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

[Lawrence MacAulay, Liberal, Cardigan, PE]

moved that Bill S-4, 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, be read the second time and referred to a committee.

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, it is an honour for me to speak today on the 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.

What we are going to be talking about today is implementing tax conventions that are going to be very beneficial for our country. They are going to create jobs, promote commerce, and favour the protection and the avoidance of tax evasion in our country.

I appreciate the opportunity to speak today on the second reading of Bill S-4.

Bill S-4 would implement a double taxation convention and a double taxation arrangement recently concluded and publicly announced with the State of Israel and with respect to the jurisdiction of Taiwan.

Bill S-4 would also amend the legislation that implemented the Canada-Hong Kong double taxation agreement, to add an interpretation provision for greater certainty.

The double taxation convention with the state of Israel replaces the current tax convention with that country which was signed in 1975. The revised double taxation convention brings us up to date with the current tax treaty policies of Canada and Israel.

There is currently no double taxation arrangement between Canada and Taiwan. Taiwan is one of the few remaining large world economies not covered by Canada's network of 92 tax treaties currently in force and, thus, the conclusion of a double taxation arrangement with Taiwan has been an important objective for Canada.

Taiwan is a significant trading partner for Canada, ranking as Canada's fifth-largest trading partner in the Asia-Pacific region and ranking 12th worldwide, in 2015. In 2015, Canadian exports to Taiwan were valued at $1.46 billion, while imports stood at $5.46 billion, for a total of more than $6.91 billion in trade between our two jurisdictions.

Taiwan currently has double taxation arrangements in force with 30 other countries, including Australia, Austria, Belgium, Denmark, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, and the United Kingdom.

In keeping with Canada's “one China” policy, a double taxation arrangement with Taiwan has been concluded as an arrangement between the Canadian trade office in Taipei and the Taipei economic and cultural office in Canada, as opposed to an agreement between sovereign countries.

This double taxation arrangement with Taiwan is consistent with other existing Canada-Taiwan instruments in a wide range of areas, from air transport, agricultural market access, visa exemptions, and postal services, to science and technology research, financial supervision, and youth mobility, among many others.

Once implemented in Canada, through this bill, the double taxation arrangement with the jurisdiction of Taiwan would constitute a functional equivalent to a tax treaty.

The convention and arrangement to avoid double taxation contained in Bill S-4 will facilitate trade and bilateral investment with the state of Israel and the territory of Taiwan, by eliminating or relieving double taxation on transborder transactions, which will mean that taxpayers will pay tax only once on a given income. This will also help to prevent income tax evasion, which is undermining the tax base and our taxation system.

Bill S-4 relates to the ongoing efforts being made by Canada to update and modernize its network of tax conventions with other territories. As was mentioned earlier, Canada relies on one of the most extensive tax convention networks in the world, with 92 tax treaties currently in force.

I want to make it clear that Bill S-4 does not represent any new or significant change in policy. In fact, the double taxation convention and arrangement covered by the bill, like its predecessors, is patterned on the model tax convention of the Organisation for Economic Co-operation and Development, OECD, which is accepted by most jurisdictions around the world.

The provisions in the particular double taxation convention and arrangement comply with the international norms that apply to such double tax conventions and arrangements.

As Canada’s economy is increasingly integrated with the global economy, the elimination of fiscal barriers to trade and international investment has become more important. Double taxation conventions and arrangements such as those we are discussing today are specifically designed to facilitate cross-border trade, investment, and other activities between Canada and each of the signatory jurisdictions.

The expression “tax convention” primarily designates income tax conventions and arrangements that establish the extent to which a jurisdiction can apply personal and corporate income tax to a resident of another jurisdiction.

For Canada, our tax treaty gives us assurances of how Canadians and Canadian businesses will be taxed abroad. Conversely, for our tax treaty partners, Canada's tax treaties give them the assurance of how their residents will be treated in Canada. Our tax treaties are all designed with two general objectives in mind. The first objective is to remove barriers to cross-border trade and investment, most notably the double taxation of income. I am sure that is something that every member in the House would agree with.

The second objective, and I am sure members would also agree, is to prevent tax evasion by encouraging co-operation between Canada's tax authorities and the tax authorities of the other signatory jurisdictions.

Those are two objectives that I am sure will get unanimous consent from all the members in the House.

Allow me to take a few minutes to expand on each of these very important objectives for our country. Let us talk first about removing barriers to trade and investment.

First of all, removing barriers to trade and investment is essential in today’s global economic context. Without question, investors, traders, merchants, and other stakeholders doing business on an international scale want to be certain of the tax repercussions of their activities in Canada and abroad.

Similarly, Canadians doing business or investing overseas want to be sure that they will be treated fairly and consistently with respect to the income tax they pay.

In other words, they want to know the rules of the game and they want to know the rules will not change in the middle of the game. That is one of the objectives of Bill S-4, to remove uncertainty about the tax implications associated with doing business, working, or investing abroad. Tax treaties establish a mutual understanding of how the tax regime of one jurisdiction will interface with that of another. This can only promote certainty and stability and help produce a better business climate especially with respect to eliminating double taxation.

Let me turn to double taxation.

No one wants to have their income taxed twice, something that should never happen in any case. However, in the absence of a convention or arrangement to avoid double taxation, such as those contained in Bill S-4, that is exactly what could happen. For example, in cross-border transactions, the two jurisdictions might apply their income tax without granting taxpayers relief with respect to the income tax paid to the other jurisdiction.

To reduce the possibility of double taxation, tax conventions apply either of two general methods, depending on the particular situation.

In some cases, the exclusive right to tax a particular income is granted to the jurisdiction where the taxpayer resides.

In other cases, that right is shared.

For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment, say for three months, to any one of the two signatory jurisdictions in this bill, Canada has the exclusive right to tax that person's employment income. If, on the other hand, that same person is employed abroad for a longer period of time, say for one year, then the jurisdiction where that person works can also tax the employment income. However, in this case, under the terms of the double taxation convention and arrangement in Bill S-4, Canada must credit the tax paid in that other country against the Canadian tax otherwise payable on that income. This is one example of how the allocation of taxing rights between jurisdictions under tax treaties ensures that individuals and businesses are taxed fairly.

Let me move to withholding tax.

One way to reduce the potential of double taxation is to reduce withholding taxes. These taxes are a common feature in international taxation. It is imposed by an authority on certain items of income earned within its jurisdiction and paid to the residents of another jurisdiction. Types of income usually subject to withholding taxes include, for example, interest, dividends, and royalties.

Withholding taxes are levied on the gross amount paid to non-residents and represent their final obligation with respect to income tax payable to Canada.

Without a tax treaty in place, Canada usually taxes this income at a rate of 25%, which is the rate set out under our own domestic tax legislation, the Income Tax Act. The double taxation convention and arrangement in Bill S-4, however, would provide for a maximum withholding tax rate on portfolio dividends paid to non-residents of 15% in the case of the State of Israel and the jurisdiction of Taiwan. For dividends paid by subsidiaries to their parent companies, the maximum withholding tax rate is reduced to 5% in the case of the State of Israel, and 10% in the case of the jurisdiction of Taiwan. Withholding rate reductions also apply to royalties, interest, and pension payments. The double taxation convention and arrangement in this bill would cap the maximum withholding tax rate on interest and royalties at 10%, and on periodic pension payments at 15%. The double taxation convention and arrangement also would provide that no tax may be withheld on cross-border payments of interest in specific situations, such as interest paid on loans made, guaranteed, or insured by Export Development Canada; or a similar institution in Israel or Taiwan.

withholding tax rates provided for in the convention and arrangement covered in Bill S-4 are consistent with current Canadian policies on double taxation.

Let me move now to encouraging co-operation.

I mentioned that tax treaties have two main objectives. I talked about the first objective, which is to remove barriers to cross-border trade and investment by eliminating double taxation.

The treaties' second objective, and I am sure everyone here will agree with me, is to encourage cooperation between tax authorities in Canada and in treaty countries. Bill S-4, for instance, has to do with a convention and an arrangement to avoid double taxation through cooperation with tax authorities specifically in the State of Israel and the jurisdiction of Taiwan.

For example, tax treaties include a mechanism for settling disputes or enforcement issues that arise after a treaty on double taxation comes into force.

In such cases, designated tax authorities of the two jurisdictions, known as the competent authorities, are to consult with a view to reaching a satisfactory solution, under which the taxpayer's income is allocated between the two taxing jurisdictions on a consistent basis, thereby preventing the double taxation that might otherwise result.

The Canadian competent authority under Canada's tax treaties is the Minister of National Revenue or the minister's authorized representative, who would normally be an official at the Canada Revenue Agency.

Furthermore, one of the most important benefits of increased co-operation between Canada and other jurisdictions is preventing tax evasion. Indeed, tax treaties are an important tool in protecting Canada's tax base in that they allow consultation with and information to be exchanged between our revenue authorities and their counterparts in jurisdictions with which we have a double taxation convention.

In that regard, the convention and arrangement to avoid double taxation listed in Bill S-4 implement the internationally agreed standard for the sharing of tax information on request created by the Organisation for Economic Co-operation and Development, or OECD, which gives Canadian tax authorities access to information needed for the administration and enforcement of Canadian tax laws, while also helping them prevent international tax evasion.

Thus, the convention and arrangement to avoid double taxation listed in Bill S-4 will help ensure that Canada's tax regime is fair by making sure that taxes owed are actually paid. Conversely, as I have already mentioned, these treaties also help ensure that taxpayers do not have to pay more than their fare share.

Let me move to timing and consideration.

Once this bill has been enacted, Canada will be in a position to send its notice of ratification of the convention and arrangement on double taxation contained in the bill. Taiwan has already sent its notice of ratification to Canada, and Israel has promised to do so and to make every effort to send its notice by the end of the year.

Under the terms provided in the double taxation convention and arrangement, it will take effect the first day of January in the year following that in which the latter of these notices of ratification have been exchanged. Thus, it is important that this legislation be enacted before the end of this year so that Canada can send its notices of ratification regarding the convention and arrangement in order for the double taxation convention and arrangement to have effect commencing January 1, 2017. Otherwise, the next opportunity for the coming into effect of the convention and arrangement would be January 1, 2018.

The benefits of Bill S-4 are clear. The double taxation convention and arrangement covered in Bill S-4 would promote certainty, stability, and a better business climate for taxpayers and businesses in Canada and in the partner jurisdictions.

