Bill S-4 (Historical)

Tax Convention and Arrangement Implementation Act, 2016

An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement

This enactment implements a convention between the Government of Canada and the Government of the State of Israel for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and an arrangement between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office in Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. It also amends the Canada–Hong Kong Tax Agreement Act, 2013 to add to it, for greater certainty, an interpretation provision.
The convention and arrangement are generally patterned on the Model Tax Convention on Income and on Capital developed by the Organisation for Economic Co-operation and Development (OECD).
The convention and arrangement have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Once implemented, they will provide relief from taxation rules in, or related to, the Income Tax Act. Their implementation requires the enactment of this Act.

Tax Convention and Arrangement Implementation Act, 2016

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, under the Conservative government, Canada went from 14 to 43 free trade partners, including the European Union, which has 28 states, $500 million people, and $12 billion in trade. With respect to South Korea, we reached an agreement that gave us access to 50 million people and $1.7 billion in trade. That creates wealth for Canada. We have not talked about the trans-Pacific partnership, which includes 10 new countries.

Yes, we must support free trade. Canada, with its modest population of 35 million people, and by extension clients, falls short. Modern technologies make it possible to trade with countries around the world. We must profit from our ingenuity, natural resources, and our work ethic so we can sell our goods around the world. A lot of money comes here from abroad and creates wealth, which we must all manage in a serious and rigorous manner, contrary to what the current government is doing.

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

Madam Speaker, I particularly appreciated hearing my colleague share some of the background in terms of our party and the whole free trade issue. I do not remember the 1988 election perhaps quite as well as he does.

Because the member has been aware of and involved in this debate for a long time, I want to ask him about the global trends in terms of debates around protectionism and maybe a rising anti-trade sentiment in certain quarters. Canada is a nation that has benefited significantly from trade. Our previous prime minister was a strong leader, not only domestically, but internationally, speaking out about the importance of economic liberalization and free trade.

What role could Canada play now in this emerging climate? What role should our government be playing in terms of trying to counter some of this emerging protectionist sentiment that we see around the world?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, l appreciate the comments of my colleague. Maybe he was very young when this occurred in 1988, but I can assure the House that now this young man is very bright, articulate, and very good. I appreciate that every time he rises in the House he has something to say that is very well documented.

We talked about the rise of protectionism. He is right and we must be aware. As an exporting country, Canada must be very aware of what is happening all around the world, in the U.S., or in Europe. This is why we have to be careful. We have to have good relationships with the U.S., with European countries, but also let me remind everyone that in election years every political party is against free trade. It is a trademark.

Let me remind the House that President Obama before getting elected as president, talked about NAFTA saying, “I'm the one that's driving, I'm the one that's driving the car and those two others are in the backseat”. The two others he is talking about are the president of Mexico and about “Obama, president of Canada”. He talked about us as a president of Canada.

This is just to say that during an election year, people talk tough. After that, they talk about business.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saint-Hyacinthe—Bagot, Aerospace Industry; the hon. member for Trois-Rivières, Rail Transportation; and the hon. member for Lévis—Lotbinière, Ethics.

Resuming debate.

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

Madam Speaker, I would like to give a different twist to the debate that I have been listening to all afternoon and try to relate it in part to my constituency.

Companies in Winnipeg manufacture all sort of wonderful things. Two of the things that come to my mind are windows and buses. Some of the best windows are manufactured in the city of Winnipeg. Some of the best buses in the world are manufactured in the city of Winnipeg. Many of the employees who produce those windows and buses are my constituents.

Canada is very dependent on exports. We export all sorts of products that are manufactured in communities throughout our country. In virtually all regions of this country some form of manufacturing is taking place. When I think of how important the trade file is to Canadians, I get a better understanding when it is brought down to the level of the people who work in factories throughout our country.

The Minister of Finance held round tables throughout the country and I was able to participate in one of them. At one of the discussions the issue of the Canadian dollar came up and whether it was better for our manufacturing industry if the dollar is high or low. I would suggest that depends on the manufacturer. For example, window manufacturers in Winnipeg gave me the distinct impression that it was better for them if the dollar is low because of where the material comes from, which is Canada. The company that manufactures the very best buses in the world as far as I am concerned is called New Flyer Industries Inc. and its employees are my constituents. The parts for the buses quite often come from all around the world, which is not unique. For New Flyer, a low dollar is not a positive thing because it has to buy the parts it needs from countries around the world.

Why am I using these companies as examples? It is because policies and price factors need to be taken into consideration, the importance of taxation for example, in what we are debating today, and trying to level the playing field. There are other things that need to be taken into consideration beyond that, however.

