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.

[Patrick Marley]

Yes, the Luxembourg example.

You're absolutely right. If it's determined that one of the principal purposes, in that example, for using a Luxembourg holding company, is to invest into Canada, the principal purpose test turns off treaty benefits under the Canada-Luxembourg tax treaty. For dividends, Canada would impose a 25% withholding-tax rate on dividends to Luxembourg. Article 7(4) says that even if we're applying the principal purpose test, countries like Canada are nevertheless allowed to apply whatever withholding tax rate would be reasonable in the circumstances, rather than applying our full 25% withholding-tax rate.

If your ultimate investors in this example could have been entitled to either a 5% or 15% rate, it would be reasonable in the circumstances for the CRA to apply either a 5% or a 15% withholding rate, rather than the 25% withholding rate, which is what I think we have under Bill C-82.

[Patrick Marley]

Thank you for having me here today. I just want to start by saying that I, too, generally support Bill C-82 and the ratification of the MLI in Canada. However, I do have some important concerns that I want to mention to you with respect to the process and manner in which it's ratified and adopted in Canada. I'm going to break that down into four points. I'll touch on each of them in more detail.

The first is on the principal purpose test, which I think is one of the most significant aspects of the multilateral instrument. We're in dire need of more guidance on how that's going to apply in Canada. Because it's the result of an OECD project, where they strived to get consensus among a broad group of nations, the text is very broad and ambiguous, and the examples that the OECD has provided give very little practical guidance as to how it's going to work in practice.

In contrast, when Canada introduced the general anti-avoidance rule domestically, the CRA, at the same time, came out with a detailed information circular, going through different examples in how they would apply in Canada. I think more guidance is needed on the principal purpose test, particularly with respect to private equity and other collective investments, which is an area that the OECD has struggled with in terms of how that test should apply to collective investors. Really, there's a huge amount of capital that gets invested into Canada that way.

The second point is that I think Canada should be opting into article 7(4). We've currently reserved on that. I'll touch on why it's inappropriate to not have article 7(4) applying, and, really, the double tax or the unfairness that could result without that.

My third point is that Canada should continue to reserve on all of the changes to the permanent establishment threshold. I think that's consistent with the approach Canada has taken to date, and it's really for two reasons. One is that what we have now, in terms of when you have a permanent establishment, is effectively a bright-line test. It's easy to understand. It's well recognized. What the changes bring in the permanent establishment test is a lot of uncertainty, ambiguity, and, really, the ability for countries to argue that there's a permanent establishment when otherwise there might not have been. That, again, can lead to a potential explosion in tax disputes among countries, and could have negative implications for Canadian revenue.

The last point I was going to make is with respect to binding arbitration. I think we should continue to push for binding arbitration in as many treaties as we can. Our firm is perhaps the largest tax litigation disputes firm in the country. I can say, from working at Osler for the past 20 years, the amount of tax disputes in the country have really continued to expand year after year. Binding arbitration is really an effective process for resolving disputes among countries on allocating taxing rights and who should have the right to tax different countries.

To turn back to my first point on the need for more guidance on the principal purpose test, again, the test applies if one of the principal purposes of an investment is to avoid tax. It's often difficult to determine what is a purpose versus a principal purpose, let alone what all of the principal purposes are and whether tax avoidance was a principal purpose. Particularly, as I said, with private equity or other investments, I'll just give a quick example, obviously oversimplified, to illustrate that, together with, in my view, the need for article 7(4) to be applicable.

If you have two investors, one in the U.S. and one in India, each wanting to invest collectively into different countries, including Canada, what will generally happen in this example is the U.S. investor would not want to invest through an Indian company, the Indian investor would not want to invest through a U.S. company. What they would often do is form a holding company, in a third country, to invest collectively. That serves a number of business purposes, including raising larger pools of capital to make larger investments in, say, mines or other development projects.