Furthermore, the convention and arrangement to avoid double taxation will serve to further consolidate Canada’s position in the increasingly competitive circles of international trade and investment. They are in line with the OECD’s international standards, and they will help strengthen the taxation system to the benefit of Canadians and to achieve our tax fairness objective for all Canadians.

These actions are consistent with the basic principles of economic efficiency and responsible fiscal management.

For these reasons, I invite members of the House to support the bill. It will support trade. It will support tax integrity. I am sure that every member will support the bill, because it is not just the smart thing to do for Canada, it is the right thing to do.

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

Mr. Speaker, obviously, the Conservatives support this legislation. We are pleased with the implications it would have for our relations with some important countries and for commercial opportunities.

I wonder if the member could speak specifically about deepening our relationship with Taiwan at the current juncture. Taiwan is a place that is democratic and is a beacon of democratic values in an immediate area that certainly benefits from that positive example. Canada can help strengthen Taiwan, especially in that context.

I wonder if the member would have some further comments about the Canada-Taiwan relationship specifically and what it means for that region.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, our relationship with Taiwan is increasing. Taiwan is already a significant trading partner, ranking as Canada's fifth-largest trading partner in the Asia-Pacific region. The member would agree with me that this is a growing region of the world.

This is about creating more opportunities for Canadian companies to export. We know that certainty and stability is what business is looking for. When we look at the potential we have with Taiwan, this is certainly the right thing to do. It will create opportunities for Canadian businesses to export more and to create jobs in our country.

It will be beneficial for all Canadians if we can ratify it before the end of the year. Otherwise, we will lose one year of growth in our business with Taiwan.

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

Mr. Speaker, I thank my hon. colleague for his speech.

Not so long ago, we had a debate in the House on one particular tax convention, on the initiative of a member of the Bloc Québécois. The debate concerned the tax treaty between Canada and Barbados, to avoid double taxation, the subject we are addressing today.

What makes the case of Barbados different is obviously the fact that companies that do not do business directly within the jurisdiction of Barbados are taxed at a rate of 0.5% to 2%. Consequently, as a result of the treaty to avoid double taxation that we have with Barbados, certain companies can benefit from the Barbadian preferential rate prior to repatriating the funds to Canada, telling the Canadian tax authorities that they have already paid their income tax and cannot be made to pay more, because they are sheltered by the treaty to avoid double taxation.

Outside these two good agreements, can my colleague talk about the potential danger and the necessity for Canada to monitor the tax situation of each of the countries with which it has entered into a convention, to make it possible to review those conventions, or even cancel them if necessary, when they make no sense, when we see a situation like the one between Canada and Barbados?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, I thank my hon. colleague, who is doing very constructive work on the Standing Committee on Finance.

He is well aware that combatting tax evasion was an important theme of the last 2016 budget. We have invested $444 million in the Canada Revenue Agency precisely in order to combat tax evasion. We want to be sure that the Canada Revenue Agency is given the resources, the teams and the technology to fight tax evasion.

Members may recall that in our statement we spoke of international co-operation, as my colleague well knows. One of the things that these conventions do, and we have over 92 of them all over the world, is to permit information sharing among tax authorities.

Members will agree that this information sharing makes it possible to combat tax evasion. This is the right thing to do for Canada. These agreements promote trade among jurisdictions, but they also give us one more tool to guarantee the integrity of our taxation system in Canada.

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

Mr. Speaker, even though we are talking about taxes, whether with respect to Israel or Taiwan, it is important to recognize that part of the lifestyle we have in Canada today is because of trade agreements and trade in general. A very important aspect of world trade is the whole issue of taxation and how tax policies are administered.

If the member looks at the broader picture of how important trade is to our country, taxation is something that cannot be overlooked. It is a very important aspect of trade.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, Canada is a trading nation. Canada depends on trade for growth. Members will recall that in the fall economic statement, we created an agency to attract investment in Canada, the invest in Canada hub, because we realize that we need to make efforts to market Canada to attract investment.

When we have these conventions and arrangements in place, we are providing certainty and stability. That is what people who want to invest in our country want to know. They want to know what the taxation will be between the two nations or two jurisdictions when we do these things.

Our trade with Israel is increasing. Our trade with Taiwan is increasing. Our trade with Hong Kong is increasing and is important as well.

We are doing the right thing, because this is about making Canada one of the most attractive places in the world to invest. We have 92 of these arrangements and conventions in place. It is the smart thing to do, and that is why we are putting this forward. I would urge all members to support us so that we can put the notices in so that the convention and arrangements can take effect January 1, 2017.

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

Mr. Speaker, I thank my colleague for answering the question I asked earlier.

He thanked me for being constructive, which I try to be as much as possible, but unfortunately, his response certainly was not as constructive, as he avoided answering my question. He did not tell me whether he foresees any potential risk with the conventions on double taxation. Obviously, he has a lot to say about these two conventions today, which makes sense. However, my question was quite simple.

Does the hon. member see any potential risk in these conventions when they are concluded with nations that have very low or non-existent tax rates?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, I thank my colleague for giving me the opportunity to rise a second time to answer him in an entirely constructive manner.

I will talk about Bill S-4, since that is what is before us today. We note that in the tax convention and arrangement to be signed with Taiwan, that these two conventions contain standard provisions of the Organisation for Economic Co-operation and Development, or the OECD.

My colleague is well aware of the fact that we are modernizing our tax conventions. As I was saying, we have 92 of them and year after year we incorporate standard OECD provisions in the conventions. They allow us to have the best possible tools for combatting tax evasion and my colleague knows it.

That is one of the things we stated in this government's first budget. We invested $444 million precisely because fiscal integrity is important to Canadians. To us, this is another tool in our toolbox to ensure that people pay their fair share in taxes and at the same time to promote trade.

That is what we need to do for Canadians in order to promote trade here in Canada.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Resuming debate, the hon. member for Sherwood Park—Fort Saskatchewan. Before he begins, I will inform him that he has 18 minutes before question period. He can resume after question period and finish things off.

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

Mr. Speaker, it will make it that much easier for the government members who want to hear my speech to come now and then stay for question period. I know many of us are receiving a lot of correspondence from our constituents on Bill S-4, so it is important to talk about it and study it in detail.

Bill S-4, which come to us from the Senate, would implement a tax treaty with the Government of Israel as well as a tax arrangement with the Government of Taiwan. It would also amend the Canada-Hong Kong Income Tax Agreement.

These types of tax treaties are very important for facilitating international trade for investment between different countries. Certainly, in that light, our party is very much a pro-trade party, and that is why we support the bill.

The bill is about enforcement, fighting tax evasion, and more broadly about facilitating trade liberalization. It is about making it possible for companies to do business in multiple jurisdictions and, in particular, deepening our relationship with some very important partners, with Israel and Taiwan.

Today I will talk about three issues: trade liberalization in general, the Canada-Israel relationship, and the Canada-Taiwan relationship.

With respect to trade liberalization, I have said before that it is important for the government to move from inertia to action on trade. We have had a number of different bills and issues up for debate with respect to trade: the implementation of the trade facilitation agreement, the CETA deal, and next week I believe we will debate the Canada-Ukraine free trade deal. The Conservative Party supports these, in part because we recognize they are really the continuation of work that was begun under the previous government. One does not come up with a tax treaty overnight. In fact, these are cases where a lot of hard work was done by the previous trade minister and by Stephen Harper, the previous prime minister.

When it came to trade, we were quite aggressive in our trade agenda. We were negotiating and updating agreements. We were undertaking a vast array of different negotiations to expand Canadian access to trade, such that at the time of the election, there were trade deals that we had negotiated between TPP and CETA, which represented over 60% of the world's GDP. Therefore, Canada would have been uniquely positioned with respect to trade.

We know the story on the TPP, with the government not leading on TPP and backing away from it to a large extent, but still being supportive of some of these things we had done. Therefore, the government is putting these bills before the House, and this is one of them with which we agree. We see them as positive bills, but they reflect as well a certain inertia, the continuation of policies that were begun under the previous government. That much is good.

It is positive to see the continuation of good policies that were started under the Conservative government, but we also need to see the Liberals be proactive on trade and start new initiatives that reflect emerging opportunities and challenges. Inertia is not going to be enough, especially given the current global economic climate. The history of the Liberal Party in office has been continuing to leave in place trade deals that the previous Conservative government created but not necessarily implementing new original trade initiatives. This is the general context.

An emerging protectionist sentiment is happening around the world right now. We have a president-elect in the United States who has expressed in the past a certain degree of skepticism of the value of trade within North America, and perhaps more so of trade between the U.S. and Mexico, but there is generally a concern about trade coming from the new incoming administration. It is important for other world leaders, other nations in general, to make strong arguments about the importance and benefits of an open economy.

It is for us to be actively pursuing that discussion, but also to be seeking out opportunities to sign new agreements, to move a trade liberalization agenda forward, perhaps with other countries, perhaps in different kinds of arrangements than we have seen exist in the past. We can do that and at the same time we can show the benefits of those trade arrangements. Canada should seize this moment and continue to be a pro-trade country, a country that benefits from trade, not merely continuing with inertia but also undertaking new initiatives.

When we talk about trade liberalization, and specifically about the bill before us, it is important to recognize that these kinds of agreements have economic benefits, but they are also ways of affirming and deepening relationships between like-minded countries.

Certainly our strategic relationships with Israel and with Taiwan are important. They reflect our values. These are both places which are democracies in regions, in environments that are not as friendly to democracy as perhaps our context is, Israel, of course, being the only democracy in the Middle East. Then we have Taiwan, not declared as an independent state but as a self-governing jurisdiction, which is a democracy, and certainly beside the world's most influential non-democracy. That really speaks to why Taiwan and Israel, in a special way, reflect Canada's values.

When we sign these kinds of agreements, they create opportunities for commerce, which create economic benefits for Canadians and for people in these countries. However, it is also a powerful signal about the importance of these relationships, and it creates a deepening of people-to-people commercial and therefore social ties between these nations. We should recognize the economic benefits of trade, but not entirely see trade as being distinct from the opportunities to build a greater community among like-minded democracies.

The current environment, in which we may have an American administration more skeptical about trade, should not prevent us from seeking other opportunities to pursue new and deeper trading relationships with other like-minded and pro-trade countries. For example, in light of the Brexit vote in the U.K., the U.K. will be working through what exactly its new relationship with Europe will be. However, we know that many of those who were pro-Brexit were also supportive of having broader trading relationships for the U.K.

After the relationship between the U.K. and Europe is finalized, we certainly need to pursue the opportunity to deepen trading relationships and pursue free trade between Canada and the U.K., and possibly, depending on the trajectory of the trans-Pacific partnership, we need to deepen our trading relationships in Asia with like-minded countries like Japan, Australia and New Zealand.

