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

[Ginette Petitpas Taylor, Liberal, Moncton—Riverview—Dieppe, NB]

moved that the bill be read the third time and passed.

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

Mr. Speaker, I am pleased to speak today about the importance of tax fairness and to join the debate on Bill C-82. I would like to use my time to explain how the bill would become an important new tool in the government's arsenal to combat aggressive international tax avoidance.

Tax fairness is fundamental to our democracy. It is a cornerstone of our government's plan to grow the middle class and spur economic growth so that more people can join it. In each of our government's last three budgets, we introduced measures to enhance the integrity of Canada's tax system. We continue to do work and take action in this regard so that Canadians can have confidence that their tax system is working and is fair.

As part of these actions to improve tax fairness, we introduced Bill C-82. The bill is a response to a profound challenge. When some Canadians choose not to pay their fair share of taxes, all of us are affected. What does this mean for Canadians? It means less money for important social programs to help new parents take care of growing families, workers find skills training or seniors live in independence. It means less money for vital infrastructure such as the roads, railways, ports and airports that help people and goods move safely and on time to where they need to go. As well, it means less money for policing our communities, health care and the environment. I could go on and on.

This is why it is important to make sure our tax system is and remains fair—

[The Assistant Deputy Speaker, Carol Hughes]

I want to remind members that there is a debate going on. If they wish to take their conversations outside, it would be much appreciated.

The hon. parliamentary secretary.

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Speaker, our government believes that all Canadians deserve to reap the benefits of a strong and vibrant economy. It goes without saying that this is made possible through a fair tax system.

Now I would like to talk about the bill before us in detail. Bill C-82 will give Canada better tools to fight what is known as tax base erosion and profit shifting, which is also known domestically and internationally as BEPS. The issue is tax avoidance strategies that wealthy companies and individuals use to exploit loopholes in the tax system. They take advantage of these loopholes to avoid paying tax or to shift their profits to low- or no-tax jurisdictions.

These schemes enable wealthy companies and individuals to avoid paying their fair share of taxes. They rob Canadians of the tax revenue that pays for the services and benefits that make Canada a good place to live and a more just and equitable society.

We have worked hard to combat that loss of tax revenue. In particular, I would highlight the work we have done on this with our international partners. We have worked with our partners at the Organisation for Economic Co-operation and Development, the OECD, and other G20 nations to identify ways in which our current tax treaties are vulnerable to potential abuse.

Those organizations then developed measures that the countries can choose to include in their tax treaties to directly address those vulnerabilities. This new approach also addressed the fact that it would take a long time to renegotiate existing tax treaties one by one.

The approach I just described has been included in this bill. This is called a multilateral convention, also known as a multilateral instrument or MLI. This instrument is the result of a global initiative and the work of more than 100 countries and jurisdictions, including Canada. The multilateral instrument allows participating jurisdictions to adopt measures with respect to BEPS agreed to by the OECD and G20 without having to renegotiate each tax treaty.

By supporting Bill C-82 and implementing the multilateral instrument, the Government of Canada is taking action to preserve the integrity of our tax system and stop people from abusing our tax treaties. In addition, implementing the MLI will demonstrate Canada's desire to take concerted action with our treaty partners to combat aggressive international tax avoidance.

The fact is, at a time when companies and capital are increasingly globalized and interconnected, no country can fight tax avoidance single-handedly. In order to implement effective reforms, it is more vital than ever to collaborate with our international partners, such as the OECD and the G20. With this bill, we are taking one more step in that direction.

On the home front, the government is also aggressively pursuing those who promote tax avoidance schemes. In the last fiscal year alone, we imposed roughly $48 million in civil penalties on these third parties.

We are also gaining better access to information on Canadians' overseas bank accounts with the implementation of the common reporting standard, or CRS. CRS is a new system that will let Canada and more than 100 other countries exchange financial account information. This information will help us identify instances in which wealthy Canadians hide money in offshore accounts to avoid paying their taxes.

We have also hired more specialist auditors who focus on the high net-worth individual taxpayers. These teams include about 250 auditors, who are responsible for examining high-income earners and more than 800 high net-worth individuals and their webs of corporate structures.

In addition, the Minister of Finance and his provincial and territorial counterparts have committed to ensuring that Canadian authorities know who owns which corporations in Canada. They are also committed to better harmonizing corporate ownership record requirements between various jurisdictions.

Building on that agreement, we amended the Canada Business Corporations Act to require federally incorporated corporations to maintain beneficial ownership information. The government's previous budget, in 2018, enhanced the income tax reporting requirements for trusts so that beneficial ownership information would be more available and accessible.

Data of this kind helps Canadian authorities act against those engaging in international tax avoidance and criminal activities, such as tax evasion.

Thanks to the latest available data and our government's targeted investments, the Canada Revenue Agency is now armed with better tools and approaches that enhance the integrity and fairness of our tax system.

These tools help the CRA collect valuable information and allow its agents to work smarter and more effectively to ensure all Canadians pay their fair share.

For example, Canada is a member of the Joint International Taskforce on Shared Intelligence and Collaboration, or JITSIC. This expanded network of 38 countries works closely and actively with other tax administrations to coordinate tax compliance activities across the spectrum of international tax risks. This expertise has allowed the CRA to participate in and lead JITSIC expert working groups, including in the development of a strategy to identify and stop promoters of abusive tax schemes.

Canada has also taken steps to coordinate its criminal investigation by joining Australia, the Netherlands, the United Kingdom and the United States in the Joint Chiefs of Global Tax Enforcement, or J5, group. The J5 will share intelligence and criminal investigation strategies with each other and conduct joint operations in the fight against those who commit, promote and enable international tax crimes, money laundering and cybercrimes.

The CRA has also been automatically accessing all international electronic fund transfers for more than $10,000 entering or leaving the country. As of March 31, 2018, teams have analyzed more than 187,000 of these transactions, amounting to more than $177 billion. Reviewing these types of transfers helps identify transactions for which taxes should potentially have been paid and better risk assess individuals and businesses.

Through these efforts, Canada is taking concrete measures to secure tax fairness for Canadians. That includes continuing to work to maintain and improve our enforcement of tax compliance, so we can have a society that works for all Canadians.

In closing, I would like to point out that we are carrying out our work to ensure tax fairness in a context where the Canadian economy is well-positioned to continue to grow. The government remains committed to investing in people and what they care about the most, namely, good jobs, strong communities, a cleaner environment and better opportunities for future generations.

Almost four years ago, one of the first things we did was to ask the wealthiest 1% to pay a little more, which enabled us to lower taxes for the middle class.

Our government then implemented the new Canada child benefit, which, compared to the previous child benefit, is simpler, more generous, completely tax free and better targeted to help those who need it most.

In order to ensure that the Canada child benefit takes into account the ever-rising cost of living and helps those who really need it, the government indexed the benefit as of July 2018, two years earlier than planned. A typical middle-class family of four is now receiving approximately $2,000 more a year than in 2015 thanks to the tax cut I mentioned and the Canada child benefit. The OECD pointed that out this summer in a very interesting report that I encourage all members of the House and all Canadians to read.

When we add up the impact of measures such as the Canada child benefit, our government's new and more generous Canada workers benefit, and our support for seniors through the guaranteed income supplement, which was enhanced in our first budget, we are on the right track to help lift approximately 650,000 Canadians out of poverty. Actually, we are more than just on the right track since we have already lifted 825,000 Canadians out of poverty; according to Statistics Canada, that represents a 20% drop in poverty in Canada.

That is thanks in part to an approach very different from that of the previous government. We asked the wealthiest 1% to do its part so we could lower taxes for the middle class and those who need it most. We created the Canada child benefit, which lifted many families out of poverty and actually reduced child poverty by 40% in this country. I think that is something we should be proud of. Making sure our tax system is fair and equitable made that possible. That is a priority for us, but unfortunately, it was not a priority for many past governments, including the one that was in power prior to the October 2015 election.

We have been making great strides toward creating stronger, more resilient communities, and our major infrastructure investments are one reason why. Since 2016, we have approved over 30,000 infrastructure projects through the investing in Canada plan. The vast majority of those projects are under way and are creating good jobs for the middle class. They are also improving the lives of Canadians from coast to coast to coast, which is, after all, the ultimate goal.