In my example, if the U.S. and the Indian companies invest, say, in a Luxembourg holding company, the Luxembourg holding company, in turn, could invest in Canada or other jurisdictions around the world. In that simple example, under our current system, if Canada pays a dividend to the Luxembourg company, we would have a 5% withholding tax, which is the same withholding tax that would apply if the Canadian company paid directly to the U.S. company. However, it's different from what would apply if it paid a dividend directly to the Indian company, because we have a 15% withholding tax rate under the Canada-India treaty.

What happens under the MLI is that if the principal purpose test applies—if you determine, in my example, that tax avoidance was the purpose of using this Luxembourg company—then treaty benefits are denied. There's a 25% withholding rate applicable on dividends out of Canada, which is more than what would have applied if either the Indian or U.S. companies had invested directly. Article 7(4) turns off that tap, or allows Canada, in this example, to apply a 5% or 15% withholding tax rate rather than revert to a 25% rate, particularly if it was as a result of commercial reasons that the Indian and U.S. companies invested together.

Admittedly, that's an overly simplified example. What typically would happen is that you'd have a larger number of jurisdictions of investors. Obviously, the U.S. is a major capital-exporting country, so it's not uncommon for large pools of U.S. investments to come into Canada. It's often commingled with investors in Europe or Asia or other jurisdictions. Because we have 93 tax treaties, in most cases the ultimate investors are in one of those 93 countries. That's where the largest capital pools are.

I'll turn now to the “permanent establishment” changes. As I mentioned, if we opt in to that change, it would have a permanent effect, because the election is irreversible, and it would apply to a vast number of treaties. As I believe Stephanie and Trevor mentioned two days ago, Canada might win or lose on that. To give a quick example, in the resource sector right now, resource companies in Canada can sell their resources around the world and pay taxes in Canada based on not having permanent establishments in those other countries. If we were to opt in to that test, it would allow foreign countries in Asia or Europe or other jurisdictions to potentially tax some of Canada's resource profits by arguing that those resource companies have permanent establishments around the world in their jurisdictions based on facilitating contracts or facilitating access to the local markets. It creates significant uncertainty. The taxpayer will always lose, because they'd have to file returns in more jurisdictions, and potentially pay taxes in more jurisdictions, but Canada could lose because it could be ceding taxing rights to other jurisdictions.

As well, because it's such a fundamental change and is irreversible, in my view it should have parliamentary approval; an order in council and subsequent governments should not be allowed to make those changes. As we stand now, any significant changes to tax treaties go through Parliament. In my view, removing that reservation on the permanent establishment changes is of such significance that it should be something for Parliament to decide, and not be done by order in council.

Thank you.

[Toby Sanger, Executive Director, Canadians for Tax Fairness]

Thank you very much, Mr. Chair, and members of the committee.

First of all, I'd like to express my condolences at the loss of a colleague and friend of many of you, former Ottawa Centre MP Paul Dewar. Paul was the same age as me. He was a neighbour and a friend. He always built on the positive side of people and situations all through his life of public service. He was devoted to the less fortunate right through to his final days, and I hope he inspires many others to do the same.

This legislation, Bill C-82, which would enable Canada and other countries to effectively implement wholesale changes to their numerous bilateral tax treaties is, in general, very much a positive step forward to reduce the hundreds of billions in revenues that are lost annually around the world from aggressive international tax avoidance, primarily by larger corporations. This represents approximately $1 billion in Canada, if you include everything.

This multilateral instrument is the culmination of five years work through the OECD's base erosion and profit shifting initiative. It's an efficient way of consistently adjusting the thousands of bilateral tax treaties that have been signed between nations in order to implement a number of action measures of the whole BEPS process. By having a generally consistent set of measures, it will limit but not entirely eliminate the practice of treaty shopping that many large corporations have engaged in to avoid taxes and drive a race to the bottom.

The introduction of these changes will be especially beneficial for lower-income countries by strengthening the rules for taxation based on the source of the economic activity and not the putative residence, often in the tax haven of the corporation. It will limit tax avoidance through hybrid mismatch arrangements that exploit differences in tax treatments, treaty abuse through double non-taxation, and the avoidance of permanent establishment. These are all positive measures.