It is important that we recognize the value of trade but in many ways we also need to recognize the very real nuances that impact the bottom line. That is really what Bill S-4 is about.

We have great trade links today with Taiwan, Hong Kong, and Israel. We do a great deal of trade with these three countries but today illustrates that there is always room for improvement. If Bill S-4 gets passed, Canadian industries will benefit from it.

This should come as no surprise. This government has been more aggressive on the trade file than the Conservative government before us and I will demonstrate that shortly.

To indicate how important trade is, I would say that Canada is a trading nation, and we are very much dependent on world trade. I expect that it will continue to be a priority for this government for a number of good reasons, but there is one that comes to mind. If we look at the last budget that we presented, we see the focus of that budget, in good part, was on Canada's middle class and those aspiring to be a part of the middle class. Good solid trade and a foundation that allows us to expand upon that will build upon Canada's middle class. Many of the jobs, both direct and indirect, that can be generated would assist Canada's middle class and provide those jobs into the future. Therefore, it is really important that we get this right, because if we have a healthy middle class we will have a healthier economy. By having a healthier economy, we will continue to move forward overall as a society. It would be difficult to do so if we did not have trade.

The specifics of the bill we are debating today can be broken down into three parts. The main purpose of this enactment is to implement a previously publicly announced convention concluded with the state of Israel, and an arrangement concluded with the jurisdiction of Taiwan. It also would amend the Canada-Hong Kong Tax Agreement Act of 2013 to add greater certainty and interpretation provisions.

The sheer number of trade and investment agreements we have entered into over the years is a fairly impressive list. One of the things that I truly appreciate about the Library of Parliament is its research capability and the manner in which it is able to present such high-calibre and high-quality documents. Let me extend a compliment to those individuals who work for our parliamentary library. I posed a question to it with respect to how many trade and investment agreements we have, where they are, and when they were entered into. In looking at it, I did a quick count. We are talking about a dozen trade agreements with a number of countries, many of which have been highlighted during the debate.

I look at this as a positive. Whenever we can get into trade arrangements, it helps us build a relationship with those countries. There are a couple that have been signed but not implemented, and they will not be implemented until we have the opportunity to have that debate and that vote. The two that I am referring to are the Canada-European Union comprehensive economic and trade agreement, better known as CETA, and the Canada-Ukraine trade agreement. I am very proud of the efforts of this government with respect to both those. Although they may have been started years ago, the CETA agreement in particular, it was this Minister of International Trade who was able to pick up that file. To give the impression that it was a foregone conclusion, that it was something that would just happen, is not truthful, because we as a government have had to invest a great deal of resources, ministerial time, and dependence on our bureaucracy, those highly qualified individuals in particular, to assist us in negotiating on behalf of all Canadians. I am pleased that we were able to get that signature in place on October 30 of this year.

It was not that long ago that the newly elected president of Ukraine delivered a speech to the House of Commons, and he talked about how he wanted to further the relationship with Canada in regard to trade with Ukraine. He put a challenge out to us to attempt to get a special Ukraine trade agreement. That was only a few years ago. When we look at what we have today, we see that it was back on July 11, 2016, that we actually had that deal signed. Again, we appreciate the efforts put in by the Conservative government at the time. I am so grateful that we had the opportunity to sign it, and we are anticipating debate to come, and hopefully, passage. How wonderful that would be.

There are some agreements still being debated; at least, discussed with Canadians. I am thinking of the trans-Pacific partnership, best known as the TPP. We understand where both the opposition parties stand on that issue. We have taken a position that we want to continue to work with Canadians and other stakeholders to see where we are going on that particular vote. I anticipate that in due course we will see more direction coming from the government, after thorough consultations to allow Canadians to have the opportunity to provide some input. The reason we are being so thorough, specifically on the TPP, is that we made a commitment to Canadians that we would be very thorough.

I listed three trade deals, two that are very close, and we are not too sure what is going to happen with the third one. We also have another dozen trade deals that have actually been implemented.

Then, if we look at the investment agreements, this is where we would find it very interesting. I found it interesting, just reading through. There is an investment agreement between Canada and Hong Kong. The bill we are debating today deals, at least in part, with that through the taxation issues. If we continue to go through it, we see there is a Canada-Israel agreement that was signed also. I am trying to quickly find it.

I know there is the Thailand one. It was signed on January 17, 1997. The Hong Kong agreement was signed on February 10, 2016. The Canada-Israel agreement was not actually an investment agreement. It was a trade agreement, and there is a difference, and that is why I had trouble finding it. That trade agreement with Israel was signed in July 1996.