These significant and concrete achievements have bettered the lives of many Canadians across the country.

Our plan is working. Over 850,000 more Canadians are employed today than in 2015. The unemployment rate is near its lowest level in 40 years. Our economy is one of the fastest growing in the G7.

We are committed to building an economy that works for everyone, where every person has a real and fair shot at success. Moreover, we are committed to making these investments to our economy for the long term, while we continue to bring down the federal debt to GDP ratio.

To continue on the trajectory of growth, Canada's economic health needs everyone to pay their fair share of taxes. The legislation before us, Bill C-82, gets Canada closer to meeting that goal.

I encourage all members of the House to support the legislation before us.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Speaker, the parliamentary secretary skips over the fact that this was originally started with the OECD under the previous government. That being said, it is helpful to know that a government can recognize when it is in its interests to pursue what a previous government had done and building on that. Therefore, I am happy to see that happen.

The member mentioned a number of examples to fight tax evasion and money laundering internationally. While it is important to have these rules put in place, I would point out that on this very day, the solicitor general of British Columbia, David Eby, has called out the federal government for not supporting the RCMP so it can do the work that is required to tackle money laundering.

A tremendous amount of documentation in the German report has come out, yet the Liberal government does not fund the important part of enforcement.

Does the member realize that having rules is important, but there also needs to be a commitment to having boots on the ground to make a meaningful difference and to ensure we have a system that works for everyone?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Mr. Speaker, it is appropriate to acknowledge the efforts of the former government, which joined the concerted international efforts as part of the BEPS project. It is true that this began under the former government, and yet we could have passed this bill much more quickly with the support of the opposition, as we have been working on it for quite some time. However, the opposition sometimes plays political games that affect and delay the process. Nevertheless I do want to point out that this was an initiative of the previous government.

With respect to my colleague's question about funding for the RCMP and the means at its disposal to combat tax avoidance and evasion in Canada, I find it somewhat surreal to hear this from a Conservative member because the Conservatives made cuts in this area. The former minister of national revenue under Stephen Harper, Mr. Blackburn, clearly said in an interview that the fight against tax evasion and avoidance was not a priority for them.

It is better late than never, but it is rather odd to have a Conservative member come to this realization and state that it is important to fight tax evasion and avoidance. He should also acknowledge that we have provided the Canada Revenue Agency with almost $1 billion in additional funding in the past three budgets to support these efforts to fight tax evasion and ensure that everyone pays their fair share. He voted against these measures.

I therefore tip my hat to the Conservative member, who has finally realized what we in the Liberal government have known for a long time.

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

Mr. Speaker, there seems to be a huge gap between what Canadians would expect and what the government is actually doing. A few days ago the minister for the Canada Revenue Agency continued to say that it had hired hundreds of new auditors to deal with the massive tax evasion that the government had, in a very real sense, encouraged.

We found out that instead of hundreds being hired, there was just a scant few dozen because of all the retirements that had taken place in the agency. We are also well aware that the government has absolutely and steadfastly opposed having in place a publicly accessible beneficial ownership registry that would be a key tool in fighting money laundering.

I want to ask the parliamentary secretary these two questions. First, why did the Liberals mislead the House and the Canadian public about the number of auditors they had hired at the Canada Revenue Agency? Second, why are they absolutely opposed to a publicly accessible beneficial ownership registry?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Mr. Speaker, I want to thank my colleague for his work as finance critic, and I want to thank the NDP members who have examined the issue of money laundering.

The Liberal government has taken a leadership role on beneficial ownership. As I said in my speech, the Minister of Finance met with his provincial counterparts and came to an agreement with them to move forward with harmonization and to get a better idea of who owns Canadian companies. He realizes that the vast majority of businesses fall under provincial jurisdiction, so he must work with the provinces.

Under the leadership of the federal government and the Minister of Finance, we are working with the provinces to give authorities greater access to the beneficial ownership of Canadian companies, to see where the owners of different companies are located.

In addition, we allocated significant resources to the Canada Revenue Agency in the 2016 and 2017 budgets to help the agency combat tax evasion or avoidance. This has been a priority for our government since we came to power.

This obviously will not happen overnight; these investigations take time. It will also take a significant amount of job training. This was obviously not a priority for the former government, but has been for us since budget 2016. I think this is clear to the Canadians watching.

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

Mr. Speaker, the Conservatives are proud to support this bill, but there is a lot of hypocrisy in what we hear from the government on this. I will go into some of that in my speech, but I will give the member an opportunity to respond to this point.

The member talks about whether we are concerned with the situation of wealthy corporate executives versus the considerations of everyday people. However, on the carbon tax, the government has given a break to Canada's largest emitters. It says that they need the break. However, it will not provide any kind of break, with respect to the impact of the carbon tax, to everyday Canadians who now pay so much more at the pumps and elsewhere as a result of the government's punitive approach.

If this were an environmental measure, if the Liberals were serious about the environment and if they thought this actually would help the environment, they would apply it consistently across the board. They are not doing that.

In spite of the man-of-the-people rhetoric from the parliamentary secretary, why are the Liberals giving a holiday on the carbon tax to Canada's largest emitters, while ensuring the maximum impact on everyday Canadians?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Mr. Speaker, it is the opposite. We have to wonder where the hon. member has been for the past few months and weeks. The Conservatives are starting to believe their own nonsense. The average Canadian receives a climate incentive that exceeds the anticipated cost. Through this policy, we made sure that we are truly supporting middle-class Canadians and I believe nine out of 10 families will have more money because of his policy.

I invite the hon. member to take another look at his numbers. When it comes to the importance of dealing with climate change, it is interesting to see that over the past 20 years the Conservatives have, at times, had the wisdom to want to put a price on pollution. While the entire planet is now realizing the importance of dealing with climate change, the Conservatives are retreating and burying their heads even further in the sand.

They refuse to see the importance of acting to protect the planet and to fight climate change. It is disappointing and the debt they are leaving future generations on this issue is despicable. I encourage them to do some serious soul-searching when it comes to their plan for the climate.

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

Mr. Speaker, I wanted to ask the hon. member and parliamentary secretary about the theme of our government for the last three and a half years, which has focused on tax fairness. We have Bill C-82 with respect to base erosion and profit shifting, along with budget 2019, which limits the stock option tax deduction. We did a full tax expenditure review beginning in 2016, with $4 billion in savings. Those funds are being invested for everyday programs.

Could the parliamentary secretary comment on how important tax fairness is for our government?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Mr. Speaker, I think our government has been clear from the very beginning about this. We asked the wealthiest 1% to pay a little more so that we could give a tax break to the middle class. It was the first thing we did, but the Conservatives voted against it. It comes as no surprise that they would vote against it, because there has been a stark difference between their approach and ours.

For instance, when the Conservatives fought to keep sending the Canada child benefit to families of millionaires, we took a different approach, one that is based on the needs of Canadian families. It is more generous and free of taxes, and it is helping to lift hundreds of thousands of kids out of poverty.

That approach differentiates us as well with respect to the TFSA. One of the Conservative policies during their former mandate was to double the TFSA limit to $11,000. I wonder how many Canadians at the end of the year have $11,000 after taxes to put in their TFSA. The American who invented the TFSA said that in the long term this would put the Canadian government in a fiscal straitjacket. When the former Conservative finance minister was asked what he was going to do about it, he said that it was a problem for Stephen Harper's granddaughter to solve.

That is the Conservatives' approach: to give more to the wealthiest while letting inequalities flourish and grow. That is what they did during their decade in government.

We have taken a different approach, and it is working. Statistics Canada, in the last two weeks, said that poverty has been reduced by 20% over the last three years in Canada. That is huge. I think it is something that Canadians should be proud of.

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

Mr. Speaker, it is a pleasure for me to rise in the House today. I understand my friend from Carleton was trying to give me a run for my money in terms of being the most verbose Conservative, so today I am going to try to catch up to him, with a 20-minute speech on this important bill.

Before I get to the substance of the bill, I feel the need to respond to some of the things that the parliamentary secretary for finance said, because he is trying to set up this narrative that is based on made-up things. I want to point to some clear facts that my friends across the way will hopefully take on board and recognize.

