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.

Canada–Madagascar Tax Convention Implementation Act, 2018

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

Madam Speaker, I have listened to the debate on Bill S-6 this morning and I must say there are plenty of things that one can draw upon in order to shed more light and to be a bit more forthright with respect to the bill.

The Government of Canada and the Liberal Party of Canada recognize the important role that trade plays in the development of our nation. Having observed the NDP for many years now, it is my experience that as a general rule that party does not support trade agreements.

There have been dozens of trade agreements. On one occasion, the vote was not a recorded vote, so NDP members claimed not to have voted against the bill. They might have voted in favour of one other bill. A couple of MPs have indicated they have voted in favour of trade, but as a general rule the NDP does not support trade agreements between Canada and other countries, and that is somewhat unfortunate.

Bill S-6 is about a tax treaty with Madagascar. Madagascar has wonderful opportunities for Canadians, and individuals from that country have opportunities here in Canada. We have many tax treaties with countries around the world, and tax treaties provide significant benefits to both countries.

That is why it is with pleasure that I rise today to address this legislation and to add my comments on a wide variety of issues, all stemming from our economy, social justice and the tax laws that we currently have. I have a fairly wide spectrum to work from based on the debate I have heard so far today. Let me attempt to do it in the best way I can.

The number that comes to my mind, which ultimately demonstrates what this government has been able to accomplish by working with Canadians, is one million, and that is a fairly recent number that has come out relating to employment.

It is worth mentioning that since we took office in October 2015, we have seen the generation of over one million new jobs. That is historic, in the sense of the last 40 or 50 years. It is an incredible number of jobs, and it is due in good part to the policies that this government has put in place, budgetary measures and legislative measures, all with the idea of supporting Canada's middle class and those aspiring to be a part of it.

Day after day, for weeks, months and years, our government has taken Canada's middle class seriously. We have developed progressive measures to assist middle-class Canadians, bringing forward policies that will support them, policies such as the Canada child benefit program and the guaranteed income supplement for our seniors, which have added great value to our economy.

We hear a lot about taxation. People expect to pay their fair share. From day one, our government has taken this very seriously.

Members will recall that during the last election, today's Prime Minister made a commitment to Canadians that there would be a tax cut for the middle class. If members look at Bill C-2, which was our first piece of legislation, they will see that we delivered on that tax cut, which put hundreds of millions of dollars into the pockets of Canadians. I would argue that the money going into the pockets of Canadians enabled them to increase their disposable income, allowing them to spend more into the economy, and it is one of the reasons for the one million-plus jobs that have been generated. Working with Canadians, investing in Canadians, allowing Canadians to have more disposable income has allowed Canada's economy to perform that much better.

Taxation policy matters. The NDP and the most recent speaker talked about tax fairness and said that the rich need to pay more. That was an important part of the very first budget we brought forward, in which Canada's wealthiest 1% had to pay more. The millions raised through that one initiative supported giving Canada's middle class a tax break. The issue of tax fairness, much like the tax break, has been of the utmost importance to this government. It was one of the very first actions taken when we assumed office in 2015, recognizing some of the comments made today, whether it was the NDP talking about tax fairness or the Conservatives talking about the tax on Canada's middle class.

When the member for Calgary Shepard asked who benefits from the tax break that we gave to the middle class and then said it is members of Parliament who benefit, I think of the tens of thousands of teachers, the tens of thousands of nurses, the tens of thousands of factory workers or the tens of thousands of people who work for our financial institutions. Those individuals also benefited from that tax break.

I indicated that when I had the opportunity, I would put some facts on the record, and there is no disputing what I have said, because it is all factually correct. The government has consistently gone out of its way to develop policy through legislation and budgetary measures that has had a positive impact on Canada's middle class.

The tax treaty that we are debating today is all about international relationships and ways for these treaties to further advance Canadian interests. This is not the only tax treaty legislation that we have put forward in the last three years. Bill S-4 also dealt with tax treaties. It is not the first time we have had to deal with tax treaties, because we understand and appreciate the true value of having these types of treaties with countries. It allows us to have a better sense of taxes flowing, both here in Canada and in the country in question. It provides additional security, if I can put it that way, for investments flowing to countries with which we have tax treaties.

We recognize, as we do on the broader picture, trade and international relations. No government in recent history has done more with respect to trade agreements than this government. The previous government likes to say that it had 30-plus trade agreements, but that is just not true. Through this administration, we have been able to sign more trade agreements than any other government in the last 40 to 50 years. Since trade agreements have been tied into tax agreements or tax treaties, I would challenge any member in the House to list a government that has been able to accomplish so much in such a short period of time on that file.

