General Angel Gurría said the following:

The conclusion of this multilateral instrument marks a new turning point in tax treaty history. We are moving towards rapid implementation of the far-reaching reforms agreed under the BEPS Project in more than 1,200 tax treaties worldwide. In addition to saving the signatories form the burden of bilaterally renegotiating these treaties, the Convention will result in more certainty and predictability for businesses and a better functioning international tax system for the benefit of our citizens.

Bill C-82 basically follows our government agenda from budget 2016. In chapter 8, we talked about making our tax system fairer, simpler, more efficient and also ensuring all organizations, enterprises and high net worth individuals follow the tax rules that everyday businesses and people in my riding follow. It is great to see Bill C-82 come to the House for approval, and it is great to see our party is shepherding this as quickly as possible.

On a personal note, I sat on the Canadian Institute of Chartered Accountants user advisory council for a number of years. I understand full well the importance of working with our international partners at various accounting institutions in the world, and also with our partners for multilateral purposes, including the base erosion and profit shifting deal.

To give an indication of the annual losses that are occurring, the OECD estimates 10% of global corporate taxing income, or approximately $100 billion to $240 billion is lost, where little or no overall corporate tax is being paid. This agreement is far-reaching. Working together in the OECD G20 BEPS project, over 60 countries developed 15 actions to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment. Leaders of OECD and G20 countries, as well as other leaders, urge the timely implementation of this comprehensive BEPS package.

That information comes right from the document I was reading over the weekend on the multilateral convention to implement tax treaty-related measures to prevent BEPS from OECD. I encourage my colleagues to read it because it is an interesting document.

It pertains to our economy and ensuring we have a strong middle class and that we continue to help those who are working hard to join the middle class. It pertains to ensuring that all corporations in Canada with operations in the world and vice versa, those foreign entities that operate in Canada domestically, pay their fair share, much like all our residents do in each of our ridings. With that, it is great to stand up and speak to Bill C-82.

Taxes paid by Canadians are what fund the programs and services that make our country thrive. When the wealthy use international tax avoidance schemes to avoid paying what they owe, it is the hard-working middle class, those folks in my riding of Vaughan—Woodbridge, who foot the bill. That is unacceptable.

Tax fairness continues to be a cornerstone of our government's promise to Canadians to grow a stronger middle class. In each of our three budgets, the government has passed laws on both the international and domestic fronts to enhance the integrity of Canada's tax system and give greater confidence that the system is fair for everyone. I encourage some of the opposition folks here this morning to look at our budgets. They are actually great documents that pertain to tax fairness for all Canadians, especially with respect to putting in resources. Over $1 billion was invested in the CRA, after those many years of cuts by the Conservatives. The Conservatives are synonymous with cuts to the system and the CRA. We want to ensure that all institutions in Canada are paying their fair share, because we know all hard-working Canadians go to work, pay their fair share of taxes, and want to make sure they create a better standard of living for their families and a better future for their children and for all Canadians.

Since our first budget in 2016, the government has continually strengthened the ability of the CRA to crack down on tax evasion and combat tax avoidance with increased funding. This funding has supported transformational changes to the CRA's compliance programs, allowing them to better target those posing the highest risk of tax avoidance, and more effectively fight tax evasion and aggressive tax avoidance.

Today we take another step toward levelling the playing field and ensuring all Canadians pay their fair share of taxes. With this legislation, the Government of Canada is upping the ante in the fight against aggressive international tax avoidance and safeguarding the government's ability to invest in the programs and services that help the middle class and people working hard to join it. Whether it is putting in place a 10% increase in the guaranteed income supplement for our most vulnerable seniors, increasing the Canada workers benefit for those hard-working Canadians at the lower end, giving them that bump up, that extra few hundred dollars a year to make a big difference in their lives, we are doing those things while ensuring that our tax system is sound, efficient and fair for all Canadians and all Canadian organizations.

Ensuring tax fairness is complex. I know that for a fact because I sat on the CICA user advisory council. Understanding tax and accounting language does require a certain amount of specialization. It requires that we work with a wide range of partners at home and around the world, which is what we have done with the legislation we are debating today.

Bill C-82 would implement treaty-related measures to counter base erosion and profit shifting, also known by its acronym BEPS. This term refers to tax avoidance strategies through which businesses and wealthy individuals can use gaps and loopholes in tax rules to shift profits inappropriately to low-tax or no-tax locations. It would also ensure that transfer pricing is done fairly.

My riding is blessed with entrepreneurs of all different stripes. The city of Vaughan has over 11,000 SMEs. We have some of the most successful entrepreneurs in the country. I applaud their efforts. I meet with them regularly. I like to listen to what is working to ensure they have the skills and resources for their workers and that they can invest in their Canadian operations, and they are doing that.

That is why our unemployment rate is at a 40-year low. That is why our growth rate is near 3%. That is why firms across the world are choosing Canada to invest in. I am proud of that. However, we also need to make sure that our social programs are funded, that investments are made in early learning, that we enhance the Canada pension plan, that we reduce taxes for nine million Canadians. Yes, we ask those who are very fortunate and privileged in our society, those who are doing well, to pay a bit more. I think that is fair. I wish my colleagues on the opposition benches would appreciate that as well.

With that, I would like to close by saying that Bill C-82 is a good piece of legislation. It concerns an instrument that has recently been ratified by our counterparts, by many European countries, by France, Australia, Singapore, and some of the South Asian countries which have also adopted it in the last few weeks.

It is something that moves the needle forward on combatting aggressive tax avoidance and tax evasion, which is something good for our society. It makes our society fairer but at the same time allows those companies and corporations that do the right thing day in and day out to make the right decisions for their employees and their employees' families. I will end with that.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Speaker, I will begin by telling the member about the so-called middle-income tax break. For Canadians earning $48,000, the tax break was $81.44. If we include an increase in the carbon tax and the increase in payroll taxes that people are paying at the end of the year, they are actually worse off under the current government than they were at any time between 2006 and 2015. That is just on domestic taxation.

The member crowed about how great CRA is doing, but I am hearing from small businesses in my riding and from many of my constituents about how aggressive CRA has become in its collection process, especially against single moms who are just trying to collect their child benefit, and from small business owners who are just trying to make ends meet. It is garnishing wages and getting straight into the bank accounts.

Is this the way the member imagines the CRA should be behaving with our small businesses, small entrepreneurs and single moms who are just trying to make ends meet? With the rising cost of living, at the end of the day, what matters is whether Canadians can make ends meet and whether businesses can actually pay their employees. CRA is making it much harder than at any point before 2015.