Under the previous government as well we commenced free trade negotiations with India. I think there is a very strong opportunity to continue this process and hopefully be able to see the realization of a free trade agreement between Canada and India. Very strong people-to-people ties exist between Canada and India. Despite a lot of differences between the ways our economy is structured, there is a positive opportunity there for us to benefit from those ties and to establish deeper commercial relationships as well.

In that context, I am skeptical of the government's trade policy in that the only new trade initiative it has talked about is pursuing a free trade agreement with the People's Republic of China. From my perspective, the strategic genius of TPP was about establishing a trading agreement among like-minded countries in the Asia-Pacific region that would have really set the terms of trade within that region in a way that would invite the People's Republic of China and other countries to come up to that standard in environmental protection, human rights, labour rights and intellectual property.

Instead, the emphasis from the government, rather than negotiating those kinds of strategic partnerships with like-minded countries that will advance our values, is before we have even completed the process with countries like Japan, Australia and New Zealand, let us go and negotiate a bilateral trade agreement with China, a country where there are obviously significant problems with human rights, environmental protection, labour rights and intellectual property.

We see in that not a sufficient appreciation of that relationship between economic collaboration and our values, the benefit of having trading relationships that establish the strategic conditions for advancing our more fundamental and important convictions in our values and in terms of our ideas on human rights.

To sum up this point, we are in an environment where there are increasing challenges, rhetorical challenges coming from different quarters to the idea of trade liberalization. Therefore, it is important that we continue to move forward with initiatives like Bill S-4 that deepen trading relationships and create more opportunities for international commerce. It is also important that we not just continue with things that were done under the previous government, but that we also look for new initiatives and emerging opportunities to advance our trading position, our economic as well as our strategic position within the world.

Having said that as a general point, I would like to delve a bit into specifically the importance of the two principal relationships that are touched on by Bill S-4: our commercial relationship with Israel as well our commercial relationship with Taiwan.

I had an opportunity to visit Israel this summer. It was a great visit. I went as part of a parliamentary delegation with a number of colleagues from different parties. Whenever we hear about Israel in the news, it is often in the context of our important strategic and security relationship with perhaps Israel's relationship to different conflicts that are happening in the region. However, it is important for us to appreciate, and perhaps look into, an aspect that is not as often discussed, which is Israel's economic vitality and the unique innovation, how co-operation between Canada and Israel gives us opportunities to understand and benefit from that innovative culture and strong economy that exists in Israel. It was a real pleasure for me, and I think, for the other members who participated in the trip this summer, to understand and see first hand some of that innovation taking place.

The advanced tech and research and development that occurs within Israel has rendered it the nickname Silicon wadi. Wadi is an Arabic word for valley. It is kind of a Middle-Eastern adaptation of Silicon Valley. A lot of innovation happens in Israel, and we see that in a number of different indicators. The highest level of research and development spending relative to GDP anywhere in the world takes place in Israel and it is the largest destination for global venture capital per capita worldwide. There is significant investment and research happening there.

A lot of my colleagues and I asked about the policies that were in place in Israel to encourage this kind of innovative economic culture, and how we could learn from that in the context of our own discussions about encouraging innovation in Canada. Certainly there are opportunities to learn from each other. We can learn lessons from the incredibly innovative dynamic in Israel. However, it is also interesting to reflect on the connections between Israel's innovative economic environment and also the culture. Members who have read the famous book Start-up Nation will know that aspects of creativity and innovation are really encouraged throughout Israel's culture.

One of the discussions we had as part of our delegation, especially when we were in Israel, was learning about the strong sense of purpose and mission of those in Israel. For the most part, there is a real appreciation of Israel as a nation with a specific purpose, to be a homeland for the Jewish people. That sense of purpose and mission feeds people's desire to create, to contribute, and to build a stronger society. As well, the system in Israel is one of military service that takes place after high school. Virtually everybody participates in this national service. That as well is a time in which innovation and creativity are encouraged and people are given opportunities to learn skills they can then use as part of subsequent innovation throughout the rest of their lives.

There is this fascinating connection that exists between an innovative culture and the economy.

Obviously not all of those lessons are particularly applicable to the somewhat different kind of society we have here in Canada, but the opportunities that come from increased collaboration, commercially and otherwise, are very significant. We should appreciate the importance of security and strategic co-operation with Israel, but also understand it within the context of economic opportunities.

I would like to speak, as well, about the Canada-Taiwan relationship.

I think members know we have a bit of a curious relationship with Taiwan. We do not have formal diplomatic ties with Taiwan. That is why we speak here not about a tax treaty but a tax arrangement, which is different in name but similar in form to what we are talking about with Israel and what we deal with in other cases.

The kind of relationship that exists between Canada and Taiwan is extremely important and close, notwithstanding the uniqueness of the names we use, because Taiwan has not declared itself as an independent state. Taiwan is a major trading partner for Canada, and the great opportunities for us to share and to learn from each other, as I guess somewhat different kinds of societies, are very significant—obviously, Canada drawing on a rich wealth of natural resources.

Taiwan also is a—

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Order. I want to remind the hon. members that debate is taking place. It is nice to see everyone getting along and talking to each other, but it is getting a little bit loud. If we can respect the hon. member who is speaking, I am sure he has a lot of interesting things to tell us. We will continue.

The hon. member for Sherwood Park—Fort Saskatchewan.

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

Mr. Speaker, it is great to see that so many government members have come to hear my speech. This is a good thing.

With respect to the trading relationship that happens between Canada and Taiwan, the main exports from Canada to Taiwan include mineral oil, asphalt, wood, coal, nickel, meat, railway vehicles, and metal ore. Canada is Taiwan's 24th largest trading partner. We import mobile devices, recording equipment, boilers, steel products, and plastic products. A lot of important economic exchange is happening between Canada and Taiwan.

The importance of Taiwan as a society is that it is Chinese-speaking—it obviously has a close relationship with China, in terms of cultural similarities—but it is also democratic. Some of these arguments we hear from the Peoples Republic of China are that it cannot have democracy there or that it has to have a different kind of a system because it reflects the culture. The reality is that democracy exists in Taiwan; it is very well and it is a strong example, in terms of what can work there.

I believe I will have a few minutes to continue later.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Yes, the hon. member will have two more minutes once we resume from question period.

The House resumed consideration of the motion that Bill S-4, 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, be read the second time and referred to a committee.

[The Speaker, Liberal, Geoff Regan]

Resuming debate. The hon. member for Sherwood Park—Fort Saskatchewan has two minutes remaining in his speech.

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

Mr. Speaker, I do want to take this opportunity while I am on my feet to particularly thank you for your involvement in hosting a great Christmas event yesterday for the children on Parliament Hill. My daughter was much more excited about meeting you than Santa Claus.

Just briefly, in my final few minutes, I will summarize what I have been talking about on this important bill. Bill S-4 would implement a tax treaty between Canada and the Government of Israel, Canada and the Government of Taiwan, and Canada and Hong Kong. It is important that we take this time to reflect on the importance of trade liberalization, in general, and certainly the benefits that have come to Canada and will continue to come to Canada as the result of our commitment to open trade.

I have called on the government to continue with what it has been doing, which is moving forward with the kinds of trade deals that we began under the previous government, but also to move from inertia from the continuation of these things to actually starting new initiatives when it comes to trade. We need now, more than ever, leaders who are prepared to recognize and speak to the benefits of trade.

I spoke about the importance of understanding the relationship between trade and our strategic interests, and how our relationships with the countries that are identified in this legislation are particularly important, because of the strategic dynamics that are at play—the kind of relationship we have with Taiwan as a democracy in the Asia Pacific region and certainly the relationship we have with Israel as a democracy in the Middle East.

Our desire to pursue stronger commercial ties reflects Canada's economic interests but also reflects our values and the benefits of working together, in particular at a commercial level, with countries that share our values.

We are pleased to support this bill and hope to see it pass.

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

Mr. Speaker, I thank my colleague for his speech on this very important subject.

I wonder if he, like me, became suspicious when he read the bill's title, which refers to preventing income tax evasion. Does he really believe that this bill and its scheduled conventions will fight tax evasion?

Granted, perhaps the information-sharing agreements between signatories could be of some use in that regard. However, the language used in these conventions is much weaker than what is usually found in international information-sharing agreements.

Does my colleague have any faith in the title, which says that these two conventions for the avoidance of double taxation will be enough to prevent fiscal evasion?

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

Mr. Speaker, I think this bill is an important step in the right direction. That is why our party will support it.

It is a step in the right direction. Certainly, the measures undertaken will make a significant and positive difference in combatting tax evasion. If the member has proposals for further enhancing co-operation between the countries identified here with respect to security and enforcement, those would potentially be good proposals. However, the provisions that are here are positive and absolutely worth supporting in light of the impacts they will have.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Mr. Speaker, this is a fine bill from the Senate. Taiwan is our 12th largest trading partner. It is a democratic jurisdiction that we need to support. We do a lot of trade and we need to find ways to build relationships to ensure Canadians can not only do business in Canada but in Taiwan as well, and eventually use the value chains that have been created into China to ensure we build relationships.

This type of agreement would not only allow Taiwan, Canada, and our citizens to truly benefit, but also China. A successful Taiwan is a successful China. This is why I am pleased to support the bill. I am pleased to hear that a lot of members in the House agree. I hope the hon. member for Sherwood Park—Fort Saskatchewan can also agree.

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

Mr. Speaker, the member made some very good points, especially about the Taiwan-China relationship. It is interesting how there are fundamental differences with respect to not only the kinds of systems that exist in those countries, but also in the way that the People's Republic of China views Taiwan. However, significant trade and commercial activity happens between those countries as well.

With respect to our relationship with Taiwan, it is important for Canada to deepen that partnership not only for our economic interests but also because of the benefits that come strategically from having stronger partnerships with other democracies within the Asia-Pacific region. That is important for China because of the potential commercial bridge that exists there. It is also important because of the way in which we can, through these partnerships with other like-minded Asia-Pacific countries, work to set the terms of trade in the Asia-Pacific region in a way that reflects our values, international human right, labour rights, environmental rights, and these sorts of things.

Incidentally, I have always been a strong supporter of the trans-Pacific partnership, which in the first round did not include Taiwan, but could potentially include Taiwan in a future round. Whatever form that co-operation takes, it is important that we emphasize the importance of collaboration among those democracies in that region.