I am not going to remind members who was in government and who was not. We have a very good sense that there have been political parties on both sides of the House that have recognized the value of trade. However, I want to emphasize that this government, specifically, has seen the value of trade, and we have acted accordingly. We have been exceptionally aggressive at pursuing all sorts and forms of trade with our counterpart countries. That is best illustrated by the two trade agreements I referenced.

We have also had investment agreements signed in the last 12 months. I could make reference to either the Hong Kong one or the one with Mongolia.

It was not that long ago that we had other legislation brought into the House. Many members might recall the world trade agreement, the Agreement on Trade Facilitation, that was introduced to the House through Bill C-13, and I was pleased to see that passed. Remember, that particular agreement from the World Trade Organization represents well over 100 countries around the world. Again, this is an agreement that this government brought forward. There is a certain number of countries that have to sign on to have it implemented, and we saw that as a high priority, brought it to the House of Commons, and passed it through.

It does not stop there. We also have an agreement on internal trade, which again is something that has been debated in this chamber. We have seen this government take a very positive approach, not only to say that it is important that we further trade opportunities abroad, but it is also important that we look at ways to take down trade barriers between provinces. This is something that we constantly hear about. There is room for improvement to make the system better, and if we talk to the Minister of International Trade or other ministers related to internal trade here in Canada, we will learn it is an important issue. Again, we recognize how important it is for Canada as a whole.

I started off by talking about the constituents I represent in Winnipeg North, and I want to emphasize that I represent a mostly working-class riding. Often I have been invited over the years to take tours of different facilities. I made reference to, for example, New Flyer Industries as one of those companies. I have been afforded the opportunity to meet with many of my constituents who, with their amazing skills and hard work, manufacture all sorts of products out of the city.

I have stood in this chamber and talked about the importance of the hog industry, which is of critical importance to the province of Manitoba. It has derived many benefits through trade agreements.

All of these jobs that I referenced are direct jobs, but there are many thousands more indirect jobs that are a direct result of having and developing industries that actually export.

It does not have to be a manufactured product. Many colleagues of mine, particularly from the Ontario caucus, boast about how technology is being developed and ideas are being developed. I know that there is a fairly significant industry of ideas being generated in the province of Ontario and other provinces that also reach out beyond Canadian borders and provide good-quality jobs. I say all of this because I truly believe that, if we collectively recognize the value of trade, we will do that much more.

I am very proud of the fact that we have a Prime Minister who is very well received in virtually all countries around the world where there is an expectation that, as a relatively new government, we are going to be able to bring Canada back on the international scene. There are many ways that people will pull for attention. For me personally, I am hoping we will see the government continue to push on the trade file, because it is so very important.

I understand that my time has expired. I might be able to expand on that in the question and answer period.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Madam Speaker, we in the NDP support the harmonization and simplification of tax legislation. We do not want to see companies paying double tax.

When I heard the member say that they were supporting this bill, it was going great until I heard him starting to talk about the middle-class tax break and how they are helping the middle class, because two-thirds of Canadians are not getting the benefit from that. In fact, people earning $45,000 or less get nothing. That made me nervous, actually. We were fine with this until we heard that.

In 1980 there was a tax agreement with Spain, Korea, Austria, Italy, and the tiny island of Barbados. It profoundly changed Canada. We have the biggest economic leakage in Canadian history happening right now through that tax haven.

The member for Winnipeg North, I know, comes from a riding where the median income is close to what it is in my riding, which is about $25,000 a year, and it may be lower. A lot of those people do not get anything from their middle-class tax break. Way more than two-thirds of Canadians, and about three-quarters of the people in his riding, get nothing from the middle-class tax break.

Does my colleague think that the government should propose amendments to the Canadian tax code to prevent tax cheats from using our lenient laws to avoid paying their fair share of Canadian income taxes?

As I said, we know that $5 billion to $7 billion are being lost through this treaty with Barbados that is supposed to be fair.

We know that we are entering into an agreement with Taiwan and Israel, and it should be a great agreement, but we thought that in 1980, when we signed a similar deal with Barbados.

How are we going to make sure that this is not going to be history repeating itself? We know that $5 billion to—

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Order. It is questions and comments. If the member would like to make a speech, maybe he could make arrangements to get added to the list.

The Parliamentary Secretary to the Leader of the Government in the House of Commons.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the member made reference to the middle-class tax cut and tried to disappoint my constituents. I think it is important that the member acknowledge that the middle-class tax cut, which is a super-fantastic thing, because over nine million Canadians will benefit from it, is one aspect of a very progressive budget.