At the same time, there are some concerns about the part IV provisions for mandatory binding arbitration, as these opaque and secret panels rarely favour source countries, and they should consider not opting into them.

Article 17 also has some problematic measures, and countries should consider making a reservation under this section.

While this bill and the 2015 BEPS initiative that it stems from are positive, they are limited. They are all about patching a system that has a lot of problems, and they are now about to be eclipsed by much more important and fundamental changes that need to be made to the international corporate tax system.

Two weeks ago, following meetings with almost 100 countries in Paris, the OECD issued a policy note entitled “Addressing the Tax Challenges of the Digital Economy”. In the words of Alex Cobham, chief executive of the Tax Justice Network, “The three pages of text in this...policy note may be more significant than the thousands that made up the BEPS project.”

The archaic arm's-length transfer pricing system that underlies our international corporate tax system, which this bill is trying to patch up in different ways, is so broken and ineffective for our new economy that major countries around the world, including the United States, the U.K., France, Germany and others are already leapfrogging it with a range of different measures to tax large digital corporations using different approaches based on their actual economic activity in their country.

National revenue authorities have found that the transfer pricing approach also enables traditional and resource sector corporations such as Cameco to easily avoid billions in tax. There has been a case of CRA taking Cameco to court, but the courts have sometimes sided with the companies over transfer pricing.

What we ultimately need to do is to move to a unitary international corporate tax system with an apportionment of corporate profits to different countries based on their share of sales, payroll and/or other factors, preferably with a minimum corporate tax rate. This is a very straightforward system, and it's exactly what we have in place in Canada to apportion corporate profits for tax purposes between provinces. It's also the system used by American states and other federal countries to apportion corporate profit. We have this in place within Canada and other countries. We need to move to this globally as well.

In addition to its simplicity, the beauty of this approach is that a global agreement isn't necessary to proceed. It's preferable that Canada could move forward in this way, just as the United States, the U.K. and other European countries are doing.

The other beauty of this approach is that it would increase tax revenues from multinational corporations by about 33% to 50% according to the IMF, and by significant amounts for lower-income countries, which are the ones most harmed by the existing system.

In conclusion, this bill is a positive step, but we can and must take much bigger steps forward to develop a more equitable and functional international corporate tax system, and it doesn't need to be that complicated. It's the smaller and medium-sized businesses that lose out, mostly from the international corporate tax system that we have right now. They often pay a higher rate of tax than do the large corporations that are able to exploit the system that exists right now.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order as we look further at Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting.

We have two witnesses: Patrick Marley, partner and co-chair of taxation at Osler, Hoskin & Harcourt LLP; and Toby Sanger, executive director of Canadians for Tax Fairness.

I assume you probably have opening remarks, and then we'll go to questions.

Who wants to start?

Go ahead, Toby. You've been here before.

I don't know if you have ever been here, Patrick.

[Stephanie Smith, Senior Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance]

The bill was signed in June 2017. Following that, the government tabled this implementing bill, Bill C-82, to enact the MLI into Canadian domestic legislation. Following royal assent to this bill, Canada would be in a position to notify the depositary of this convention that it has completed all necessary procedures to implement the bill in domestic law. Then the multilateral instrument would be in force, in respect of Canada, a three-month period after such notification.

[Trevor McGowan, Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance]

Thank you, Chair.

We appreciate the opportunity to appear before the committee today to speak about Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. This convention is generally referred to as the MLI.

The substantive provisions of the MLI are based on the results of the OECD/G20 base erosion and profit shifting project, the BEPS project. This includes the final report on BEPS action 6, entitled “Preventing the Granting of Treaty Benefits in Inappropriate Circumstances”, and the final report on BEPS action 14, entitled “Making Dispute Resolution Mechanisms More Effective”.