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

Mr. Speaker, as a follow-up to the previous question about this important trading partner in the Asia-Pacific region that is Taiwan, could my colleague expand a bit on the fact that Taiwan could be a stepping stone for Canadian businesses in the Asia-Pacific region, not only with China but with Canada's other trading partners in the region, particularly given the intellectual property regulations that are in place in Taiwan but not in China?

Could the member tell us more about Taiwan being a potential economic stepping stone for our businesses in the Asia-Pacific region?

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

Mr. Speaker, my colleague raises a very good point. It is not that we should never or can never trade with countries that do not share our values or respect universal human values, but it is certainly much easier and, to a much greater extent, beneficial to be able to prioritize trade with those countries where there is a commonality in values, and also where we are able to work from similar rule of law standards. That is what makes trade easier with places like Taiwan, as well as other countries in the Asia-Pacific region, Australia, New Zealand and Japan. They have similar intellectual property standards to us when it comes to human rights, labour rights, and protecting the environment. My colleague is quite right that it is particularly important, easier, and also beneficial to us economically and strategically to engage with those types of countries in particular.

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

Mr. Speaker, my friend and colleague has recommended I pose a question. Not wanting to disappoint him, I have a question for the member.

When we talk about the issue of taxation policies, which is a very important aspect of trade agreements in principle, and when we look at the countries in question today, Israel, Taiwan, etc., it is important that we recognize it further advances and formalizes an important aspect of an agreement that is already in place. By doing that, we reinforce those trade connections between Canada and other specific countries. I see that as a good thing. We have to recognize that Canada is in fact a trading nation and we are very dependent on world trade.

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

Mr. Speaker, I agree with my friend from Winnipeg North on the benefits that have come to Canada through trade. We are a trading nation. The benefits that come from that are not always obvious or are taken for granted in our political debates. However, the Conservative Party has really led the way in demonstrating the benefits of trade and in signing and negotiating new trade deals. As I said during my remarks, it is good to see some of the continuation of that policy in certain respects with regard to trade.

At the same time, we are not seeing nearly as strong a willingness on the part of the government to really defend the importance of trade. We see the Liberals completing some of the things that were started under the previous government, but we will wait to see whether there is actually a willingness to start new initiatives. It is at least encouraging to hear some of the words that have been said about this bill. Again, whether we will see actions follow from that on new initiatives remains to be seen.

We strongly affirm on this side of the House that, yes, Canada is a trading nation and indeed must be a leader in speaking out about and demonstrating the benefits that come from open trade.

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

Mr. Speaker, very quickly, I would like to ask the same question I asked my Liberal colleague earlier, who did not seem to think that conventions for the avoidance of double taxation can potentially facilitate tax evasion.

According to its title, the bill will fight tax evasion. However, let us look at the Canada-Barbados tax agreement. Taxation levels in Barbados are very low, and the agreement we have with that country is used by certain individuals to avoid paying their fair share of taxes.

Does the member see any danger with our 92 conventions? Could some of them potentially facilitate tax evasion?

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

Mr. Speaker, I am not going to comment specifically on the deal with Barbados. It is not what we are debating in front of us, and, honestly, I do not know the details on that agreement.

In general, though, sometimes we get this perspective that jurisdictional competition is necessarily a bad thing. I do not think we should assume that jurisdictional competition with respect to tax rates is always a bad thing. In fact, often it can be a very good thing. If jurisdictions are competing to offer a more efficient combination of public services and lower taxes, then many economists would tell us that this leads to better service delivery and a more optimal combination of services and taxes.

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

Mr. Speaker, I am pleased to rise in the House at second reading stage of Bill S-4. The bill passed third reading in the Senate on Monday. It was sent to us, and it is important that we debate it here in the House.

I understand that the government is rather eager to pass Bill S-4. If it receives royal assent by January 1, the two tax conventions that are listed in the bill, specifically with Israel and Taiwan, will come into effect. The ultimate goal of those conventions, as other members have said in their speeches, is to avoid double taxation. When you pay taxes in one jurisdiction and repatriate money that has already been taxed by another jurisdiction, it goes without saying that Canada does not tax that income a second time.

The bill contains two conventions. The one with Israel is in fact an update, since we have had a convention with Israel since 1975. We are simply updating it today, adding new OECD standards based on its model agreement for the avoidance of double taxation. The bill therefore aims to bring the previous convention with Israel in line with current OECD standards.

The second convention in the bill is completely new. We have never had this type of convention with Taiwan. It is something that did not exist before, which is rather positive.

The bill also includes a technical change to the Canada–Hong Kong Tax Agreement to clarify the situation of the convention with Hong Kong to make it parallel to that of Taiwan. These two territories have special status with respect to China. Since we are adopting a convention with Taiwan, we have to update the terminology used in the description of the convention with Hong Kong to ensure that it is identical to that of Taiwan.

I will not spend too much time on the convention with Hong Kong except to say that we have to be careful in this case because according to one expert who testified on the matter on Monday at the Standing Committee on Finance, the proposed change in the convention with Hong Kong could be interpreted as a reopening of the tax treaty. In a way, we might agree that the current convention with Hong Kong is not in force because of the inaccurate terminology. This could be looked at more closely. I believe that the technical change for ensuring consistency with the Taiwan convention is entirely appropriate.

I will also mention that we will support Bill S-4, introduced in the House today. It comes to us from the Senate because, traditionally, tax conventions come from the Senate. Last year, we saw this a number of times. As hon. members know, there are 92 tax conventions in Canada. Currently, some are being negotiated, while others are in line to be ratified, like the ones we are talking about today.

Traditionally, bills on such conventions originate in the Senate. They are subsequent to negotiations between the jurisdictions. I cannot use the term “country“ in this context, because we are talking about Taiwan. We have to be careful about the words we use. I know that we could make diplomatic mistakes with the status of Taiwan.

We need only think of what happened last week when the U.S. president-elect put his foot in his mouth on this issue. In diplomacy, we must pay attention to the words we use.

To summarize, these conventions are negotiated between two authorities, and that can take some time. In Taiwan's case, among others, negotiations were lengthy. We were discussing it back when the Conservatives were in power. This convention was finally signed in January 2016 by the Taipei Economic and Cultural Office in Ottawa and the Canadian Trade Office in Taipei.

This was done intentionally so that this arrangement would not be negotiated nation to nation, which could be perceived as a diplomatic faux pas. China could have believed that we recognized Taiwan as a separate state. We had to be careful and that is why it was the two offices that negotiated the Canada-Taiwan agreement, by following the instructions of their own governments, of course. These negotiations lasted a long time, and the agreement was finally signed on January 21, 2016, if my memory serves me correctly.

Nearly a year later, the government is now proposing to implement it. The Parliament of Taiwan ratified it fairly quickly in February 2016. It has taken us a little longer. I tried to find out why, but the government has not yet explained why it is only bringing this forward in December 2016. The government is saying that this is practically a national emergency because if the arrangement is not ratified before the end of December, it cannot be implemented until January 1, 2018. The reason is that the text of the arrangement stipulates that the arrangement will take effect on the first day of January in the year following its ratification. That is why the government is saying that it is urgent that the arrangement be ratified so that it can take effect on January 1, 2017.

As the parliamentary secretary mentioned, the convention with Israel has unfortunately not yet been ratified by Israel's parliament. We will see whether it can be ratified before December 31 so that it too can take effect before January 1, 2017.

We are going to support the bill because of these two agreements, but we have serious reservations regarding the tax conventions. I spoke about the risk associated with tax conventions when I asked my colleagues questions. I wanted to comment on it further because, in this case, the disparity between the tax rates of the countries and authorities with whom we are ratifying conventions for the avoidance of double taxation and our own are not necessarily problematic.

Thanks to the research done by the Library of Parliament staff, whom I would like to thank, we were able to find out the specific tax rates of individuals, businesses, and trusts in the two jurisdictions in question, Israel and Taiwan. They are very similar to those in Canada. Tax rates are a bit lower in Taiwan, but Israel has more progressive tax rates, which means that they are a bit higher than ours, so there is not necessarily a problem in this case.

However, tax conventions can be dangerous when they are signed with low or no tax jurisdictions. Indeed, there are countries that require no income tax to be paid whatsoever and that take part in this tax competition that puts downward pressure on tax rates. It is a serious problem for our society, and one that needs to be resolved. We need to pay particular attention to those countries. In this particular case, there is no problem.

However, as I was saying earlier, we have a tax treaty with Barbados. One of my colleagues in the Bloc Québécois raised this issue a few months ago and moved a motion to have this tax treaty with Barbados reviewed. That treaty is of the same nature as the ones we are studying today and very similar to the Organization for Economic Co-Operation and Development model, a convention adopted in 1980, and similar to the ones we are studying today. There are a few differences, because at the time, the OECD model was a little less detailed, but it is essentially the same model used today.

What might suggest that the tax treaty with Barbados is perhaps being used for the wrong reasons is that, in 2014, Barbados ranked second in terms of Canada's foreign investments abroad, after the United States of course, which is our largest trading partner given its proximity and the fact that our administrations are similar from a legal standpoint for both corporations and individuals. It goes without saying that the U.S. is our most important economic partner.

It is surprising, however, that according to Statistics Canada figures, Barbados ranked second in 2014—and not only in 2014, since Barbados was also near the top of the list in 2015, in third place. It also ranked second in 2013.

There is reason to wonder why the second largest recipient of Canadian foreign investment is Barbados, a tiny Caribbean country that has no major economic activity to speak of. It does raise questions.

Looking at the numbers, one cannot help but wonder what is going on there, what could possibly attract so much Canadian investment in Barbados, and whether an investigation is in order. However, there is no need to dig very deep to find out why Barbados is the number two destination for all of our foreign investments in the world. The main reason is that we have an agreement with Barbados to avoid double taxation.

That allows companies who decide to take advantage of this agreement to send money from their subsidiary in Barbados to Canada and then declare to the Canadian tax authorities that they have already paid their 0.5% tax in Barbados. As a result, they do not pay taxes in Canada because, according to the agreement, when a party pays taxes in another country and brings the money back to Canada, there is no second taxation.

As I said earlier, there is no problem with Taiwan and Israel. In other cases, however, there are huge issues because we allow companies to pay a lot less in taxes than what they would pay if taxation levels were similar to Canada's.

That is why it is with a note of caution that I support Bill S-4 today. I want to highlight the problem and raise a red flag for the government's benefit. The parliamentary secretary did not seem to know what the problem was when it was raised by my colleague—he did not seem to know what the problem was or want to consider it. Unfortunately, the Liberals voted against a motion to review the Canada-Barbados tax treaty. I would like to remind my honourable colleagues of that, and I call upon the government to at the very least commit to reviewing the 92 conventions we have with other governments around the world, because problems could arise.