I can assure him that many of my constituents who have children, and many of my constituents who are seniors and rely on the guaranteed income supplement, will be receiving literally hundreds, and in some cases thousands, of dollars more. That does not even deal with the middle-class tax cut. It is all part of the budget. There is a net gain for my constituents, and I am very proud of that fact.

With respect to the question the member posed regarding trade and tax evasion, I share the concern about individuals who choose to avoid paying taxes. I am very proud of the fact that we have a minister responsible for revenue who has allocated, I think, close to $400 million, and please do not quote me on that, to fight tax evasion. I see that as a good thing.

If we take it all together, I would highly recommend that the member reconsider his position on the budget, because the majority of his constituents will benefit.

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

Madam Speaker, certainly these are important issues. I might recommend to him a fact-finding trip to Taiwan and Israel in the month of February. I know I would certainly be prepared to pick up the slack in this place.

I want to ask him about the trade initiatives of the present government. We are seeing legislation come forward that kind of follows through with and implements things that were begun under the previous government.

We are pleased to see the bill come forward. We are pleased to see the continuation, the following through, of that, but we hope, as well, to see the present government undertake additional new initiatives on trade.

We are seeing the Canada free trade deal next week, which is something that was begun under the previous government. We have had CETA, again negotiated under the previous government.

Could the member tell us whether there are additional new trade initiatives the present government is undertaking? We are pleased to see the continuation of those things, but we would also like to see actual additional proposals, because it is so important that we continue to move forward with this trade agenda well into the future.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I can understand why the Conservatives are a little nervous about this issue. According to the parliamentary library, there are 12 trade agreements. I could list off the countries or I can provide the information to my colleague across the way. I think what makes the Conservatives nervous is that they did not quite get the job done on CETA.

CETA was actually signed off by our minister, who did an outstanding job in finalizing it and getting it across the goal line. The Conservatives used to count that as 28 trade agreements. If we use their math, it would mean that they are actually being outperformed by this government. We did in less than 12 months of action what took the Conservatives more than 10 years. I know that they will be a little sensitive. They do not like to be outperformed.

Even if they look at the bottom line of trade deficits and so forth, one of the things the Liberals have consistently done is deliver trade surpluses. The best case in point is the multi-billion dollar trade surplus Mr. Harper inherited, and he turned that into a deficit. We are hoping in time to turn Mr. Harper's path toward ongoing trade deficits into a more positive light. It might take us a while.

We understand the importance of trade agreements. We will continue to push for trade agreements. I have a personal favourite, that being the Philippines. We have a bit of an agreement there. I would love to see something more, but that is more a personal thing.

I can assure the member that we have a very aggressive government that will continue to look for opportunities that will expand Canada's trading opportunities. If that means an agreement, an association, or just looking at side agreements and working with our provinces and different stakeholders, we are prepared to do that.

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

Madam Speaker, the member used this favourite Liberal phrase, “did not get it done”. He should not let the foreign affairs minister hear him use that phrase. It might bring back some bad memories.

I want to follow up on the member's comments about CETA. I think the member knows that we negotiated it. It was gift-wrapped and given to the government, and through various shenanigans and the Liberals' attempt to put their stamp on it, we almost lost that deal. In the end, certainly, we were very happy to see that completed. It is in Canada's best interest.

We are in a not bad place when it comes to trade. If the Liberals are trying to compete with us on trade, they are going to have a hard time doing it. Hopefully it is an effort they will undertake, and hopefully they will try to learn policy lessons from us in other areas.

The member spoke as well about the deficit. He knows that we had a balanced budget at the end of the previous government's tenure and that the debt-to-GDP ratio went down under Stephen Harper from about 34% to 31%. Projections are that they will go up to 38% now under this new finance minister.

The government talks about its economic record. Since the member brought up deficits, I wonder if he will use this opportunity to tell us when the current government will bring us back to balanced budgets. I have asked this question many times and still have not had an answer. I know that the member for Winnipeg North will be able to concisely drill down and give us the response to that question.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I want to go back to the CETA comments. I wonder how the member would feel if I were to present him with a half-knit sweater for Christmas and package it up.

We honestly recognize that the Conservatives did do some work on CETA. We have acknowledged that.

We had leaders in Europe who had a very difficult time and it was off the tracks. If it were not for a very aggressive Minister of International Trade, working with the parliamentary secretary and a Prime Minister who was prepared to pick up the discussions and carry it over the goal line, we would not have that agreement. That is the reality.

It was signed off by this government. It does not mean that we cannot share in the glory, because at the end of the day, Canadians and Canada's middle class will benefit from it.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Is the House ready for the question?

[Some hon. members]

Question.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

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