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.

Canada–Madagascar Tax Convention Implementation Act, 2018

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Speaker, I am glad to be joining this debate on the most exciting of subjects, tax and a tax treaty. For those constituents of ours who are tuning in on CPAC this early morning, or who have come to watch in the gallery, this is as exciting as this place is going to get, I think, until question period. I see the parliamentary secretary nodding his head, because he knows this too.

I am also glad his intervention covered so much subject matter beyond Bill S-6, because that now allows me to delve into the government's record on taxes, its management of different public policy issues like the Asian Infrastructure Investment Bank, consumer confidence in Canada and business confidence in Canada, as well as how the government has approached Bill S-6.

I will start with an observation about this tax treaty and some of the comments made by the parliamentary secretary. He seemed to be placing Bill S-6 within the confines of trying to achieve greater tax fairness and doing other great things with the Government of Madagascar. He said the bill would make sure that Canadian companies and Canadian taxpayers who may be doing business in Madagascar would not be double taxed, and that it would increase trade and do all of these wonderful things.

However, when I asked officials a question at the Standing Committee on Finance, we heard there was such a small number of tax filers with tax filings in Madagascar that each instance raises confidentiality concerns. Officials from Finance Canada responded to me that these concerns are such that, “consistent with the taxpayer confidentiality protections in the Income Tax Act, the department is precluded from releasing these data”.

This may be why Bill S-6 comes from the other place, the Senate side. The department told me in this official letter to the Standing Committee on Finance that there are so few tax filers impacted by this that the department would not be able to release the data. I had asked which sectors of the Canadian economy and which sectors of the Madagascar economy would be affected, and whether there were any good examples. I did a quick Google and DuckDuckGo search, and I was able to find that Sherritt International was one of the companies in question. It is mostly a mining consortium. There was very little else that I could find.

To the credit of the Department of Finance, it did a pretty thorough review. It reviewed sources including the T1134 information return on foreign affiliates of Canadian taxpayers, the T1135 information return that collects data on specified foreign property holdings, the T106 information return on non-arm's length transactions with related non-residents, and Schedule 21 to the T2 corporate tax return on foreign income tax credits. The department examined all of the years to 2011 and then the subsequent years.

For those still able to follow, either in the public gallery or at home, Finance Canada did a thorough search to double-check how many of these filings would include Madagascar in some way, and they are actually very, very few. Perhaps the tax treaty will enable more business to be conducted by Canadians in that particular country, and there are opportunities yet to be found for this tax treaty and the consolidation of some of the rules to make it simpler for individuals to do business in both. I was unable to find an instance through any international organization or online that showed that Madagascar was behaving like a tax haven. I think that assuages some of the concerns individuals may have had.

I am sure the government knows that I will be supporting this piece of legislation as well. There was no concern about curbing tax evasion through Bill S-6, or about a potential increase in tax evasion. In fact, this is a very small piece of legislation that does not do what the Parliamentary Secretary to the Minister of Finance said. It is not part of a broader approach. If there are so few tax filers that the information cannot be released, then the impact is negligible. Therefore, it cannot be counted as part of the government's broader plan.

I am pouring out my heart here on what I believe about Bill S-6 and its contents, having spent several meetings at committee looking at this particular piece of legislation. I am feeling lighter. As the Yiddish proverb goes, when one pours out one's heart, one feels lighter, so now that the parliamentary secretary has poured out his heart about the government and what he believes its achievements are, I am going to do the opposite. I am going to poke holes in a couple of things he said. I am going to poke holes in some of the Liberal government's achievements, including in some of the statistics it likes to use.

At committee we asked both Global Affairs and Finance Canada for information on the specifics of Bill S-6 and who it would impact. We were told the bill would impact the mining sector. We were also told that detailed information could not be released because it would compromise the privacy of certain tax filers.

That is unusual. In prior cases, when we have done these tax consolidation treaties or signed up to multilateral international instruments with respect to taxes, such as Bill C-82, which was the tax treaty of tax treaties, it was always tens or hundreds of thousands of Canadians who would be impacted. That included Canadian-controlled private corporations in Canada. There would be many of them, so it was easier for us to estimate the impact.

The parliamentary secretary mentioned base erosion and profit sharing, which is not a fixed section in this particular piece of legislation. We have already had legislation to cover that off.

When I mentioned to my kids, who are very young, with my oldest being 10, that I debated an obscure bill called the Canada-Madagascar tax treaty, the first thing they wanted to talk about was King Julien and Skipper, Kowalski, Rico and Private, the famed characters from Penguins of Madagascar and the other movies in the Madagascar series. My kids were thrilled to watch that series when they were younger, and they are still thrilled to watch it today.

However, this piece of legislation is not about that. I am sorry to burst their bubble but this, unfortunately, is not about King Julien or those four little penguins.