The OECD and G20 BEPS project was initiated in 2013 with the objective of developing a coordinated approach to addressing concerns over BEPS. The project now involves not only OECD and G20 countries but also more than 120 jurisdictions known collectively as the “inclusive framework” on BEPS. BEPS is a term used to describe aggressive, but nonetheless legal, tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift income to low- or no-tax jurisdictions. Countering such strategies requires a coordinated international response. The MLI is an important component of that coordinated international response.

Over 100 jurisdictions participated in the negotiations that led to the conclusion of the multilateral instrument. To date, 87 jurisdictions have signed the MLI. Bill C-82 would bring the MLI into force with respect to Canada and allow Canada to swiftly modify the application of many of our bilateral tax treaties to include BEPS countermeasures without the need for separate bilateral negotiations.

The MLI represents a big step forward in strengthening international tax integrity and tax fairness. Specifically, the MLI would allow Canada to address treaty abuse in accordance with the minimum standards established by the OECD/G20 base erosion and profit shifting project. This includes the adoption of a new treaty preamble, which states that the object of a tax treaty is not to create opportunities for tax avoidance, and also a principal purpose test, which is a substantive anti-abuse rule designed to counter treaty abuse.

ln addition, the MLI would allow Canada to incorporate provisions in its tax treaties dealing with the resolution of tax disputes that are in accordance with the minimum standards and to adopt mandatory binding arbitration with many of our key treaty partners. Mandatory binding arbitration is a mechanism that obligates the parties to a tax treaty to submit unresolved cases to an independent and impartial decision-maker—an arbitration panel. The decision reached by the arbitration panel is binding on the parties and resolves the case.

Chair, this concludes my introductory remarks. My colleague and I would be pleased to answer any questions the committee may have.

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

This is our first full committee meeting in new digs. Welcome to everyone. Pursuant to the order of reference of Monday, October 15 of last year, we are here to discuss Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting.

To start on this bill, we have with us, from the Department of Finance, Stephanie Smith, Senior Chief, Tax Legislation Division; and Trevor McGowan, Director General, Tax Legislation Division.

Welcome to both of you. The floor is yours.

[The Chair, Liberal, Wayne Easter]

We need a motion to accept the committee report.

The subcommittee met on Monday, October 29. Members have a copy of the motion that was agreed to, which outlines the procedure and how we'll handle Bill C-86. I don't think there are any additions to it. Point 2 indicated that, in relation to the pre-budget consultations, the proposed travel to San Francisco and Houston, Texas, scheduled for the fall, be postponed until a later date. Third, the order of reference to commence the study of Bill C-82 would be dealt with in early 2019.

That's the motion, and members of all parties were there.

Is there agreement on the committee report?

Taxation

[Joël Lightbound, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I thank the member for Hull—Aylmer for his question and for the work he has done on this issue as a member of the Standing Committee on Finance. We have always made it clear that fighting international tax evasion and international tax avoidance is a priority.

We implemented the common reporting standard to allow us to share information with almost 100 other countries to help investigators track money hidden in offshore accounts.

We are also working with the provinces and territories to set up a registry of beneficial owners of companies, as requested by the anti-tax haven collective Échec aux paradis fiscaux.

This spring, we introduced Bill C-82. This bill would implement OECD reforms to existing international tax agreements to prevent corporations and individuals from using aggressive tax avoidance schemes.

Multilateral Instrument in Respect of Tax Conventions Act

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

The answer is yes, Madam Speaker. I said it in my remarks earlier, and I say it again here. I will be supporting Bill C-82, because I agree with the intent of the bill. However, as I pointed out in my remarks, the government has failed in its ability to follow through on that intent.

I have not seen any meaningful recovery of tax dollars yet by the government. There has been some minor recovery, but certainly not to the extent the government should be attacking the problem.

The problem is that currently between $20 and $60 billion a year is leaving this country through tax avoidance measures by multinational corporations. Think of what that $20 to $60 billion could do for our country. Think of the benefits for our country in terms of health care, as one example.