If today we say yes to a treaty with Taiwan to avoid double taxation and if, a few years later, Taiwan decides to modify its regulations to become a competitor in the race to the lowest tax rates, then maybe our conventions would need to be reviewed.

That is the crux of the message I wanted to send the government today. It should start taking a close look at the tax situation in every country with which we have a convention because there could come a time when such conventions are used to subvert the very ideals underpinning them.

The title of the bill mentions preventing tax evasion. We have to ensure that these conventions stand the test of time as tools to prevent tax evasion, not to facilitate it. In some cases, they facilitate tax evasion.

I hope there will be at least one mechanism that enables the government to examine and monitor the tax situation in the jurisdictions with which we have tax conventions. It would be very disappointing if the government did not commit to monitoring the situation in those jurisdictions because such neglect could lead to serious problems. We know that tax evasion is an extremely serious problem, and it is definitely one of my priorities as the national revenue critic.

This is a problem for every country in the world and every person on the planet seeking better government services. The government's role is to provide services to citizens, but when companies and individuals have more and more ways to avoid paying their fair share, our societies pay the price. The honest ones who pay their fair share end up having to pay more every year. They have to contribute more because some taxpayers decide to play by different rules and avail themselves of the services of unscrupulous tax experts who have no ethical qualms about trying to make their clients pay as little tax as possible. Sometimes they use questionable schemes that the Canada Revenue Agency disputes, thankfully. More often than not, it turns out that these schemes are perfectly legal.

These conventions to avoid double taxation are one of the components of the Income Tax Act that make tax evasion legal. There are many other ways to review our policies and legislative measures to fight tax evasion. The government should make this bill and this file a priority instead of talking only about investments. We are told repeatedly that $444 million has been invested in fighting tax evasion.

If tax evasion continues to be completely legal in some cases, tax experts will be able to defend their cases before the courts by saying that they obeyed the law and that there is no problem. The Canada Revenue Agency will challenge this by holding that they did not obey the spirit of the law. The tax experts will win and manage to find new ways every time to get around our tax measures and ensure that their clients do not pay their fair share in society. That is unacceptable.

It is the issue of the day, and I would like to see the government take it more seriously, not only by investing money to find the guilty parties, but also by making the necessary effort to make tax evasion as difficult as possible for the dishonest people who engage in it.

There is something relatively positive in these conventions that is not necessarily something we want to see, and that is a tax information exchange. For example, in this convention with Taiwan, it is good that a section of this agreement talks about a tax information exchange, but the best solution would have been a tax information exchange agreement that was separate from the convention on double taxation. This is a much more robust mechanism for exchanging information, even though any such exchange is on request, which is a major drawback. In fact, the government has to have its suspicions before it can request information from the jurisdiction with which it has an agreement. It is not an automatic exchange. I know we are heading toward an automatic information exchange, but that is not in the bill and it is something we would like to see in the future.

We would like to see more investments, legislative measures, and information exchanges that are truly effective and allow for information to be obtained in real time. We would like to see a shift from on request to an automatic exchange.

I would be pleased to answer my colleagues' questions.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I thank my colleague from Sherbrooke for his rather interesting speech.

During the debate and in his speech, he talked about risk a number of times. Bill S-4 applies to current treaties that have already been signed. I believe that if we intend to sign treaties with other countries we will.

I question the sincerity of his concern since he is looking at this bill through the lens of countries with which we have no agreement.

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

Madam Speaker, I gladly go back to the issue of risk and potential danger.

There are two treaties before us. The one with Taiwan is brand new since we started from scratch. The one with Israel is only an update to apply the OECD model. That being said, there is a potential danger. I remind my colleague that we have 92 similar tax treaties.

Of course, I keep mentioning the ones that we often hear about, the ones that seem problematic. Therein lies the potential danger, and that is why I recommend that the Parliamentary Secretary to the Minister of Finance establish a mechanism to monitor the tax situation of the countries we sign conventions with. That would ensure that, over time, treaties like the ones with Taiwan and Israel remain reasonable and do not facilitate tax evasion like others do.

I want to emphasize that there is a potential danger and encourage the government to closely monitor the situation in every jurisdiction to make sure that our tax treaties do not defeat the purpose of this bill.

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

Madam Speaker, the member across the way talked a great deal about tax evasion and avoidance, and even at one stage referenced the government providing literally hundreds of millions of dollars to deal with the issue. It is important to recognize that this government takes tax avoidance and evasion very seriously, and the budget clearly demonstrates that.

When we look at the trade file, we can talk about the investment agreements with Mongolia and Hong Kong that have been signed in the last year and we are debating the Ukraine and CETA agreements today. Those are some of the most obvious ones. Then there is Bill S-4 itself, which deals with the taxation policy, along with trade.

My question to the member is this. I thought I heard the member say he supports the bill. Does he not recognize that the bill is important and that there would be value in passing the bill in a relatively timely fashion so we can put in place the measures encompassed in this legislation?

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

Madam Speaker, the member's question gives me an opportunity to talk about the importance of these two tax treaties, which we support because they are beneficial to Canadians, unlike other similar treaties.

These are indeed important opportunities, and more opportunities will open for Canadians and the jurisdictions that sign these treaties with us. They can do business here, and we can do the same in their respective jurisdictions.

As I said earlier, Taiwan is a launching pad for Canadian businesses in the Asia-Pacific region. We could say the same about Israel and other countries, like Japan, which is very advanced. Also, Taiwan's regulations are similar to Canada's, especially when it comes to the protection of intellectual property, which is almost inexistent in China. Taiwan has put a lot of effort into getting Canadian businesses to use it as a point of entry into other areas of the Asia-Pacific region. It is an exemplary democratic presence that we want to encourage with economic exchange and potentially with trade enhancing treaties such as this one.

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, I thank my colleague from Sherbrooke for showing an interest in an issue that may seem rather dry at first glance. Before I ask my question, I would like to say that I initiated a discussion with the people of Trois-Rivières on tax havens with the help of the parliamentary tools that are available, and it is one of the issues on which I received the biggest response. Although people may not fully understand how tax havens work, they know that companies that use these tax havens are not paying their fair share of taxes and that Canadians are the ones who will have to compensate for that, if they want to ensure that there is continued funding for existing public services.

My question about the bill before us is this: when there is a reciprocal agreement that the same company will not be taxed twice, should the agreement not contain some safeguards that say, for example, that the tax rate must be the same or that any discrepancy must be previously set out in the bill?

That way every citizen would feel as though the company that is bringing its profits back home paid its fair share of taxes somewhere.

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

Madam Speaker, my colleague raised an excellent point about such agreements. I have to say that my constituents in Sherbrooke are very concerned about tax evasion. They think it is outrageous that some companies and individuals, rich ones, typically, can hire cunning tax experts to help them bend the rules. KMPG was a pretty high-profile example. Individuals paid the company $100,000 to figure out a tax arrangement under which they would not have to pay tax on income earned from their funds in the Isle of Man. Such shameful situations anger my constituents.

Solutions may be put forward to equalize tax rates, thereby ensuring that companies pay their fair share. Those mechanisms are under review, and this is probably a good approach because companies that use tax shelters also use our infrastructure, our roads, and our airports here in Canada. Our taxes pay for all of that, but they use their wealth to avoid contributing.

They benefit from our infrastructure and our society, but they pay virtually no tax. We need to speak out against that every chance we get. Our constituents in Trois-Rivières and Sherbrooke are speaking out. That is why the government should pay very close attention to this issue.

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

Madam Speaker, I am pleased to rise today to speak on Bill S-4.

At first glance, members might ask why a bill dealing with international tax treaties and measures would be of much importance. On the face of it, Bill S-4 does not appear to have much to do with economic growth, but if we look at it a little, the thrust of the bill is entirely consistent with our government's commitment to growing the middle class and to help those looking to join it.

Canada is a trading nation and improving economic growth in our country is highly dependent on international trade and investment. Removing barriers to incoming business and capital is essential to these efforts. Let me reiterate, our government has been relentless in its efforts to produce economic activity and has made historic investments in infrastructure.

In addition to the investments made in budget 2016, the Minister of Finance recently announced the creation of an infrastructure bank, which will help to leverage federal government commitments even further.

Our government recognizes that to further grow the economy, we need to attract investment and talent to our country. International tax competitiveness is a key element of Canada's economic performance that we must not overlook. A tax agreement with other jurisdictions, including Taiwan and Israel, is an important part of attracting new investments and talented individuals, boosting economic growth, and creating jobs.

While large-scale tax measures generally get more attention in terms of their efforts on Canada's international competitiveness, there are many other components that can be easily integrated into the tax system and strengthen Canada's tax advantage.

Tax treaties with other countries and jurisdictions play an important part in the goal of making Canada's tax system as efficient as possible, and thus more competitive. Canada currently enjoys the benefits of a network of bilateral double taxation conventions currently enforced with 92 foreign jurisdictions, one of the largest such networks in the world.

I will be splitting my time with the hon. member for Laurentides—Labelle.

There is an ongoing to need to expand and modernize this network, and we are continually working to secure additional agreements and update existing ones. These treaties of mutual benefit to both signatories and to their respective taxpayers provide clarity on the rules relating to cross-border trade and investment, and remove barriers to augmenting them.

Furthermore, these agreements help to combat tax avoidance and evasion through the exchange of information that permits our government to uncover income that may be concealed elsewhere. It is very important, and our government has spent a lot of time and energy on this, ensuring that Canadians have a tax system that they can have confidence in and that all Canadians and Canadian corporations are paying their fair share.

To these ends, Bill S-4 implements a double taxation convention and a double taxation arrangement recently concluded and publicly announced with the State of Israel and with respect to the jurisdiction of Taiwan. Bill S-4 also adds an interpretation provision to the legislation that implemented the Canada-Hong Kong double taxation agreement, for greater certainty.

Relief from double taxation is desirable because of the harmful effects double taxation can have on the expansion of trade and the movement of capital and labour between countries. Double taxation conventions require countries to clarify the respective jurisdiction to tax income and provide certain forms of relief from double taxation. There is currently no double taxation arrangement between Canada and Taiwan, Canada's fifth-largest Asia-Pacific trading partner and 12th overall in 2013. This means that Taiwan is one of the few remaining of Canada's larger, and I would say one of the most important, trading partners to enter into our tax treaty network.

The bill also implements a revised double taxation convention with the State of Israel. This replaces an existing tax treaty that was signed here in Ottawa in 1975. The revised double taxation convention has been updated to make it consistent with Canada's current tax treaty policy.