What were the fiscal policies of the Conservative government with respect to tax reduction? It is important to underline that all of the taxes that were lowered by the Conservatives are the ones that were disproportionately paid by lower-income Canadians. We raised the base personal exemption; that is, we increased the amount of money that people can earn before they have to pay any tax. Surely, my friend across the way would not say that raising the base personal exemption was somehow targeted at helping the wealthy. Indeed, we took many low-income Canadians off the tax rolls completely.

We lowered the GST from 7% to 6% to 5%. It is the tax that all Canadians pay. In particular, it is a regressive tax that is paid disproportionately, because a higher proportion of GST is paid by lower-income Canadians than is paid as a proportion of other taxes. Therefore, lowering the GST was particularly beneficial to middle and low-income Canadians. We also lowered the lowest marginal income tax rate.

We lowered business tax rates, in particular small business tax rates. Why did we lower business tax rates? When we lower business tax rates, the evidence shows that it creates jobs. It also raised business tax revenue over the time that we have seen a reduction in business taxes in this country. It was a process that began under the previous Liberal government, which, relatively speaking, I think was better than the current Liberal government on many fiscal issues. It began the process of lowering business taxes, which was continued under the Harper Conservative government. The effect of that was that over the same period, we saw an increase in business tax revenue. The tax reductions we were making were targeted at improving the effectiveness of our economy and providing tax relief to those Canadians who needed tax relief the most. Did we lower the highest marginal tax rate? No, we did not. We targeted tax relief to Canadians who needed it most by raising the base personal exemption, by lowering the GST and by lowering the lowest marginal tax rate.

The parliamentary secretary for finance can say that the Conservatives think a certain way or that we want certain things, but I challenge him to speak specifically, which the current government never does. We believe that helping low and middle-income Canadians can be done most effectively by letting them keep more of their own money and deciding how they want to spend it themselves. We do not take a paternalistic approach when it comes to helping Canadians who are struggling financially. We think people can make good monetary decisions about what is in their interest and how they want to pursue projects and needs that are important to them and their family. That is why our approach emphasizes tax reductions.

The current government has raised taxes for middle-class Canadians and those, as it likes to say, who are working hard to join it.

[Some hon. members]

Hear, hear!

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

Members were clapping when I pointed out that the government is raising taxes on Canadians working hard to join the middle class, so they finally realize it. We certainly invite those members who realize this flaw to come over and join us. There is still some time. I know there are so many people coming over to the opposition benches these days, some voluntarily and some not, and we welcome more to see the light.

If we look at the contrast in approach, we have the carbon tax, which is a new tax imposed by the current government. That is specifically targeted at punishing Canadians who can least pay the tax. The government has said it is an environmental measure and that the Conservatives want to make pollution free again.

The Liberals are giving a holiday on the carbon tax to Canada's largest emitters. There is no paying of the carbon tax and there is no cost to those large emitters. Instead, they are imposing the cost on Canadians who can least afford it, on the single mom who needs to drive her car to take the kids to grandma's and grandpa's, on the small business owner just starting out and on individual Canadians who are struggling and do not have high-priced lobbyists or the ability to access the PMO.

We know how many meetings happened in the PMO on how to help SNC-Lavalin avoid prosecution. I wish they had at least that many meetings to think about Canadians who are struggling and will struggle more because of the carbon tax that is being imposed on Canadians who can least afford it while large emitters are getting a break.

If the Liberals were at all serious in their claim that this is an environmental measure, then they would impose a carbon tax across the board. However, it is not an environmental measure, it is a revenue measure and that is why Conservatives will get rid of the carbon tax. We will not just get rid of the carbon tax on large emitters, but we will make sure that no Canadian is paying the federally imposed carbon tax that the Prime Minister is so desperate to impose on them.

My friend from Winnipeg North wants to know what is going to happen in the provinces. We see in provincial elections across the country that more and more Canadians are rejecting the carbon tax as well. We have seen that rejection in Ontario, New Brunswick, his province of Manitoba and very soon we will see that in Alberta as well. I am looking forward, next week, to Albertans joining the growing movement of Canadians who are rejecting the carbon tax. People in my constituency may still face a federally imposed carbon tax even after the next provincial election. However, they will not have long to wait until we replace the current government this fall and ensure that Albertans and all Canadians do not have the burden of the carbon tax.

For the members who want to say this is the only possible way to respond to climate change, I point out to them that we saw a reduction in greenhouse gas emissions under the previous Conservative government. We saw in every jurisdiction across the country that emissions either went down or up by less than they had during the previous period. We saw an increase in emissions in British Columbia under the carbon tax that they have had in place for quite a while. All the evidence suggests that this is not an environmental measure and, again, the Liberals' own decision to give a holiday on the carbon tax to the largest emitters shows that they are just not serious about this.

The government needs to re-examine the rhetoric it is using in light of the reality and in light of the fact that it is imposing tax increases at every opportunity it can. It is clear why it is imposing these tax increases. It simply cannot get a handle on spending.

In the last election the Prime Minister looked Canadians in the eyes and told them that he would run deficits lower than $10 billion, and then he would balance the budget by the 2018-19 fiscal year. There was no balance. We saw very clearly in the budget that the government has not balanced the budget. It has no intention of balancing the budget and it will not face up to the fact that it made a promise that it simply did not have any plan or sincerity about keeping.

Now the Liberals are desperate to start to plug that fiscal hole by imposing new taxes on Canadians at every opportunity, and they have tried to do this in so many ways. After the last election, despite promising to lower the small business tax rate to 9%, they undid that promise and said they were going to leave the tax rate at 10.5%, effectively a tax increase on small business. Then, with great fanfare, after they had attacked small businesses, after they had called small business owners tax cheats, after they tried to impose these new rules that were met with such frustration, such virulent objection from the business community, guess what they said. They said they were going to lower the small business tax rate to 9%, which is what they had promised they were going to do in the last election before they unmade that promise. However, they still have changed rules for small businesses that impose a new and greater tax burden on them.

We know what the current government is about. It is about raising taxes at every turn to try to plug its wide-open hole in terms of its fiscal plan and we cannot let it do that. As these deficits and these debts grow, it will certainly be raising taxes unless we get a new government in place that ensures Canadians are no longer paying for the mistakes of the current Prime Minister and that instead allows Canadians to get ahead by lowering their taxes.

We can be sure that, as we have seen in the past, the approach of a Conservative government, under the able leadership of the member for Regina—Qu'Appelle, would be focused on providing tax relief to those Canadians who need it most, those Canadians who are suffering the most under the current government's high-tax, high-spend agenda.

There are members across the way who are shouting the phrase “trickle down”. The approach of the current government is to pour subsidies on the largest corporations, to try to give special deals to its friends, to try to help SNC-Lavalin to get out of its prosecution and to somehow think that will trickle down. On this side of the House, we oppose the Liberals' theory of trickle-down government, and that is why we believe in providing tax relief to Canadians who need it most as we did by lowering the GST, by lowering the lowest marginal tax rate and by raising the basic personal exemption.

It was important for me to start out by responding to my colleague, the parliamentary secretary, but let me now make a few comments on this legislation, which, contrary to my tone until now, is actually legislation that we support. It is legislation that really builds on great work done by the previous government. We would not necessarily know it by hearing some of the comments across the way, but Conservatives in government were actively engaged with our international partners in ensuring that we have a fair and more transparent tax system. The work that we are dealing with in terms of the bill began as a result of an agreement in 2013 and Conservatives from that period onward, and indeed before that period, were active in engaging with our international partners.

In January 2015, we put in place a requirement that electronic transfers of $10,000 or more had to be reported to the Canada Revenue Agency by banks and financial institutions. We have always, in terms of our policy declarations and the principles we have put out there in platforms since, emphasized tax fairness and emphasized simplification of the tax code. This is vitally needed. An area that many Canadians bring to our attention on a regular basis is that there are opportunities for us to ensure proper reporting and ensure tax fairness and, therefore, strengthen Canada's revenue position.

Therefore, this is legislation that builds on that work that our colleagues have spoken in favour of up until now and certainly that we continue to support.