The government has shown decidedly no desire whatsoever to go after some of these multinational companies that continuously flout the tax system by avoiding taxes. Instead, and I have to point this out, since my hon. colleague raised the question, all the government has done over the past couple of years is try to label small business people as tax cheats. If there are tax cheats out there, they are on the large multinational scale.

The government has done absolutely nothing to try to recover that money but instead tries to turn hard-working, small business people in Canada into tax cheats themselves with its own legislation, and that is shameful.

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

Madam Speaker, I am very pleased to participate in this debate. I was thinking just the other day that one of the most offensive words in the English vocabulary, and perhaps the vocabulary of others throughout the world, has to be “taxes”. People hate taxes. More specifically, people hate paying taxes. This should come as no surprise to anyone. I do not like paying taxes. I do not think anyone does, but there is a huge difference between paying taxes as required by law and individuals or sometimes companies and multinational corporations deliberately finding ways to avoid paying taxes.

There are many old sayings that I could bring to the floor today and I will invoke a couple of them. One, of course, is that the only inevitable things in life are death and taxes. That just shows a predisposition by people to accept the fact that we are taxed, and perhaps over-taxed, unnecessarily. People have accepted it, but they do not have to do so willingly.

I recall many years ago a media broadcaster and commentator in the United States by the name of Arthur Godfrey, who once said, “I am proud to pay taxes in America”—because he understood understand that the taxes paid for all of the benefits, programs and services he received—“but I could be just as proud for half the money.” That is the reality that we face today in our everyday lives. We understand that we need to pay taxes to be able to pay for the programs and services that we receive, but do we really have to be paying as much as we currently do?

That debate we can have, but what is non-debatable is the fact that everyone needs to pay their fair share, and I emphasize the word “fair”. What we have seen over the last number of years is the proliferation of multinational companies that are not paying their fair share of taxes. That is the genesis of Bill C-82 that we are debating today.

In fact, we have seen, and there has been empirical evidence provided, that many multinational corporations are not just attempting to reduce their tax obligations and tax burden, but are actively trying to avoid paying taxes. That is where I have to disagree, and disagree vehemently, with those who would try to take advantage of what is undoubtedly a complicated tax code and tax system and deliberately try to undermine that tax system that affects all of us by deliberately avoiding their fair share of taxes.

Over the last number of years, certain articles have come to light, most specifically the Panama papers, which contain the names of Canadians who have been avoiding paying their fair share. I have been a firm believer all my life that every single person understands, from the first moment they are able to achieve cognition, the difference between right and wrong. I have no issue and take no issue whatsoever with individuals, corporations or companies that do everything they can to legally reduce their tax burden, which is fair game, but I do take issue with multinational corporations that have sometimes deliberately used illegal methods to avoid paying taxes.

I support Bill C-82. It is a step in the right direction. Quite frankly, I have criticized the current government for not going far enough. It has talked a good talk, but I have not seen it walk the walk yet in terms of recovering lost money that should have been paid into government coffers to provide the very programs and services we all enjoy. However, I at least applaud and agree with the initiative to bring forward Bill C-82. I certainly will be supporting it, because I hope that over time this and perhaps future governments will be able to more effectively collect the monies duly owed this country through lost taxes.

I also believe that Bill C-82, while admirable in its intent, does not go far enough. In fact, I would suggest that what we need to engage in now is to talk about tax policy in general, because one is connects to the other. Indeed, we are losing money to tax avoiders and tax cheats. Moreover, we also need to have a conversation about the level of taxation in this country and how it affects this country's competitiveness.

I have been alarmed over the last number of years to discover the amount of money, the amount of investment, that is leaving this country to go south of the border primarily because of the reduction in taxes by the new U.S. administration. The United States has drastically reduced its corporate taxes to a point where Canadians and Canadian businesses are moving south of the border because they find it a more attractive tax environment than here in Canada. I find that truly alarming.