The parliamentary secretary went off on a tangent at one point. He mentioned that the tax treaty in Bill S-6 would increase consumer confidence, and that it was part of a slew of policy decisions the government has been making to increase both consumer and business confidence. If he had bothered to check the latest statistics posted by different economic analysis bodies online, or if he had bothered to check the Conference Board of Canada, he would have seen that consumer confidence is just as low as it was in 2015. It has not improved since then. We can see that in our communities. I can see it in cities and towns all over Alberta.

However, there is more consumer confidence in Alberta now that we have Premier Jason Kenney and the United Conservative Party in charge. A new cabinet has been sworn in, and on Tuesday of next week the members of the legislative assembly will be sworn in. I hope we will know the new plan for the province on Wednesday.

Some of that plan has already come out. The government of Alberta has already announced that it will get rid of the punishing provincial NDP carbon tax, which was far more punishing on Albertans and Alberta businesses than the federal backstop. That does not mean the backstop is any good. It does not mean the federal carbon tax is any better.

The Alberta government is basically proposing to return to the old system, which was working. It was the first system to put a price on carbon for the largest emitters, not directly on consumers. The system worked. It was lauded all across North America at the time. It did not punish consumers directly for their behaviour, but was specifically aimed at the largest emitters, who were making it part of their business plans. That is the difference. May 31 is the last day of the Alberta carbon tax.

We can really see consumer confidence returning in Alberta. People are more confident now that they have a government that is on their side and will back up the decisions of private businesses, everyday Albertans, the mom-and-pop convenience stores, the local dry cleaner and the small oil and gas servicing company that has somehow managed to just get by over the last few years.

Albertans are on the cusp. They know that prosperity might return with the right decisions being made by their government to get involved, not to make decisions for them but to support them in the decisions that will create new jobs, create more business investment and lead to higher returns in terms of corporate and personal income taxes.

That is how consumer confidence returns, not by having what we have seen from the federal Liberal government over the past four years. The Liberals created a situation here in Canada that made it impossible to build a pipeline. Energy east was cancelled because of regulatory red tape. Northern gateway was cancelled by cabinet order. There already is a functioning Trans Mountain pipeline, but the Liberals caused a situation in which Kinder Morgan saw no real means to get the expansion built. It was losing construction seasons to it, so the government expropriated it. The government bought it for $4.5 billion.

Now we know from the Parliamentary Budget Officer that the government not only overpaid for the pipeline project by $1 billion but will also need to extract another $8 billion to $9 billion from the taxpayer to build this pipeline.

There has been talk of legislation and there has been talk of an expedited process, but we are waiting until later in June to find out whether this pipeline will get perhaps half a construction season. We know that construction seasons in Canada are short. Basically, there is a construction season and then there is winter. These are essentially the two seasons we have in Canada. Most people who live in big cities know this, as they have experienced it. We are going to lose a second construction season, and this does nothing but reduce business confidence and reduce consumer confidence.

How can Canadians have faith in a government that purchases a pipeline, overpays for it, and loses money every single month operating it? When the interest being paid on the debt is subtracted from the tolls charged on the pipeline, Liberals are losing money every single month operating in the most profitable part of the energy sector, which is shipping.

I hear constantly from the Minister of Natural Resources, who is from Edmonton and should know better, as once the oil gets to the west coast, 99.95% of the product shipped out of the port of Vancouver goes to California. Those are not my statistics; I am not making them up. I asked the Library of Parliament to confirm them for me. This is from the Greater Vancouver Board of Trade. The port itself has said that 99.95% of the product goes to California to feed the refineries there.

Therefore, this is not about reaching new markets on the current pipeline, and perhaps not even on the future pipeline. A series of public policy decisions led to a situation such that a private company felt unable to build a pipeline because of obstruction at the federal and provincial levels. Those obstructions are not gone; they have just become purely governmental. All the decision-making is on the government side.

When I knocked on doors in my communities and for my provincial counterparts, which I did during this past election in Alberta, I heard time and time again that people have no faith whatsoever in the Liberal government's ability to deliver on the construction of a pipeline and no faith in the government's ability to manage public finances.

The parliamentary secretary mentioned the Liberals' great plan to increase affordability for the middle class and that Liberals reduced the tax bracket from 22% to 20.5%. I remind the parliamentary secretary and all members of the House that the biggest tax break from those tax changes went to every single member of Parliament in this chamber. Those who were earning $45,000 or less got zero. They received no benefit whatsoever from that tax cut, but because of the way the progressive tax system works, every single member of Parliament in this chamber got over $800 off their taxes at the end of the day.

That is what the Liberal government did. Those of us in this chamber are not the middle class, but the Liberals did this and claimed it was for the benefit of the middle class. They gave themselves a bigger tax cut than they gave not so much to the working poor, but to people trying to get by and get ahead, people who are taking jobs that many people do not want to take. They work hard for the wages and salaries they earn.