Even as we discuss this legislation, we continue to see the gaps in terms of some of the things the government members say and the reality in terms of what they do. In many cases with these international conventions, we talk about the issues of simplification, of consistency, of ensuring that CRA is treating everybody fairly and of making sure that there is not double taxation.

In that way, it is worth pointing out again the good work of my colleague from Calgary Rocky Ridge who put forward Motion No. 43, which was a motion that would impose a duty of care on the Canada Revenue Agency in its interactions with Canadians, basically to ensure that people are treated fairly in their interactions with the Canada Revenue Agency. While, on the one hand, we have situations where companies may be taking advantage of some of these creative tax-planning arrangements, we have situations where individuals who may be low-income individuals face the CRA coming down very hard on them and they have a difficult time responding. It was a common-sense, reasonable motion that my colleague from Calgary put forward and I was pleased to support that. Unfortunately, it was only members of the Conservative caucus who supported Motion No. 43.

All members of the government opposed this common sense tax fairness measure. Unfortunately, my colleagues in the NDP opposed it. We do hear the NDP members sometimes talk about the problem their constituents face with respect to interactions with CRA.

However, I hope we will have an opportunity to bring a similar initiative in the future, perhaps in a future Parliament. Maybe in light of the more recent comments we have heard on this from the NDP, maybe its members will support it at that time. Canadians can have confidence that when it comes to holding CRA accountable to ensure that people are treated fairly and equally under the law, thus far it has only been the Conservatives who have taken that clear, consistent principled position.

If the Liberals are concerned about fairness for the middle class, then we would expect them to vote in favour of initiatives that would ensure fairness for the middle class when they have an opportunity. Unfortunately, they have not done that.

On the issue of double taxation, I spoke earlier about the carbon tax. We have with the carbon tax a form of double taxation, which is the fact that the federal government is requiring a carbon tax in every jurisdiction. It is imposing a federal carbon tax in jurisdictions where provinces are not imposing it themselves. Then it is collecting GST on top of it.

The Liberals have said that this will be revenue neutral for the federal government. It is not revenue neutral for the federal government. In and of itself, the federal carbon tax imposed on provinces that have rejected it is not revenue neutral from the perspective of the federal government. They have said in their announcements that most of the money will be rebated back. That is a big difference from all of the money, but the government is collecting GST on top of that.

Therefore, right here within our own domestic reality, we have a problem of double taxation. We have taxes being imposed on top of other taxes. This increases the burden on Canadians who really can least afford it.

We have had a number of initiatives, and not just speaking of the work of the previous government, in this Parliament from different members of our Conservative team who have been trying to bring about tax relief for Canadians. Every time we propose measures to bring tax relief to Canadians, the Liberals oppose them.

The leader of the opposition had an excellent initiative around making parental leave tax free. This would give parents a greater ability to plan to preserve their own fiscal situation while they were going through the transition of having a child. Certainly, we want to support parents in that situation. The government's approach to parental leave is to try to reduce that flexibility by reducing the flexibility that families have to allocate leave between different partners. Our approach is to provide more choice, more opportunity by reducing taxes across the board. Unfortunately, the Liberals voted against it.

Finally, with respect to Bill C-82, a mixed signal is being sent by the government. On the one hand, it wants to look like it is being tough on tax evasion and tax avoidance. On the other hand, we have seen how dedicated the Prime Minister and his team were to try and get a special deal for SNC-Lavalin. We do not exactly send a message that we are tough on anything when it comes to the actions of big corporations, if then we also try to put as much pressure as we can to get a special deal for those well-connected companies that can afford high-priced lobbyists and can push back there. It is gravely inconsistent.

If the government wants to address this issue and the issues around it, it needs to send a message that everybody is equal under the law, that it does not matter if one is a big company or a Canadian who is struggling to get by, that the law is the law. Sending that message in a clear and consistent way, ensuring that everybody is treated equally and fairly under the law, would very much address what we are talking about. It would confront the problems that this legislation seeks to confront.

Therefore, while we support the bill before us, we recognize the desperate need for the government to do better, to stop piling taxes on those Canadians who can least afford to pay them and to start sending a message that everybody, regardless of where one is situated in society, is equal under the law.

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

Mr. Speaker, I have heard a similar speech from the member many times before, and I find it very troubling particularly when he talks about getting a handle on spending.

How does he justify that Stephen Harper ran up the debt up by $160 billion? I know his response, because we hear it a lot from those on the other side of the House. They say it was the economic times and the circumstances, and that they needed to come back out of the 2008 recession.

However, in reality, if we were to go back over the last 151 years, we would see that Conservatives have been in power for 36% of the time but have racked up well over 55% of the debt. In fact, of the last 19 budgets introduced by Conservatives in the House, 16 of them ran deficits, occurring under Mulroney and Harper. The only three that ran surpluses were the two that came after Paul Martin's $13-billion surplus and the one in 2015, after Conservatives slashed veterans services and sold off shares of GM at bargain prices so that they could produce a budget to bring into the election.

How can the member opposite square off that argument about Stephen Harper's record?

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

Mr. Speaker, the member is asking a similar question to one he has asked before, so he will no doubt receive a similar answer. Let me answer each point he made.

He said that Conservatives ran up $160 billion. Usually we hear the Liberals say it was $150 billion. Maybe by the election they will be saying it was $300 billion. The figure of $150 billion is not even accurate. In fact, in spite of the global financial crisis, the federal debt-to-GDP ratio went down during the period of the last Conservative government.

During this time, members across the way, some of whom were not here at that time, were calling for an increase in spending. Liberals thought we should be spending more, but we said, no, we would have timely, targeted and temporary deficits and we would get back to balance, which we did.

The member opposite wants to compare Canada's history over the last 150 years. I do not know if I can say much about the record of former prime minister Charles Tupper, for example, when it comes to deficit spending.

We could go back a long way. I do not hold the member opposite responsible for the Liberal policy under Pierre Trudeau of opening residential schools. I do not hold the Liberal Party responsible for all of the things it has done over the last 150 years, and I cannot necessarily be held responsible for Conservative policies that were pursued in the early part of the 20th century and last part of the 19th century.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I would like to bring the debate back to the issue before us today, tax treaties.

Does my colleague have an opinion on concluding tax treaties with administrations where the tax rate is extremely low compared to the tax rate in Canada? These tax treaties can become loopholes for certain multinationals that manage to transfer their international profits to these places. Instead of declaring their income in Canada, they declare it in these places that have agreements with Canada. I would like my colleague's opinion on these agreements, to come back to the matter at hand today.

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

Mr. Speaker, the reason we enter into tax treaties, whether with higher tax jurisdictions or lower tax jurisdictions, is to ensure a framework for tax fairness so that people are not facing double taxation and to ensure there is a proper reporting structure to address possible issues of tax avoidance.

To the member's point, there is a principle here such that, regardless of the agreement, taxes should be paid in the jurisdiction where, in some sense, the work is being done. If there is a case, for instance, where all of the operational aspects are in one place but none of the taxes are being paid there, that is obviously an issue to discuss and to explore how we can respond to it.

I will also point out for the member that when other jurisdictions have lower taxes, companies can relocate to those jurisdictions if they wish to. It is not possible to, say, prohibit a company from moving its headquarters somewhere else. In fact, under the previous government, companies from the United States chose to move their headquarters to Canada. However, they would have had to bring aspects of their operations to Canada associated with that as well. When we are a low-tax jurisdiction, that can work to our advantage as well.

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

Mr. Speaker, one of the concerns Canadians have is that as we get closer to an election, they expect a certain element of truth from leaders. We saw a good example of that today from the Leader of the Opposition, who continued to deny that he did not retweet after making some changes and so forth.

Let me give an example of what the member across the way said in terms of trying to give misinformation.

He is trying to give the impression that most of the residents in Winnipeg North are going to have to pay additional taxes as a direct result of the price on pollution, knowing full well that there is a tax rebate. People will find they are actually getting money from Ottawa. Most of the residents in Winnipeg North will benefit by the price on pollution, yet the Conservative Party will try to give a false impression to Canadians.

Is it the Conservative Party's overall plan to try to gain votes by trying to deceive Canadians?