This revised double taxation convention with the State of Israel builds upon strong, multi-dimensional, bilateral relations, as evidenced by our close political, economic, social, and cultural ties.

Underlying the strength of the Canada-Israel bilateral relationship is a breadth of personal connections between the two countries. There are approximately 20,000 Canadian citizens living in Israel and many Canadians, of course, have family in Israel. The Canadian Jewish community, which stands at around 350,000, acts as an important bridge between Canada and Israel. These informal ties have led to significant co-operation in business, philanthropy, and tourism.

Canada and Israel have a number of bilateral agreements in place, including the air transportation agreement from 2015; a renewed and funded science and technology agreement; the Canadian Space Agency and Israeli Space Agency memorandum of understanding for space co-operation, dated 2005; and the 1975 convention.

On the trade side, Canada-Israel merchandise trade totalled approximately $1.4 billion in 2015, comprising $342 million in Canadian exports to, and $1.2 billion imports, from Israel. Israel was Canada's forty-fourth-largest export destination worldwide in 2013. In that year, it was Canada's forty-third-largest source of imports globally.

Even though Israel's trade numbers with Canadian may not be in the top 10 or top 20, I would still certainly say, after having the honour of visiting the State of Israel this past summer, that expanding trade and investment ties between Canada and the State of Israel is very important.

What Israel has done with venture capital funding, specifically in Tel Aviv, is very impressive. Its venture capitalists are world-renowned. There are a lot of exciting things happening in the State of Israel that Canada needs to look at and emulate.

With respect to Bill S-4, the intention of this convention signed with the State of Israel on September 21 is to contribute to the elimination of tax barriers to trade and investment between Canada and Israel and to help solidify the economic links between the two countries. It is consistent with the government's commitment to seek new investment and trade opportunities for Canadians and to promote foreign investment in Canada.

As with the double taxation arrangement with Taiwan, the convention with the State of Israel generally follows the pattern of other double taxation conventions already concluded by Canada. Accordingly, it generally follows the format and language of the OECD model tax convention on income and on capital.

Most countries, including Canada and Israel, tax their residents on their global income. Additionally, when a resident of a country derives income from sources in another country, such as from a business located there, it is typical for the source country to subject that income to tax.

The convention recognizes this international taxation dynamic and sets out in which circumstances and to what extent Canada and Israel may tax the earnings of one another's residents and non-residents.

The convention also implements the current internationally agreed standard for the exchange of tax information upon request, as developed by the OECD and, therefore, allows Canadian tax authorities to obtain information relevant to the administration and enforcement of Canadian tax laws, and assists them in the prevention of international tax evasion and avoidance.

Bill S-4 would also reduce double taxation and encourage investment by reducing the withholding tax. It would provide for a maximum withholding tax rate of 15%, in the case of the State of Israel and the jurisdiction of Taiwan, on portfolio dividends paid to non-residents. This would help encourage and foster innovation and trade between Israel and Canada, and Taiwan and Canada.

For dividends paid by subsidiaries to their parent companies, the maximum withholding tax rate is reduced to 5% in the case of the State of Israel, and 10% in the case of the jurisdiction of Taiwan.

Again, these measures would encourage and facilitate trade and investment and increase ties between Canada and Israel, and Canada and Taiwan.

The bill would also cap the maximum withholding tax rate on interest and royalties at 10% and on periodic pension payments at 15%.

The provisions of the convention and arrangement contained in the bill are an excellent example of our government's efforts to create a more equitable and competitive tax system.

Bill S-4 would allow us to continue to grow our economy and create good middle-class jobs. It would allow for more predictable and fairer tax treatment of cross-border transactions and help the government to combat tax avoidance. We look forward to securing additional agreements such as these, and I encourage all members to support this legislation to help Canada become a more competitive jurisdiction for international business and investment.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Madam Speaker, I listened with great interest to my hon. colleague. The issue of fixing our tax regimes with other jurisdictions that people move back and forth between is something that we need to do. Here we are doing it with Taiwan and Israel.

I am a little confused about this bill being described as an act to prevent fiscal evasion. I do not see efforts within the bill to deal with fiscal evasion. It is a serious problem internationally, and a larger vision for Canada would be to make sure that we are getting a fair deal for Canadian citizens by dealing with the offshore financial arrangements that put us at a disadvantage, for example, the Canada–Barbados treaty agreement. It certainly was a substandard agreement for Canada that has allowed a lot of money to flow offshore that should have been taxed here.

In terms of whether or not to support this legislation, it is necessary, as it would clean things up and make them more equitable for dealmaking between Taiwan and Canada, and Israel and Canada. But I would like to hear my hon. colleague speak to the larger question of the vision of the current government for dealing with international tax evasion and tax havens.

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

Madam Speaker, parts 1 and 2 of Bill S-4 include provisions dealing with the issues my hon. colleague mentioned: part 1 deals with Israel, and part 2, Taiwan.

I sit on the Standing Committee on Finance and I am proud to state that I was a member of the committee when it presented a motion on tax avoidance and tax evasion so the committee could to examine those issues. It is something that is paramount to our government. We have invested $444 million over five years to ensure that the CRA has the resources and tools to ensure that all Canadians and all Canadian companies, organizations, and foreign subsidiaries operating in Canada are paying their fair share; that Canadians have confidence in the tax system; and that the revenues coming into our coffers are then used to fund programs that Canadians value and are dear to their hearts.

[Monique Pauzé, Bloc, Repentigny, QC]

Madam Speaker, I heard my colleague talk about the State of Israel.

For the purposes of the treaty, what is Israel? Here is a example: is a settler in the occupied territories in Israel? If so, is that settler covered by the arrangement for the avoidance of double taxation?

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

Madam Speaker, this type of treaty encourages greater links between Canada and the State of Israel, and greater investment and trade flows between Canada and Taiwan. That is what is important and what we need to focus on within this bill. It would allow Canada and Israel to continue to create stronger links between the two entities, and that is very important.

I had the pleasure of visiting the State of Israel this summer. It was a learning experience, indeed. I was in Ramallah as well, and it Tel Aviv and Jerusalem. It was an eye-opening experience and a learning experience, and I am the better for it.

Bill S-4 would allow our government to move the needle forward in creating a strong economy for Canadians and strong middle-class jobs. Overall, it is a win-win for us.

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

Madam Speaker, my colleague from Timmins—James Bay talked about the Canada–Barbados tax treaty, which is similar. What safeguards will be put in place so that we will not see recurring what we have seen happening with the Canada–Barbados trade agreement? We are seeing a $5 billion leakage from the Canadian economy, which could be paying for things that we need, including pharmacare and services that Canadians demand. Maybe the member can tell us what safeguards will be put in place to protect Canadians.

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

Madam Speaker, to my hon. colleague, please look at part 1 and part 2 of the legislation and you will find the answer there.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I want to remind the member that he is to address the questions to the Chair, so I would suggest that the member not use the word “you”.

Resuming debate, the hon. member for Laurentides—Labelle.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I thank my colleague from Vaughan—Woodbridge for sharing his time with me.

I am pleased to rise in the House to address the important matter of Bill S-4. As members will know, this bill implements a convention and an arrangement on double taxation that were recently signed and announced. The convention was concluded with the State of Israel, and the arrangement with Taiwan.

Canada now has 92 tax treaties in force, and it continues to work on developing other such treaties with other jurisdictions. Bill S-4 builds on Canada's ongoing efforts to update and modernize its network of tax treaties, which helps prevent double taxation and tax evasion.

Indeed, Canada currently has one of the world’s largest networks of tax treaties. This is an important feature of Canada’s international tax system, a feature that is key to promoting our ability to compete. At the same time, the system needs to ensure that everyone pays their fair share of taxes. We do not want certain foreign and domestic firms to be able to take advantage of Canadian tax rules to evade taxes, or for certain wealthy individuals to turn to foreign countries to hide their income and avoid paying taxes.

Every time that happens, workers and small businesses in Canada end up having to pay more taxes than they should have to. It is not right. The Canada Revenue Agency needs information from foreign countries in order to identify and discourage the hiding of income.

To that end, the convention and the arrangement on double taxation in Bill S-4 implement the current international standard on tax information exchange on request established by the Organisation for Economic Co-operation and Development, thus enabling Canadian tax authorities to obtain the necessary information for the administration and enforcement of Canadian tax laws, while helping them prevent international tax evasion.

Here at home, the Government of Canada continues to work to keep our tax system up to date and competitive, so that Canada can remain a leading player in the global economy. It is essential to take measures in support of a more competitive tax system in order to foster conditions that allow Canada's entrepreneurs and industries to excel, thus clearing their path to success.

Clearly, having modern tax conventions, such as those contained in Bill S-4, is a key component of that goal. Canada remains committed to maintaining a tax system that will continue to help Canadian businesses in their drive to be world leaders, while ensuring that everyone pays their fair share of taxes.

The tax conventions complement our government's broader commitment to implementing a more competitive tax system that will raise the standard of living of all Canadians. The convention and arrangement for the avoidance of double taxation set out in Bill S-4 directly support and encourage cross-border trade in goods and services, which in turn helps Canada's domestic economic performance.

Moreover, every year, Canada's economic wealth depends on foreign direct investment, as well as the entry of information, capital, and technology. In short, the convention and arrangement for the avoidance of double taxation set out in Bill S-4 provide individuals and businesses in Canada and the other countries involved with predictable and equitable tax results in their cross-border dealings.

I would now like to talk about two things that this bill proposes to do, namely reduce withholding taxes and prevent double taxation. Withholding taxes are a common feature of the international taxation system. They are levied by a country on certain items of income earned in that country and paid to the residents of the other country. The types of income normally subjected to withholding taxes would include, for example, interest, dividends, and royalties.

Without tax treaties, Canada usually taxes this income at the rate of 25%, which is a set rate under our own legislation for income tax, more specifically, the Income Tax Act. Withholding tax rates in other countries are often as high or even higher.

Since one of the main functions of a tax convention is to divide the powers of taxation among the signatory partners, the conventions contain provisions that reduce and, in some cases, eliminate withholding taxes that could be applied by the jurisdiction where certain payments originate.

For example, the convention and the arrangement for the avoidance of double taxation in Bill S-4 provides for a maximum withholding tax rate of 15% on portfolio dividends paid to non-residents in the case of the State of Israel and Taiwan. The maximum withholding tax rate for dividends paid by subsidiaries to their parent companies is reduced to a rate of 5% for the State of Israel and 10% for Taiwan.