We have implored the current government to try to come to grips with that, to try to reduce the tax burden here in Canada both on the corporate side and the individual side. However, so far, we have not had a very receptive audience. We find time and again that whenever we get financial updates from very reputable organizations and financial observers, not just in Canada but throughout the world, they say that Canada is losing investment capital to the United States because of our failed tax policy. I believe that has to be addressed. I would again implore the current government to deal with this quickly.

I have seen over time that tax policies certainly vary from jurisdiction to jurisdiction. However, one thing that is undoubtedly true is that excessive taxation is a problem for the citizens of every jurisdiction. It creates a system where both individuals and companies, but primarily large companies, aggressively try to avoid taxes because they believe they are overtaxed to begin with. In fact, I believe that this regressive tax policy and taxation in general, and high taxes in particular, cause individuals and corporations to try to avoid paying their taxes. As a matter of fact, I recall a statement by an old Republican warhorse by the name of Barry Goldwater, who once opined many years ago that the taxation has created more criminals than any other single act of government. That is true. Excessive taxation creates criminals, because individuals will do whatever they can to avoid paying what they believe to be excessive or unfair taxes. Once again, that is a debate that perhaps we can have at another time.

Currently, the level of taxation, both corporate and individual, in this country is proving to be uncompetitive. I do not want to see a situation where months or years from now we have to tell our children that the best thing they can do is to move out of this country to a place that has a more favourable tax regime to start a business, because here in Canada it is uncompetitive and they will simply be unable to compete.

It does not have to be that way. If we put our minds to it, and if there is the political will, we can do something about this unfair tax regime and the uncompetitive environment we find ourselves in today.

Let me conclude simply by saying that while I agree with, and will certainly support, Bill C-82, much more work needs to be done. I have not yet seen the government prove that it is willing to take the steps necessary to improve the competitive situation in this country, and once again, I implore it to do so.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Madam Speaker, I thank my colleague for his excellent question and important work on all of these issues at the finance committee and here in the chamber. I think he is exactly right that when it comes to the activities of the CRA, we often do not see the same opportunities available to people who are not in that category of well connected and able to hire lawyers. Unfortunately, this often happens when people do not have the same sort of fiscal capacity to fight back against injustices that are affecting them and are necessarily more vulnerable to the actions of government, of regulators in government departments, and so forth.

It is sometimes presumed by my colleagues in other parties that bigger, more powerful government is somehow good for those in the middle and those who are struggling. I think the opposite is very often the case, that when we have bigger government, it becomes accessible to and aligned with the interests of those who are well connected. That is precisely the reason why I think we need limited government, a constrained government. A government that is constrained by an understanding of the rights of citizens ensures that those who do not have the connections, the lawyers, the lobbyists can have their rights and interests protected. That is what Motion No. 43, seconded by my colleague, would have achieved.

Bill C-82 certainly makes progress. However, there is so much more to do that could have been done. Hopefully, after the next election and the next parliament we will have an opportunity to finally move forward with some of the measures that Conservatives have been proposing for a long time to fix the CRA and ensure that people are treated fairly.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, the member mentioned all of the opportunities the government and all members have had in the House to further simplify things for Canadians, both in applying for and receiving benefits from the Canada Revenue Agency and also avoiding four tax measures that would have drastically improved the lives of everyday Canadian families who are trying to make ends meet. It is a juxtaposition with Bill C-82. In this bill, the bill that I reference as the tax treaty for tax treaties, the government is proposing to make sure that large multinational corporations that are able to afford the best-paid lawyers and accountants are taken to task when they engage in aggressive tax planning.

There is also a cultural issue that has been mentioned before about the behaviour of the CRA when it comes to large corporations. We have seen it make deals with KPMG so its clients do not suffer, but the same type of willingness for the culture of settlement does not seem to exist for everyday Canadian families or single moms who are trying to get the child benefit.

Can the member comment more about his experience in his riding for families trying to comply with CRA regulations?