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

Mr. Speaker, what unbelievable language and what an unbelievable approach from the member for Winnipeg North.

I look forward to talking to his constituents about the carbon tax, because I am sure that people in Winnipeg North, as in Sherwood Park—Fort Saskatchewan and elsewhere, are deeply skeptical of the government's claim that it will take more money from people, process it over here, and then give even more of it back. When has that worked out?

That is about the quality of math that we would expect from a Prime Minister who said he would balance the budget by this year, and yet we are still tens of billions of dollars in deficit.

Canadians know they are paying more as a result of the Liberal carbon tax, and they simply do not accept that they would be any further ahead with this process of taking their money and processing it and rebating some of it back.

I look forward to having the conversation in the next election about the government's plan on the carbon tax. We have shown that we can do more for the environment by not imposing new taxes on Canadians. The Liberals believe that the only solution, the only thing worth doing, is to impose new taxes under all kinds of different names and excuses. We reject that and we look forward to having that debate.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, I would ask my colleague a very important question. He mentioned how companies can relocate. As everyone knows, General Motors is leaving Oshawa. We have seen 1,500 job losses in Windsor, and manufacturing is very susceptible to bad tax policy and uncertainty. I want the member to address how important the tax policy is for certainty and competitiveness.

We heard our colleagues talk about the carbon tax. When I was knocking on doors this weekend, a constituent told me I had to go back and tell the Liberals to make the carbon tax even higher because he wanted it to be $1 million per tonne. That way, with Liberal math, he would be getting back $200,000 or $300,000. He said that then he could retire.

I do not know if Canadians realize how bad a policy this is. Could my colleague please talk about how important it is to have good tax policy to provide business certainty and to make sure we have competitiveness?

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

Mr. Speaker, it is a great question from my colleague, who obviously lives these issues and is hearing directly from his constituents about them.

I come from an energy-producing part of the country. He comes from a part of the country where manufacturing jobs in the auto sector in particular are very important. We see in both of these areas how the imposition of taxes and regulatory changes, in particular the imposition of new taxes, is hurting economic development.

We saw in the past how lowering business taxes led to an increase in business tax revenue. That was because companies were looking at those tax policies and making decisions about investment that reflected those calculations. They were choosing to invest in Canada as a result of the fact that Canada was a good place to invest.

We have many advantages. We have an educated workforce and many things going for us as a country, but the financial dimension of it is obviously critical as well for companies that are thinking about making these investments.

The government's solution to this is to tax more and put the money forward in corporate welfare for things like superclusters. We have seen it has much less effect for the government to pick winners and losers and give money to some of its friends while taxing other people more. It is a much less effective approach than simply lowering taxes for all Canadians, especially targeting tax relief for small business and to those Canadians who need that tax relief at the individual level the most, thus putting them in the driver's seat and allowing them to make decisions to take advantage of the opportunities that result. It is up to the government to give people as much opportunity as possible to get ahead and then to let them do that with their own resources.

[The Deputy Speaker, Bruce Stanton]

Before giving the floor to the hon. member for Sherbrooke, I must inform him that there are 11 minutes remaining before the expiry of the time provided for government orders.

The hon. member for Sherbrooke.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I am honoured to have these 11 minutes to speak to Bill C-82 and share my opinion on it as part of the debate and before it is eventually voted on at third reading in the House and sent to the other chamber.

As we saw at report stage, this bill has the unanimous support of the House. All members voted to support it. It has not been the subject of heated debates, from what I saw today, although it is relatively important. I will try not to repeat too much of what I said at second reading before it was referred to committee. On that point, the committee study went pretty well. There were no amendments to this bill, but still, there were some good debates. I will try to summarize them for the House to illustrate some of the dangers possibly in store for us regarding this bill, which simply aims to update the tax treaties we already have with 93 countries around the world. That said, it is anything but simple.

Concluding tax agreements with countless countries has almost become Canada's trademark. Other countries do not have so many tax agreements. Nevertheless, these tax treaties are a double-edged sword. On the one hand, they help avoid double taxation. In other words, companies and individuals are not taxed twice on the same income. That makes sense when we are talking about similar administrations with similar tax rates. Obviously a person should not have to pay twice on the same income in two different places, especially when their tax rate is similar. It makes sense to establish this type of connection with other countries to eliminate double taxation, whether informally or formally, as in the case of the 93 countries with which we have such agreements. This allows individuals and companies to have a residence in either country and be taxed according to their country of residence.

However, it makes less sense to sign tax treaties with tax havens. That is what Canada is doing with its trademark tax treaties, but it is sort of glossing over the fact that it has signed treaties with tax havens like Barbados, which has a tax rate of 0.5% to 2% for foreign corporations.

Canada's trademark is even seeping into its tax policy. It will not say so openly, but it is very happy to have a treaty with Barbados, a country where Canadians invest heavily year after year. Barbados is often the third or fourth biggest destination for Canadian foreign direct investment, after the United States and the United Kingdom.

That is no coincidence. It is not because the Barbadian economy is booming, because tons of new hotels and banks are going up, because its population is flourishing and wealthy, or because things are hopping there. It is simply because the government's unspoken tax policy allows Canadian companies to outsource their subsidiaries abroad; they can open a subsidiary in Barbados, which they use as a Canadian financial centre from which to run their international business instead of establishing a headquarters in Canada and doing business out of Canada. That is why we need to be cautious and make sure tax treaties are being used appropriately in cases where countries have similar administrations.

[The Deputy Speaker, Bruce Stanton]

Order. The hon. government House leader is rising on a point of order.

[Bardish Chagger, Liberal, Waterloo, ON]

Mr. Speaker, I will not interrupt for long. I saw that he was pausing.

I would like to table the government's response to Order Paper Questions Nos. 2246 to 2264.

Bill C-82—Notice of time allocation

[Bardish Chagger, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I would like to advise that agreements could not be reached under the provisions of Standing Orders 78(1) or 78(2) with respect to the third reading stage of Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. Therefore, under the provisions of Standing 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 proceedings at the respective stage of the bill.

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 third time and passed.

Multilateral Instrument in Respect of Tax Conventions Act

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I was saying that there has been a form of unanimity on the bill, and that we must be careful with tax treaties on the whole.

The bill was introduced and debated because we want to modernize tax conventions to prevent them from being abused, as the government itself has stated. At committee, for one, the government said that tax conventions were being abused. Bill C-82 can help with this by modernizing these conventions and ensuring that they are not abused in future.

It is an admission of guilt by the government to recognize that, although the conventions have good intentions, some taxpayers abuse them. The bill will clarify the language of these conventions to ensure that this no longer occurs and that the courts have more teeth to enforce the provisions of the convention pertaining to the fight against tax evasion. This bill attempts to address the loopholes in these conventions.

The fundamental problem, which was also brought up in committee, is that the modernization of these treaties requires the support of both countries that are party to the tax treaties. There are 93 treaties, and not only will Canada have to ratify Bill C-82, but the co-contracting country will also have to ratify an equivalent bill in its own jurisdiction so that the instrument can be implemented in both countries and the new and improved treaty can be applied. In my opinion, that severely limits the future scope of the bill.

What we were told in committee is that both countries are indeed required to complete the ratification process for the convention to take effect. To date, only 12 to 15 countries have ratified this sort of bill and done the same thing that Canada is in the process of doing today. That means there are still about 80 countries that have not yet taken such action and may not even be in the process of doing so. The best example I can give is that of Barbados. Barbados signed the document during a nice photo op. The only thing the country has not done is initiate its own legislative process, which is required to implement the convention.

I find that troubling, because I am not convinced that all the partners of these 93 countries are going to sign them. This legitimizes to some extent the countries that are so-called tax havens, which will continue to exist and might just sign the document for a nice photo op but do nothing afterwards. That will only perpetuate the problem. If this instrument is going to improve the treaty, both countries have to sign it. If either country does not sign it, there is absolutely no point to the treaty, and we will be left with the old system, the old treaty that, by the government's own admission, is not working properly and has loopholes that the courts cannot close. That is the legal and inherent limit to this bill, which means that its enforcement will also be quite limited.