Instead, they received higher payroll taxes. There has been a CPP increase as well, which is taking away from their income at the end of the day and taking away their ability to choose how they want to save.

The second part is that they have a carbon tax to pay. We heard the Parliamentary Secretary to the Minister of Finance speak to this, and in the scenarios he noted, he gave OECD numbers. A colleague of mine mentioned that a family on the lower income scale with two kids would not be getting back all of that money. The parliamentary secretary's numbers only make sense if we include the child benefit, which is just a re-badging of the old universal child care benefit. It is the original Conservative policy that was introduced when the government wanted to introduce a universal, one-size-fits-all, cradle-to-old-age welfare system. Whereas the government would take care of our children directly under this system, the UCCB was meant to empower parents, and that is how we should be looking at it.

The government claims that if we look at all government policy together, the carbon tax is not so bad. However, that does not help the kind of family my colleague mentioned, which is not seeing these rebates.

As well, if we look more closely at the GGPPA, which is the acronym for the government's carbon tax bill that is over 200 pages long, and then if we look at this latest budget document and some of the implementation portions of it, including the algebra formula that implements the rebate program for the federal carbon tax, we see that there is a provision that would allow the minister of finance to exclude any money he or she wishes from the rebate. A finance minister could give it to any other minister he or she wants, for any program, infrastructure or purpose. It is right there in the formula. There is no guarantee in the legislation that Canadians would receive any sort of rebate on the carbon tax, and it will never replace the full amount.

It is absolutely illogical and irrational to say that 100% of the collected tax will be returned to those who pay it. There always is and there always will be an administrative cost in collecting a tax, unless people think that public servants work for free and they think the lights and the heating in this place come for free, and they do not. It has to cost a certain amount of money, which is why we say the government is misleading them. The way the government presents the facts around the carbon rebate and the carbon tax is ingenious, but it is not an environmental plan; it is a tax plan. It is as simple as that.

To return to the point of consumer confidence and how we have not seen it return, some of the facts on LNG speak for themselves. In the case of LNG, $78 billion worth of projects in Canada have been cancelled since 2015. Those are LNG projects that have been completely abandoned by the companies that were proposing them. Tens of thousands of potential well-paying construction jobs, many of them unionized, are gone. They will not be created, because that $78 billion to put people to work has been removed from the private sector. That is an important fact to remember.

The only large-scale project that I am aware of that is going ahead is LNG Canada's project. LNG Canada is a consortium. Mitsubishi is involved and Petronas is involved. The only reason that the consortium went ahead with the project is that it has an exclusion and an exemption from the carbon tax. Of course a company will go ahead and build a large-scale industrial project, as LNG Canada is proposing to do, when it gets an exemption to a tax.

I cannot imagine any regular, everyday, hard-working taxpayers being told by the Liberal government that CRA is going to give them an exemption this year so that they do not have to pay taxes because they are doing so well in producing jobs and growing their business or are earning a higher salary because they work hard. Nobody gets that type of exclusion or exemption.

I will spend my last two minutes on my favourite subject, the Asian Infrastructure Investment Bank, because Madagascar, this country that we are signing a tax treaty with, is a member of this bank. As I said, the parliamentary secretary, by going on a tangent, has allowed me to go on a tangent here. Madagascar is a member of the Asian Infrastructure Investment Bank. As far as I know, it has not received any project yet. It has only spent $15 million to $20 million, which is a paltry sum compared to the nearly half a billion dollars that Canada has set aside. That same money is being used to build pipelines all over Asia, including in Azerbaijan, Bangladesh and the suburbs of Beijing.

I am pouring my heart out here. As my Yiddish proverb said, I am feeling lighter from being able to speak about the Asian Infrastructure Investment Bank. If we in Canada are unable to build pipelines, which are the safest way to move energy, it seems absolutely wrong to be giving a half a billion dollars to governments in Asia and to the China-controlled, Beijing-based Asian Infrastructure Investment Bank.

I support Bill S-6, a small piece of legislation coming to us from the Senate, but I do not support the government's agenda and its repeated failures to get large-scale energy infrastructure built in Canada. I do not support the government's policies that have undermined business confidence and the confidence of Canadians. October cannot come soon enough. The current Liberal government is not as advertised.

Multilateral Instrument in Respect of Tax Conventions Act

[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.

[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.

[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.

[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 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.

Business of the House

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

Mr. Speaker, this afternoon we will resume debate at third reading of Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting.

Tomorrow we will resume debate at second reading of Bill C-92, an act respecting first nations, Inuit and Métis children, youth and families.

Next Monday we will resume debate at second reading of Bill C-93, an act to provide no-cost, expedited record suspensions for simple possession of cannabis.

I hope I will have more to tell you tomorrow.

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 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.

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.

Multilateral Instrument in Respect of Tax Conventions Act

[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.

[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 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.

[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]

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.

[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—