Withholding rate reductions also apply to royalty, interest, and pension payments. The convention and the arrangement for the avoidance of double taxation covered by this bill caps the maximum withholding tax rate on interest and royalty payments to 10%, and the maximum withholding tax rate for periodic pension payments to 15%.

The other issue I want to talk about is double taxation. Double taxation at the international level happens when taxes are collected on the same taxable income for the same period in at least two jurisdictions. The convention and arrangement regarding double taxation in Bill S-4 will help prevent double taxation so that any given income is taxed only once.

Generally speaking, the Canadian tax system applies to the income earned by Canadian residents anywhere in the world. However, foreign authorities can also invoke their right to tax any income earned in their jurisdiction by Canadian residents. Canada usually gives a credit for foreign tax paid on that income. This duplication of taxes paid in the jurisdiction where the income was earned and in the taxpayer's country of residence can have unfair negative consequences for taxpayers. No one should have to pay taxes twice on the same income.

Without any convention or arrangement for the avoidance of double taxation such as the ones provided for in Bill S-4, that is exactly what happens. Both countries could claim taxes on the income without providing the taxpayer with any measures of relief for the tax paid in the other country.

In closing, the convention and arrangement for the avoidance of double taxation proposed in the bill will provide certainty and stability and create a favourable climate for trade, to the benefit of taxpayers and businesses in Canada and in the partner countries.

What is more, the convention and arrangement for the avoidance of double taxation proposed in the bill will strengthen Canada's position in an increasingly competitive global trade and investment environment.

Those are the reasons why I ask my colleagues to vote in favour of the bill.

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, I thank my colleague for his speech.

I have to say I mostly agree with him when he says that no one should have to pay taxes twice on the same income. I think once is plenty, given current tax rates. However, citizens wonder if everyone contributes their fair share into the common treasury that pays for the services we need.

When we sign a treaty on the avoidance of double taxation, do we make sure that both countries' taxation levels are similar, even if “similar” is rather imprecise?

Does my colleague not believe that we should establish benchmarks and say that if a partner deviates from the benchmark by a certain number of percentage points, the agreement is nullified because it ends up undermining one of the partners?

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, certainly, every time we reach an agreement with any country, we need to consider the current status of both countries. We cannot conclude a single agreement with the rest of the world and think that it would always work the same way.

I think we have tax agreements because they allow us to exchange information so we can determine who is tyring to evade the local tax laws. It is important to do this. I agree completely that it might not always be perfect.

However, the goal is to find those who are abusing the system, not to destroy the system because people are abusing it, and I think we need to look at it from that perspective going forward.

[Monique Pauzé, Bloc, Repentigny, QC]

Madam Speaker, I thank my colleague for his speech.

I am tempted to ask him why we are debating Bill S-4, when the government is regulating things well enough through the regulations. For instance, in the case of Barbados, the regulations make it easy to avoid taxes. There are currently 22 tax havens with which we do not have a treaty, but the government treats them as though we do.

If the government is running everything through regulations, why brother with Bill S-4?

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, Bill S-4 implements two treaties. For reasons unknown to me, those treaties are being implemented by a bill, which is perfectly fine.

In that regard, I do not see how Bill S-4 is problematic.

[Lloyd Longfield, Liberal, Guelph, ON]

Madam Speaker, I was in Israel on a parliamentary trip this summer and saw enormous potential for investment through venture capital and some of the items the member discussed, such as royalties. The movement of money between our two countries could help stimulate growth and the jobs we are looking for.

How significant is this in terms of non-tariff trade barriers, and how could that help venture capital move between our two countries?

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, any time we have a new treaty to help our relations on fiscal policy and investment policy, it does help, with our relationship with those countries, to build out our economy and theirs.

We are one planet, and I think we should see it that way. We should work as best we can to work as a team within the bounds of what we find acceptable in each place.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Madam Speaker, the issue of tax treaties is interesting and actually hits close to home for me, because my wife gets an income from another country, with which we have a tax treaty.

One of the issues that comes up, though, is the difference between employment income and pension income. I wonder if the bill accurately reflects the situation where in some countries they tax one's employment income but not one's pension income. The alternate takes place here. We do not tax income, because it is being taxed in another location, but if pension income is not being taxed in the home country, it can be taxed here.

Does the member know which way we are going on this particular treaty?

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I do not know the answer to that question. I read through what I could, and I know that pensions were specifically addressed, but I do not know the specific details and cannot answer in a helpful way.

However, I know that Bill S-4 will be a positive bill for us in working with these other countries.

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

Madam Speaker, I am very pleased to speak at this stage of the debate on Bill S-4. Before I get into the meat of the matter, I would like to thank the people of the provincial riding of Chauveau for honouring me with their trust and launching my wonderful career eight years ago to this day. I thank the people of Chauveau, whom I now represent to the best of my ability here in the House of Commons as the member for Louis-Saint-Laurent.

We are at second reading of Bill S-4, which, as the title suggests, is a Senate bill. This is basically a technical, not to say mechanical, bill about the application of certain trade agreements with Taiwan and Israel. To be precise, it is about a convention and an arrangement for the avoidance of double taxation and the prevention of fiscal evasion for people who do business in Canada and Israel or Canada and Taiwan.

As people keep saying during this debate, no one wants to pay taxes twice on the same income. Once is enough and sometimes even more than enough. A second time is unnecessary and can even make investors less keen. International trade and free trade agreements between our country and other parts of the world contribute to growing our country's economy. It is therefore important to have agreements that facilitate these exchanges. This bill seeks to facilitate the process for the two partner jurisdictions. I will come back to the benefits of free trade between different countries.

Let us look more specifically at what is going on in this bill with regard to Israel. Bill S-4 seeks to update an agreement that was concluded many years ago in 1975. A lot has happened since then. That was more than 40 years ago. In any international dealings, especially international trade, it is appropriate to comb through the previous piece of legislation to ensure that it meets modern standards and is adapted to the new realities that investors face in Canada and abroad.

For Israel the agreement dates back to 1975; for Taiwan, it is an entirely different story. A tax convention was drawn up by the previous government, but it had to be updated by Bill S-4, which has already been passed by the Senate. It is important to know that if the House of Commons does not pass the bill before the end of the fiscal year, December 31, the process will be delayed by one year. This could negatively impact our economy and trade between Canada and Israel and between Canada and Taiwan next year. That would mean one less year to stimulate our economy, which is not a good thing.

Furthermore, I would like to state that the Canada-Hong Kong Tax Agreement Act, 2013 is also affected by Bill S-4, which we are studying today.

As I was saying earlier, this bill is extremely technical. I read a little of it to ensure that it made sense, and I noted that all aspects were examined in great detail. To be honest it is rather well written. This kind of agreement is often a bunch of gibberish and can be difficult to deal with.

About ten years ago, when I was a journalist, I did a story on the Hon. Lawrence Bergman, who was the Quebec minister of revenue at the time, and who drafted laws concerning income. Those laws are really something. They are very thick documents that are technical in the extreme, so much so, that you cannot follow them. However, the Hon. Lawrence Bergman, who was a notary, took great pleasure in reading every word of the bills he introduced. Some would say that it was his work and that it was his duty to do a good job.

We understand that when it comes to more general laws. However, the details of trade agreements or agreements affecting income tax returns can be a very sensitive subject. That is why we need experts to draft these laws. That is exactly what happened with Bill S-4.

A few days ago, a parliamentary committee examined the issue. We were able to speak to experts, to those who helped draft the bill. We did our best to leave no stone unturned. We are not perfect, but we did the best we could. There were concerns on this side of the House.

Yes, these are direct agreements to avoid double taxation for those involved in trade between Canada and Israel and Canada and Taiwan. Taiwan is a territory that is central to the potential economic development that could occur under the trans-Pacific partnership agreement, if somehow everything goes well and this government supports the agreement that we signed a year and a half ago. It is at the heart of the economic development resulting from Canada's trade with its partners and hundreds of millions of customers.

We asked questions about the consequences this could have on Japan and China, two major trading nations in the Asian economy. The officials we spoke with assured us that everything would be done properly, that Bill S-4 would have no negative consequences on potential trade with Japan and China. That is a good thing.

However, I did not get an answer to one of my questions. That is unfortunate, but that will not stop me from supporting the bill. It is always a good idea to examine the potential and the economic impact of every piece of legislation we are voting on. My question was quite simple. I asked if they had measured the economic impact that these new agreements could have on Canadian production.

The agreements were considered from a legal and political standpoint to make sure that diplomatic relations between the three countries—Canada, Taiwan and Israel—would carry on. The economic impact, however, was not assessed. Still, let us be confident that our investors and our business people will better be able to take part in rich and dynamic economic activity abroad, which is good for Canada's economy. That is very important for us.

We need to consider these things when examining a bill. We need to understand the real impact this will have on the economy, on businesspeople, and on those who will be directly affected, in other words, people who do international trade between Canada, Israel, and Taiwan.

Let us now look more carefully at what is really involved with these two jurisdictions. As the members know, Taiwan is a major economic player. It is known as one of the four Asian tigers. Yes, it is important that our country have strong economic relationships with all of them, and it does. Obviously, and as everyone knows, Taiwan exports a great deal and has limited natural resources compared to our magnificent and huge country, but it is doing well globally. In fact, it is nothing short of spectacular and impressive, economically speaking.

Imagine how many thousands of items we have held in our hands in our lifetimes that say, “Made in Taiwan”. Yes, we trade with Taiwan, but trade has to be a two-way street. There may have been some flaws in the previous agreements that might have led to double taxation. That is what we call a spoke in the wheels. That is the case for Taiwan.

For Israel, look at the deep, sincere, productive, and globally inspiring ties that exist between Canada and Israel. We know that this state was born in controversy after the second world war. Everyone knows it. The day after its creation, Israel was already at war. That is why I say it was created in controversy. I am not saying it was right or wrong, but obviously when a state is created one day and invaded the next, one might call that a rocky start. However, without rewriting history, everyone knows that today, Israel is the democratic state in the Middle East that can inspire all the other countries. Israel is our friend and ally. Canada is a friend and ally to Israel.

We know that Israel's population is eight million. It is the 38th-largest economy in the world, second only to the United States in terms of start-ups, brand-new companies with big potential and definite risk.

People go on and on about Israel's outstanding economic performance. Despite being the perpetual target of neighbouring enemies' hostile ambitions, Israel continues its extraordinary advance on all fronts and in all economic sectors.