It will be up to us to look at it again in the future. It will be up to legislators and the government to keep a close eye on the situation in other countries. Having nice signing ceremonies is all well and good, but if we cannot move forward and if we decide to let it go and not assume our responsibilities, we will wind up with the same problem.

One thing that was clearly stated during the committee's study was that this bill might be limited in scope, so we need to take a closer look at that. We also need to make sure that we are monitoring the countries we have these agreements with over time.

Bill C-82 will make for better treaties. I would like to thank the NDP for that because we are the ones who, for years, have been urging the government to renegotiate all the tax treaties people are abusing. Members may recall that, two years ago, my caucus was behind a motion the House adopted to, among other things, renegotiate tax treaties. We should all thank the NDP leader for his insistence on tax fairness, because it is thanks to him that renegotiation is happening now.

We will have to make sure that everyone follows through on these promises and that the new instrument is implemented by the countries with which we have signed treaties.

[The Deputy Speaker, Bruce Stanton]

The hon. member for Sherbrooke will have 10 minutes for questions and answers when the House resumes consideration of this motion.

The House resumed from April 8 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 third time and passed.

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

Mr. Speaker, I am pleased to rise in the House this afternoon and speak to an important piece of legislation, Bill C-82, which is a further step in our government's agenda and plan to build an economy that is fair and where everyone has the opportunity to succeed.

A fair tax system forms the foundation for a stronger middle class and a growing economy, instills confidence in Canadians and helps create opportunities for everyone. It is important not only as a matter of fairness but as a means of safeguarding the government's ability to invest in programs and services that help Canada's middle class, including residents in my riding of Vaughan—Woodbridge and Canadians working hard to join the middle class.

In my riding of Vaughan—Woodbridge, residents work hard and pay their taxes diligently—

[The Assistant Deputy Speaker, Carol Hughes]

I want to remind members that the House is in progress, so I would ask them if they are having conversations to please go out to the lobby.

The hon. member can continue his speech.

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

Madam Speaker, in the riding of Vaughan—Woodbridge, which I am privileged to represent, the residents work hard and pay their taxes diligently. They want assurance of our tax system and its fairness, assurance that everyone is paying his or her fair share.

As a government, since being elected we have invested over a billion dollars in the Canada Revenue Agency to ensure that we have a system that works for all Canadians and that our country can have confidence in this department. As we all know, tax season has now come to an end. Millions of Canadians have filed their returns, and they can be assured that our government is putting in the resources necessary for a timely, efficient, fair service for all Canadians from coast to coast to coast.

Tax fairness is something that is important to me and to our government. In addition to Bill C-82, with budget 2019, which followed a wide-ranging review of federal tax expenditures introduced in budget 2016, our government has brought forward a number of changes to make our tax system fair, efficient and transparent, and to ensure that tax expenditures do not unfairly benefit the wealthiest Canadians rather than the middle class and those working hard to join it.

I am proud to announce that our government's actions are expected to recoup over $4 billion annually in revenues that have been reinvested in the Canada child benefit, in seniors and in those Canadians who need it the most. In my riding, the Canada child benefit delivers benefits to over 16,000 kids monthly, nearly $5 million to over 9,000 families.

We know that in late February, Statistics Canada, in its annual income survey, noted that we have lifted 825,000 Canadians from coast to coast to coast out of poverty. We have seen a reduction of nearly 20% in poverty rates across Canada. At the same time, over the last three years, we have created over 900,000 new jobs, a majority of them full-time and in Canada. That is attributed to the hard-working entrepreneurial spirit that people have in my riding of Vaughan—Woodbridge and across Canada, and we have helped lay the foundations for this strong period of growth that continues today.

In addition, in budget 2019 we will limit the usage of the stock option deduction, a measure that benefited only 2,330 individuals who claimed approximately $1.3 billion of employee stock option deductions. We will limit the use of the employee stock option deduction to ensure that it is only used in new start-ups and young firms.

Before I left the private sector for the public sector, to run and be elected as a Liberal member of Parliament, one of the things I advocated for was an adjustment to the employee stock option deduction that was and had been in use for many years. I already knew that it was unfair, that it was something that was not necessary for our economy to grow, and that it did not benefit middle-class Canadians. I am happy that our government came through and put this measure in the current budget.

In addition, as a reminder, the first thing our government did when elected was cut taxes for nine million middle-class Canadians and, yes, ask the 1% to pay a bit more. The second thing we did was cut taxes on small businesses by lowering the small business tax rate to 9%, which represented a $7,500 tax saving annually for small businesses. In my riding, there are over 4,000 small businesses that potentially can reduce their taxes this year by approximately $7,500. They can use this to reinvest in their human resources, in their capital equipment and in greater dividends for themselves, for personal use.

We have introduced policies, including in Bill C-82, that ensure that our economy is strong, that our tax system is fair, efficient and transparent, and that all Canadians and all wealthy Canadians are paying their fair share. These measures by our government will help strengthen confidence in Canada and encourage investment. They will help support Canadian businesses as they grow, expand into new markets and create more good, well-paying jobs with great benefits.

Ensuring taxpayer fairness is a complex process requiring ongoing engagement with a wide range of partners both at home and around the world.

I would like to add that for a number of years, I sat on the Accounting Standards Board's User Advisory Council here in Canada. Members can rest assured that I am quite aware of the intricacies and the difficulties of ensuring a fair and transparent accounting system and a fair, transparent and efficient tax system and of coming up with norms and regulations that are uniform internationally, which we have done and that are contained in Bill C-82.

The bill would ensure that corporations do not shift profits from a jurisdiction with a high tax rate to a jurisdiction with a low tax rate or, in some instances, shift profits from a jurisdiction where there are tax rates to a jurisdiction where no tax rates exist and they would have zero tax payable. We want to avoid that situation. Residents in my riding of Vaughan—Woodbridge and across Canada depend on the programs and services that we as a government deliver, and we need to ensure that those government programs are funded equitably by Canadians from coast to coast to coast.

The bill being considered today is another step forward in this process. It proposes to implement a multilateral instrument, or MLI, in respect of conventions for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. When we refer to fiscal evasion, it is exactly what I mentioned earlier: profit shifting from one jurisdiction to another to lower one's tax bill and to avoid paying taxes. In other words, with Bill C-82, our government would not only be making Canada's tax system a fairer one, it would also help to escalate the fight against aggressive international tax avoidance.

Bill C-82 proposes to allow Canada to implement treaty-related measures to counter a practice known as base erosion and profit shifting, or BEPS. As this chamber has already heard, BEPS relates to strategies by which wealthy individuals can use loopholes to shift profits to low-tax or no-tax locations to avoid paying taxes. The multilateral instrument this bill seeks to enact is a product of a worldwide initiative involving over 100 jurisdictions, including Canada, again demonstrating Canadian leadership on the world stage to get done what is needed and what is right. It is the first multilateral convention to modify the application of bilateral tax treaties. It allows signatory nations to implement measures developed from the OECD/G20 project to counter the practice of base erosion and profit shifting and to do so in a timely manner. We are not talking about forward many years; we are talking about the near term.

Just as importantly, the MLI allows signatories to work more effectively together in the fight against aggressive international tax avoidance. In addition, the MLI contains provisions to improve dispute resolution under Canada's tax treaties.

While some of the provisions of the MLI are required, others are optional. The mandatory provisions meet the minimum standards established by the OECD, as agreed to by all the signatory jurisdictions, and each signatory is free to choose among the provisions that are optional. Our government proposes to adopt a number of the optional provisions of the MLI upon ratification in addition to the mandatory ones.

There are three provisions in particular I would like to reference that would prevent or reduce opportunities for inappropriate tax avoidance, which, again, is shifting profits from one jurisdiction to another. They look at transfer pricing and a number of measures wealthy individuals or some corporations utilize to reduce their tax bills, such as moving resources to a foreign jurisdiction so as to not pay taxes where the revenues are generated.

First would be a 365-day holding period for shares of Canadian companies held by non-resident companies. It would ensure that the lower treaty-based rate of withholding tax on dividends would not be available in the case of short-term share acquisitions.