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, we are continuing the discussion on Bill C-82, which is a bill dealing with implementing certain provisions of an international agreement with respect to tax avoidance. In my remarks prior to question period, I discussed the particulars of the bill. I discussed our support for the bill. I also touched on a number of other issues that have been important in the debate on this bill and relate to its provision. I want to come back to those likely areas of disagreement among the different parties.

This bill deals with, in substantial part, the activities and operations of the Canada Revenue Agency. It has been interesting throughout this debate to hear various members of different parties talk about how the CRA interacts with different people, how it should treat people. All of us as members of Parliament hear these stories when people come into our offices. We hear of people who have just had terrible disruption occur in their lives as a result of actions of the Canada Revenue Agency, people who are treated unfairly, who may actually have been in the right but are put through a long, disruptive process and are ultimately not compensated for the disruption that is caused to them as a result of CRA activities.

Very early in this Parliament, a member of the Conservative caucus, the member for Calgary Rocky Ridge, decided to do something about this. My colleague from Calgary Shepard seconded that motion and was very active in this initiative as well. Motion No. 43 was put forward. It created the opportunity for progress toward establishing a duty of care, which should not be that revolutionary, that in interacting with individual taxpayers, the tax authority has a duty of care, that it ought to be fair to them and accord them certain rights and the taxpayers bill of rights ought to have some concrete enforceability. I think if any members asked their constituents whether CRA should have a duty of care, they would say yes. If they asked constituents whether the taxpayers bill of rights should be enforceable, they would say yes.

This motion is very reflective of a Conservative philosophy toward government, which is, in this case, that government ought to be formally constrained in a way that protects the fundamental rights of individuals and that restraint requires us to constructively pass motions and initiatives that ensure government is bound to behave in a way that is proper toward citizens and that respects their rights as individuals and as taxpayers. However, when the motion came up for a vote, every member of every other party who was present chose to vote against it.

Today, when these different issues of challenges that individuals face in their interactions with CRA come up, my colleagues in other parties, the NDP and the Liberal Party, are keen to tell us about the actions they are taking and about the impact on individuals, yet they were unwilling to take the clear, obvious action which would have constrained forever the CRA from engaging in abuses of power in their interactions with individual taxpayers. Maybe I will hear from them during questions and comments. Maybe we will hear from some of the different members who have spoken already today about why they voted against providing taxpayers with that basic protection to ensure they are treated fairly.

I made the point as well that when it comes to issues of tax avoidance, a complicated tax code that limits the manoeuverability of those who cannot hire expensive tax lawyers is particularly regressive. The government has sought to implement tax changes that have always protected the most well connected and well off, while imposing new higher taxes on individuals.

I want to highlight specifically the issue of income splitting, because this is quite revealing about the approach the government took. Under the previous government, we had a policy of allowing everybody to split his or her income, recognizing that two families making the same amount of money should be able to split their incomes such that two families with the same income pay the same amount of tax. The Liberals opposed income splitting and repealed it. They repealed income splitting for the wage earner, and then they said it was a problem to have income sprinkling that potentially allows income splitting for people in the small business world, that somehow that is an inequality, an unfairness that exists in the system. There are a lot of things that argument totally misunderstands.

One could also point out that to the extent there might have been an inconsistency in terms of the ability of some people to do that and others not, it was an inconsistency created by a policy decision of the Liberal government, which was to raise taxes on families by undoing what had been the previous Conservative tax cut for families, which was to bring in income splitting.

We see all these different ways in which Liberals are increasing taxes: the carbon tax, getting rid of income splitting and refusing to pass concrete measures holding CRA accountable. It is important to note these measures target those who actually need tax relief the most. It was Conservatives who targeted tax relief to middle-income and low-income Canadians. We raised the base personal exemption. We lowered the GST. We lowered the lowest marginal tax rate. We did not make any changes to higher income brackets. That is our record: standing up for those who need the help most by cutting their taxes and giving them more power over their own lives.

The House resumed 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.