I had the privilege of visiting this magnificent country in 2009 at the invitation of a charity very familiar to the member for Mount Royal, CJPAC. I would like to thank the group for inviting me. I went with my former colleagues from the National Assembly, and I learned so much about this magnificent democracy, an eternally optimistic country that is an inspiration to us all.

Like everyone else, I was impressed because anyone who visits Israel is impressed by its vitality and surprising agricultural capacity. Let us not forget that things can be hard to grow in that part of the world. It takes a lot of hard work because it is basically a desert. However, thanks to hard work and engineering together with Israeli ingenuity, a country that many thought of as basically a pile of sand is a place that creates jobs, wealth and remarkable agricultural output.

It seems, and I see my colleagues nodding, that dairy production is impressive. It is even said, and this may be a bit of folklore, that Israeli cows produce the most milk in the world. I know this because I have spoken with local farmers who told me that if the cows do not produce they are sent out into the desert. Members believe I am kidding. In some way, this illustrates the extraordinary will of the Israelis to develop the full potential of their country, which should inspire all of us here, in Canada, to develop our full potential in an orderly way.

In some areas, such as the environment, they do not have to take lessons from anyone. They are leaders in solar energy. Some will say that is obvious because it is always sunny in that country. Naturally, that does help. Nevertheless, they do not have a lot of water in Israel.

Israel is a world leader in water conservation, water desalinization, and water recycling. All that potential is extraordinary. We could talk at length about the economic vitality of this fascinating country.

Israel is a leading nation in research and development, in terms of the R and D-to-GDP ratio. Of course, there are bigger economies. We need only think of our American friends, who invest a lot more money than Israel in R and D. Still, a country like Israel, with a population of 8 million people, has the best R and D-to-GDP ratio in the world. That is inspiring.

I will digress a little bit while we are on the subject of to-GDP ratios. I remind members that Canada had the best debt-to-GDP ratio in the G7 when our government left office, and that allowed the current government to make a few foolish economic decisions. Still, the fact of the matter is that we left the house in order.

Let us return to the subject of Israel, a country where high technology is front and centre. Beyond the capacity to take advantage of its natural resources, when a country puts its most brilliant minds to work, then that country really shines because it is generating pure wealth. Israel is such a country, a high-tech hub where what does not yet exist is being invented and created. Microsoft, Intel, Appel, Google and all the other high-tech communications corporations have highly specialized and developed research facilities. That is where the action is, where things happen.

In closing, what is happening in Israel is inspiring and must be acknowledged. We especially need to recognize that these people are able to fully realize their potential, particularly when it comes to natural resources. They managed to draw from their arid land a tremendous amount of potential, and the potential they are drawing from their minds—which are anything but arid—is just as amazing. That is why Canada needs to be friends with Israel.

Here is one last interesting figure: Israel has the best ratio of scientists to workers in the entire world. In Israel, there are 140 scientists for every 10,000 workers. That is the best record on the planet, and it explains why these people are such great leaders in research.

Israel is our friend, and we should do everything we can to make sure that trade with that country goes well. Bill S-4 will help with that.

Let us now talk about the importance of free trade. I think that it is important to talk about free trade when it comes to international relations and international trade. The government and the official opposition agree on the principle of free trade. We sometimes disagree, are divided, or have different views on some aspects of it, but overall, we agree that free trade is the future and will drive economic development.

We cannot talk about free trade without remembering the epic battle that took place in the House of Commons and across Canada about 30 years ago in 1986, 1987, and 1988 under the leadership of the Right Hon. Brian Mulroney. At the time, Canada had entered into negations that were difficult at first but that produced an extraordinarily successful result, and that is the Canada-U.S. Free Trade Agreement.

The facts are the facts. We must remember that, in 1983, the man who gave us the free trade deal, Brian Mulroney, was against free trade. During the 1983 Conservative Party leadership race, John Crosbie, a Newfoundland MP running for the leadership, said that he was in favour of free trade. Mr. Mulroney, a Montreal businessman originally from Baie-Comeau, said it was not a good idea because it would be like an elephant sleeping with a mouse. Guess which one would crush the other. That was Brian Mulroney's analogy. I feel like I am channelling him here.

Mr. Mulroney, an intelligent man capable of recognizing when his opponent landed a good blow, was inspired by John Crosbie and said that Canada would do free trade. France even recognized his extraordinary leadership just a couple of days ago by inducting him into the Legion of Honour. I had the privilege of attending the event. What a great moment. The current Prime Minister, the member for Papineau, toasted him graciously.

This goes to show that Canadians have no political stripes. When great Canadians are honoured, we all win.

Sorry, I went from Quebec City to Ottawa via Sept-Îles. I went on a little detour. Since we were talking about Brian Mulroney, I could be even nicer and say that I went from Quebec City to Ottawa via Baie-Comeau.

On September 13, Brian Mulroney delivered a wonderful and very interesting speech at the University of Calgary. In his speech, he talked about free trade's track record over the past 30 years. I will quote from that speech:

“The statistics alone speak to the success of the FTA. Trade volumes more than tripled in less than 20 years – from $235-billion...[to $800 billion today]...Trade exploded into the largest bilateral exchanges between any two countries in the history of the world”.

We are more than just good friends with the Americans. We are also the Americans' best trading partner. We are also their biggest competition. We should be proud of that.

In the two hours or so, $250 million in goods and services will be exchanged by Canada and the U.S. This is more than $1 million every minute of every hour of every day, more than $2 billion in total each and every day of every week of every month of every year.

All that to say how important trade is between our two countries. That is why we need to support and promote free trade. We also know that we signed the trans-Pacific partnership just a year and half ago, and that agreement will also help create wealth. We should also support that. Other negotiations are under way, and we should encourage them because Canada is an export country.

I went to Vancouver for the Special Committee on Electoral Reform. To make a long story short, I was on the 27th floor of the hotel I stayed at. I had a magnificent view of the Vancouver harbour, and I counted no less than 12 container ships bound for Asia stacked full of merchandise. That is what it means to create wealth. When our goods and services can be exported overseas and other countries buy them, that means money coming into Canada. Let us hope that Bill S-4 will help create jobs and wealth.

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I commend my friend from Louis-Saint-Laurent on his excellent speech.

He mentioned my former MNA for D'Arcy-McGee, Lawrence Bergman, his former colleague. I just want to say that I completely agree with the hon. member for Louis-Saint-Laurent. Mr. Bergman is a man of great honesty and integrity, and intellect.

I liked what my colleague said about Israel, the Silicon Valley of the Middle East. My colleague from Louis-Saint-Laurent surely knows that the mayor of Montreal, Denis Coderre, and the mayor of Toronto, John Tory, just got back from a mission in Israel. Some Israeli companies are setting up their head offices in Montreal and Toronto.

How does my colleague think we might contribute to increasing trade with Israel?

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

Madam Speaker, the best way to boost trade between Canada and Israel is to continue being Israel's best friend and ensuring that the relationship is mutual, but also to allow individual interactions. When we travel, visit places and meet people, we are able to improve our interaction.

These fine speeches in the House are nice. It is nice to allow our businesses to export and to welcome scientists and Israelis here in Canada, but it is much better when we can have direct interactions.

Speaking of Montreal mayor Denis Coderre's meeting in Tel Aviv, without getting too personal, I will just say that the mayor of Montreal and Mayor Tory attended Cirque Éloize, a Quebec-Canada production. Mayor Coderre took the time to say hello to my son, Jean-Philippe, who is an artist and circus performer for Cirque Éloize.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I thank my colleague for his speech.

We too believe that it is a good idea to support this bill and to have this sort of agreement with Israel and Taiwan. However, when it comes to the fight against tax evasion and tax havens, it is important to include automatic tax information exchange provisions in agreements signed by Canada.

Does my colleague not believe that it is a good idea to include automatic tax information exchange provisions in the 92 existing agreements and in future agreements so that this sort of exchange does not just occur by request only, as is currently the case?

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

Madam Speaker, I had the pleasure of working with the member for Saint-Hyacinthe—Bagot on the issue of physician-assisted dying, as well as other issues, and her comments are always very relevant, particularly in this case.

Right now, in article 25, on page 52, there are five paragraphs describing the types of information that will be exchanged to prevent tax evasion. Canada cannot resolve the problem of tax evasion on its own. Every country in the world must work together.

[Monique Pauzé, Bloc, Repentigny, QC]

Madam Speaker, I listened to my colleague with interest, and I can see how knowledgeable he is on this topic.

In his speech, he talked about the things that need to be taken into account in a treaty. I have two questions for him.

First, do we need to take into account Israel's borders? Are those living in the Israeli settlements part of Israel or not? I did not get a clear answer to that question earlier.

Second, my colleague talked about how urgent this treaty is. However, in 2009, when the Conservative government entered into treaties with 22 tax havens, it did so via regulation, never by means of a bill such as Bill S-4, so in my opinion, there is no urgency here.

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

Madam Speaker, I am not an expert in that field, but I will do my best to answer these pointed questions.

Who can do business with Israel and Canada? According to Bill S-4, those with an Israeli passport, and that is it.

As for the fact that we are proceeding with a piece of legislation instead of making a regulation or an order in council, the experts we heard in committee told us that with this specific kind of treaty, since it dated back to 1975 in Israel's case and there had been a few agreements with Taiwan over the last few years, we needed to take a legislative approach.

I am not a legal expert, so I will not go into too much detail, otherwise I might start talking nonsense and make a fool of myself. Some would say it is a bit too late for such concerns, but that would be a lie, a misrepresentation of the truth. I will simply reassure this House that we asked that question in committee, and the legal experts told us that in this specific case an order in council would not suffice, that a bill was necessary.

As I said earlier, Canada cannot resolve the problem of tax evasion on its own. All 162 countries of this beautiful earth must work together.

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I am certain that my colleague from Louis-Saint-Laurent will say that the treaty is available. It clearly states that a resident of the State of Israel can use the treaty. There is a definition in the treaty. Since 1976, it has generally been the practice of governments to present this to the House of Commons.

My question is on free trade. My colleague was correct in saying that, in the beginning, Brian Mulroney was against it, but that he supported it later. The same thing happened with our party. First, we were against it, then we supported it. We agree with the official opposition that it is very important to have free trade agreements with as many countries as possible.

Does my colleague believe that the other members of the House who do not share this opinion today will change their minds?

[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?

[Some hon. members]

Agreed.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

The motion is carried. Accordingly, the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I believe if you seek it you would find the unanimous consent of the House to see the clock at 5:30 p.m.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Is it agreed?

[Some hon. members]

Agreed.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Accordingly, the House will now proceed to the consideration of private members' business as listed on today's Order Paper.