Second would be a 365-day test period for non-residents who realize capital gains from the disposition of shares or other interests that derive their value principally from Canadian immovable property. It would aim to prevent non-residents from obtaining a treaty-based exemption from Canadian taxes on capital gains in inappropriate circumstances.

Third would be a provision for resolving dual-resident-entity cases to prevent potential double taxation, which would also help to protect against a company's ability to manipulate its tax residence to avoid or reduce its taxes.

Additionally, Canada would retain the option to adopt additional provisions of the multilateral instrument after ratification.

By implementing the optional provisions I mentioned, together with the required minimum international standards, Canada's ability to protect its tax base would be enhanced and would support the international effort to tackle base erosion and profit shifting.

Overall, the multilateral instrument is an international approach that makes it possible to implement necessary changes in a timely and efficient manner. It is an important tool in combatting aggressive international tax avoidance, and it would benefit both Canada and our international tax partners. Again, there are approximately 100 countries that have signed on to BEPS.

I am glad to see Canadian leadership on that front. That is what we have demonstrated as a government time and time again in the last three and a half years since we were elected and given the privilege of serving this great country and the 37 million residents that inhabit it.

The multilateral instrument this bill proposes to put in place, with its provisions designed to address aggressive tax avoidance, represents another step in our government's efforts to ensure tax fairness for Canadians. Again, we have lowered taxes for middle-class Canadians, nine million of them, with an approximately $20-billion tax cut, and have asked the wealthiest 1% to pay a little more. We know that the recent report by the Parliamentary Budget Officer looked at that tax cut and actually put a stamp of approval on it, saying that what we attempted to do in terms of lowering taxes for middle-class Canadians and ensuring that the 1% paid a little more actually worked. There was a net benefit for our economy.

We made a promise to middle-class Canadians that we would lower their taxes and make sure that everyone paid their fair share. While we have introduced a middle-class tax cut and reduced the small business tax rate, Canadians need to have confidence that the system will, at the same time, help grow the economy and ensure that the benefits of growth can be felt by everyone.

For many years, economic growth could not be defined as inclusive. For the last three and a half years, we have seen what inclusivity of economic growth means. It means lifting 825,000 Canadians out of poverty. It means creating 900,000 new jobs, the majority full time, the majority private sector. It means the lowest unemployment rate in over 40 years. It means wage growth, real wage growth, which we have not seen in Canada for many years. It means that Canadians are optimistic about their future.

We do face challenges in certain sectors, and our government is there to address those challenges, working in partnership with those sectors and those industries. That is the good work we were elected to do, and that is the good work we will continue to do.

I encourage all hon. members to support the proposed legislation, Bill C-82, which would implement such an important tool for tax fairness.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, as the member knows, I support this legislation as well. It is one of the few Liberal initiatives that actually makes some sense. I have called it in the House before a tax treaty for tax treaties. That is really what it is.

The member talked about many other things that had very little to do with the contents, so I am just going to ask him a question on that point. Originally the Liberals promised that the so-called increase on the top 1% would pay for itself. That is actually the wording they used, “pay for itself”. That is not what the Parliamentary Budget Officer found. He found that the top income earners in Canada were paying a higher share of total income being collected, which was not the point.

Would the member agree with me that the effect of the tax changes the Liberal government introduced gave a bigger tax cut to every single member of the House of Commons than it did to those earning $45,000 or less?

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

Madam Speaker, I would like to thank my hon. colleague and friend, the member for Calgary Shepard, who I have the privilege of sitting on the finance committee with.

What I will say is that when we look at our overall tax system and the way it works, and if we look at the elasticity of tax in terms of the way the Parliamentary Budget Officer wrote about it in the report, our tax cut worked. We allowed nine million middle-class Canadians to receive a tax cut. They used that income to invest and save. We also adjusted the top tax rate. There was some front-loading in the first year, which many had anticipated. What we are seeing is that upper-income earners are still responding with their labour supply. They are still responding. We are still seeing growth in the economy. We are still seeing growth, I would say, in incomes.

The Parliamentary Budget Officer's report was, in my view, an endorsement and a validation of our policy of reducing taxes for middle-class Canadians and asking the 1% to pay a little extra.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Madam Speaker, in my riding of North Island—Powell River, there are some serious concerns regarding the fisheries. For many years, successive governments have not supported restoration and local community hatcheries. That has put a lot of the community members I represent in great financial difficulty.

When we look at this legislation, we have to recognize that the gap between the richest Canadians and low-income Canadians is growing. In fact, the 100 richest Canadians now hold as much wealth as the bottom 10 million Canadians combined.

In the last two elections, the Liberals promised to cap how much could be claimed through the stock option deduction. However, they backed down on that promise more than once after they took power. Why did the government decide to do this? Why not keep that promise?

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

Madam Speaker, I want to put on the record that I grew up in northern British Columbia, in Prince Rupert. My mother and her five sisters worked at a cannery. That is how they made their income. I worked at a cannery. Unfortunately, many of those canneries no longer exist, as the industry has changed quite a bit.

I note that in budget 2019, we have put in approximately $100 million for the restoration of the salmon industry. I would love to follow up with the member on the exact details.

In budget 2019, our government aligned our stock option rules with those of the United States. We will still allow the stock option deduction for small firms and new technology firms, because we need those innovators in Canada. Many firms that come into existence do not generate cash flow right away. Stock options are a form of payment in terms of compensation for their employees. For existing and mature firms, we have eliminated the tax deduction beyond $200,000.

This is real progress and real change.

[Bob Bratina, Liberal, Hamilton East—Stoney Creek, ON]

Madam Speaker, I was pleased to hear some endorsement from the other side regarding some aspects of our budget.

It is important for people to know that informed consultation goes on in the decisions we make with regard to the finances of the country. Certainly, the great experience my friend from Vaughan—Woodbridge has had in that field speaks to the integrity of our process.

How much intense consultation was there regarding the issues we brought forward? I know there were some controversial consultations early on. They were changed somewhat because of the input we received from people like the member for Vaughan—Woodbridge. Could the member tell us about the consultation process?

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

Madam Speaker, I come from a very humble, middle-class background, having grown up in Prince Rupert, British Columbia. However, through a lot of work, I had the privilege of working on Bay Street and Wall Street for over 20 years.

Our government does listen and consult when it puts forward changes in how businesses operate and in our tax system. This has been a fundamental principle since our government entered office.

Bill C-82, a multilateral instrument, went through vast consultation with our international partners. Bringing this legislation forward would ensure that shifting profits from one jurisdiction to another would not occur. It would lessen that opportunity. It would ensure that Canadians continued to have confidence in our tax system's ability to fund the programs and services they utilize and need on a daily basis. It would allow us to take a step forward on a national pharmacare program and to take a step forward on the Canada child benefit, which we have done by indexing it two years ahead of time. We have brought in measures such as a $1.7-billion tax cut for seniors through the guaranteed income supplement exemption amount.

Many measures we have brought forward we have been able to do through consultation with Canadians, similar to what we have done for Bill C-82.

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

Madam Speaker, a question was raised a few minutes ago in regard to the issue of income inequality. One of the things that I like to think we have done very successfully in government to address that issue is increasing the tax on Canada's wealthiest 1%, while at the same time decreasing the tax on Canada's middle class. We also put in a boost of income through the Canada child benefit and things such as the guaranteed income supplement.

Could my colleague and friend provide his thoughts on how that actually assists in ensuring that there is more equality?

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

Madam Speaker, if we look at all the policies we have implemented and where Canadian families are today, we see that an average family of four is $2,000 better off today than it was three and a half years ago. We know that has been done through a middle-class tax cut, which was funded by increasing taxes on the wealthiest 1% of Canadians. We know those are progressive policies. We know that all Canadians need to pay their fair share of taxes. However, we know that Canadians in the middle class deserve a break. We understand there are affordability issues. We have addressed some of those affordability issues in the budget with regard to youth and students, with regard to seniors and with regard to housing affordability.

We have also asked a very fundamental question. We have asked the wealthiest 1% of Canadians to pay a little more, because we need it for the betterment of society. We cannot allow our society to further go down the path of income inequality. We have stopped that and we have improved that. We have seen the results as, again, over 825,000 Canadians, in all 338 ridings across this country, have been lifted out of poverty. It is a great success and we should all be proud. It is a 20% reduction of our poverty rate. Those are the measures behind it, which have reduced inequality in this country and are giving more and more Canadians hope. We as a government need to be proud of that record.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, God is an honest payer, but a very slow one, as the Yiddish proverb goes. It means that for all the good things we do during our life, the treasures await us in heaven, which is a very common thing many Christians believe. The National Prayer Breakfast was this morning, so I thought I would begin with a Yiddish proverb that many know.

However, it also applies to taxes, because what we expect from Canadians, Canadian corporations and those doing business in Canada is to pay their taxes honestly and not to engage in aggressive tax planning and tax avoidance schemes, which this bill proposes to make more difficult by implementing a multilateral tax treaty. In this House, I have previously called it a tax treaty for tax treaties.

Those who are listening in or those who are in the gallery may be wondering what BEPS is, because many members have mentioned it. It is base erosion and profit shifting. I am going to provide a definition and I am hoping that everybody will be able to follow along.

The definition from the OECD is an example, so it is easy to figure out. Company A, which resides in the Cayman Islands, wants to provide a licence for the use of intellectual property to company C in South Africa. South Africa, however, has not concluded a tax treaty with the Cayman Islands and would thus be entitled to apply its domestic withholding tax rate on outbound royalties.

Hopefully, everybody is getting what I am getting at here.

However, a European country has concluded a tax treaty with South Africa that reduces its withholding tax rates on royalties. This country does not itself levy a source tax on royalties. Therefore, company A establishes a letterbox company in this European country and diverts the royalty payments through the letterbox company to reduce the tax withheld by South Africa. In this example, the principal purpose of establishing this arrangement, including the letterbox company, is to obtain the lower withholding tax rate available under the tax treaty between South Africa and the European country.

This is what we call base erosion and profit shifting. It is something that very large corporations routinely engage in and have been accused of in the past. It is sometimes called “the green jersey”. I have heard it called “the single malt”, depending on the jurisdiction it comes from. Typically, it heavily impacts high tax rate countries, such as Canada, the United States and others. Low tax rate countries are impacted as well, as they lose a lot of their ability to raise taxes on behalf of their citizens, because they are not able to track the money as it moves around. The companies are not honest payers in those situations, nor will they be slow ones in the future, unlike the Yiddish proverb I mentioned. We want to ensure that large corporations, large multinationals and individuals doing business in other countries are paying their taxes honestly and that they are not slow to do so but pay them on time and when they are expected to.

This is a tax treaty for tax treaties. I support this piece of legislation, because we want to ensure that our tax system is both fair and efficient, and that we are able to collect the taxes owed to the government. We know how much difficulty the Canada Revenue Agency has had collecting that information. Hopefully, now it will be looking at what the tax gap is.

I want to draw the attention of the House to article 28 and article 29 of this tax treaty, because that is the only part of the legislation I had concerns with at committee. This tax treaty will not return to Parliament to determine whether we continue with certain reservations or not. What this tax treaty is proposing to do is take Parliament out of consideration after the bill is passed by this House and by that other place as well. What will happen in those situations, with the many reservations the Canadian government has indicated to our multilateral partners, is that if in the future cabinet were to decide that we wish to participate in them, that particular matter will not return to the House and will not be taken up for consideration.

I think that was a matter brought up by Patrick Marley at committee with respect to articles 10, 12 and 13. He mentioned that, because of that, he had some concerns that perhaps Parliament would lose its ability to impact the tax treaty choices and specific implementation provisions in the future, perhaps when some members of this House are no longer here, or I am no longer here, and the contents of the treaty would not be well known.

That is literally the only part of the treaty that I have concerns with. Outside of that, I think the generalities of it are the MLIs, ensuring that our multilateral partners are harmonizing the rules with us and that we have the same rules applied across many different countries. This would ensure that we are able to collect the taxes that are owed to the Canadian treasury. We would also be able to ensure that tax avoidance and aggressive tax planning are reduced to an absolute minimum.

There are many examples of these types of companies that engage in it. Some of the largest ones, like the one that produces the smart phones in our pockets, typically have trademark and copyright subsidiaries that simply trade in the trademark. There is no actual business being conducted in the different jurisdictions; they simply charge a royalty for its use.

Starbucks is a great example. I have used it before and I am still waiting for their lobbyists to call me and complain that I used it as an example.

Starbucks engages in this practice by charging a royalty on its logo and its name, which it puts in a different jurisdiction. Then its Canadian, American and other subsidiaries—holding companies, sometimes—pay a royalty to the other place that does not charge any taxes on the royalty. That is the type of base erosion we are trying to avoid and do away with.

Before I continue, I will mention that today, May 2, is a special day. As I do on almost every May 2, I want to wish a very happy birthday to my father-in-law and my wife, who were both born on the same day. If I did not do that, I would not want to go home tonight and could not guarantee I would return next week. I say a very happy birthday to both of them.

May 2 is also a special day for those who, like me, are of Polish heritage. Constitution Day is the day the original Polish Constitution was created. It is the founding document of many European constitutions, including the American constitution. Guaranteed rights are set out in it. The principle of “no taxation without representation” comes partially from that original document, a principle that again is found in documents like Bill C-82, the tax treaty of tax treaties. That same principle applies here as well.

We are trying to ensure that the taxes owed to the people of Canada are paid by the corporations and individuals who owe them. I simply do not see a reason that we should not be enforcing as many of the provisions as we possibly can.

Many of our OECD and G20 partners will be participating, although the United States of America will not be participating in this multinational convention. However, we have many tax treaties with our neighbours to the south that will ensure they meet their obligations to us and we meet our obligations to them. They will ensure that taxes owed in both jurisdictions are indeed paid.

We know that the partial goal of the government with this document and with budget bills is to collect the difference between what is owed and what is actually collected. Many officials at committee said their hope is that they will be able to close that tax gap and collect the taxes they have not been able to collect. It is estimated that roughly $23 billion in profits that should have been declared in tax in Canada were shifted to a lower-tax jurisdiction. That is a large sum of money, but it would not be the full $23 billion; it will be a faction of that amount. It is all part of the government's attempt to find and scrounge every single last dollar to pay down the deficit.

Kudos to the government. It is about $20.3 billion off the target it set for itself in 2015, and it will still be off its target well into 2040.

I was at a town hall yesterday, and several constituents asked me whether the Canadian government was ever intending to reduce the deficit to zero and start paying down the national debt. I had to tell them that unfortunately, no, that is not the case, that there is no such intention in any government document at this point. It simply tracks how big the deficit and the national debt will be. For the first time this year, the Government of Canada owes over $700 billion on behalf of taxpayers. If we include crown corporation debt, it goes to over $1 trillion. After the next few terms, we are expecting to see another $250 billion to $300 billion added to the national debt, and that number excludes crown corporations.

Initiatives like this try to seek justice on behalf of Canadians by trying to collect the taxes owed in other jurisdictions, an important part of closing the tax gap. I will be supporting this piece of legislation, as I did at earlier stages of the bill and at committee. My only concern, which I am putting on the record so that future parliamentarians will see it, is provisions in articles 28 and 29 that shift the responsibility from Parliament to cabinet to decide which reservations can be done away with. Those will be done by orders in council. My understanding from officials at committee is that a simple order of cabinet would do so. It is a defect in the bill, but the defect is not sufficient to cause me vote against it. I invite all members to vote in favour of it.

[The Assistant Deputy Speaker, Carol Hughes]

Is the House ready for the question?

[Some hon. members]

Question.

[The Assistant Deputy Speaker, Carol Hughes]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Assistant Deputy Speaker, Carol Hughes]

(Motion agreed to, bill read the third time and passed)

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

Madam Speaker, I would like to say a few words about this bill.

Is it too late?

[The Assistant Deputy Speaker, Carol Hughes]

Yes, it is too late.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I wonder if we might be able to canvass the House to see if we can have unanimous consent to see the clock at 5:30 p.m. so we can begin private members' hour?

[The Assistant Deputy Speaker, Carol Hughes]

Is that agreed?

[Some hon. members]

Agreed.

[The Assistant Deputy Speaker, Carol Hughes]

Accordingly, the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.