[Professor Ian Kerr, Professor and holder of the Canada Research Chair in Ethics, Law and Technology, University of Ottawa, As an Individual]

Mr. Chair, honourable members, thank you and good afternoon. I appreciate the opportunity to appear before you today as part of your PIPEDA review, a statute in desperate need of legal reform.

My name is Ian Kerr. I'm a professor at the University of Ottawa, where I hold a unique four-way position in the Faculty of Law, Faculty of Medicine, school for information studies, and the department of philosophy. For the past 17 years, I have held the Canada research chair in ethics, law, and technology. Canada research chairs are awarded to “outstanding researchers acknowledged by their peers as world leaders in their fields.”

I come before you today in my personal capacity.

I'd like to begin by reinforcing some points that have already been made in previous testimony.

First, to put it colloquially, and to disagree with my colleague David Young, the call for stronger enforcement through order-making power, the ability of the OPC to impose meaningful penalties, including fines, is by now a total no-brainer.

As Micheal Vonn of the BCCLA who recently testified before you said, “There is no longer any credible argument for retaining the so-called ombudsperson model”. This has already been acknowledged by Commissioner Therrien, former commissioner Stoddart, and assistant commissioner Bernier, and has been fortified by testimony from other Canadian jurisdictions that already have order-making power, which commissioners Clayton and McArthur have testified before you as being advantageous. Strong investigatory and order-making powers are a necessary component of effective privacy enforcement, especially in a global environment. Let's get it done.

Second, I agree with former commissioner Stoddart and with overlapping testimony of Professor Valerie Steeves, both of whom have stated that PIPEDA's language needs to be strengthened in ways that reassert its orientation towards human rights. As Professor Steeves attests, privacy rights are no longer reducible to data protection, which itself is not reducible to a balancing of interests. Enshrining privacy as a human right, as PIPEDA does, reflects a profound and crucial set of underlying democratic values and commitments. Privacy rights are not merely trade-offs for business or governmental convenience. PIPEDA needs stronger human rights language.

Having reinforced these views, the majority of my remarks will focus on two central themes raised by this study, transparency and meaningful consent. I will use this framing language to orient your thinking, but in truth, both of these concepts themselves require expansion in light of dizzying technological process.

When PIPEDA was enacted, the dominant metaphor was George Orwell's 1984, “Big Brother is Watching You.” Strong privacy rights were seen as an antidote to the new possibility of dataveillance, the application of information technology by government and industry to watch, track, and monitor individuals by investigating the data trails they leave behind through their activities. Though perhaps no panacea, PIPEDA's technology-neutral attempt to limit collection, use, and disclosure was thought to be a sufficient corrective.

However, technological developments in the last 17 years since PIPEDA go well beyond watching. Today, I will focus on a single example, the use of artificial intelligence, AI, to perform risk assessment and delegated decision-making. The substitution of machines for humans shifts the metaphor away from the watchful eye of Big Brother towards what Professor Daniel Solove has characterized as:

...a more thoughtless process of bureaucratic indifference, arbitrary errors, and dehumanization, a world where people feel powerless and vulnerable, without any meaningful form of participation in the collection and use of their information.

This isn't George Orwell's 1984; this is Franz Kafka's trial of Joseph K.

Since the enactment of PIPEDA, the world we now occupy permits complex, inscrutable artificial intelligence to make significant decisions that affect our life chances and opportunities. These decisions are often processed with little or no input from the people they affect, and little or no explanation of how these decisions were made. Such decisions may be unnerving, unfair, unsafe, unpredictable, unaccountable, and unconstitutional. They interfere with fundamental rights, including the right to due process and even the presumption of innocence.

It's worth taking a moment to drill down on some real-life examples. IBM Watson is used by H&R Block to make expert decisions about people's taxes. At the same time, governments are using AI to determine who is cheating on their taxes.

Big Law uses ROSS to help its clients avoid legal risk. Meanwhile law enforcement agencies use similar applications to decide which individuals will commit crimes and which prisoners will reoffend. Banks use AI to decide who will default on a loan. Universities use AI to decide which students should be admitted. Employers use AI to decide which people get the jobs, and so on.

But here's the rub. These AIs are designed in ways that raise unique privacy challenges. Many use machine learning to excel at decision-making. This means that AI can go beyond its original programming to make discoveries in the data that human decision-makers would neither see nor understand.

This emergent behaviour is what makes AI so useful. It's also what makes it inscrutable. Machine learning, knowledge discovery in databases, and other AI techniques produce decision-making models differing so radically from the way that human decisions are made that they resist our ability to make sense of them. Ironically, AIs display great accuracy, but those who use them and even their programmers often don't know exactly how or why.

Permitting such decisions without an ability to understand them can have the effect of eliminating challenges that are essential to the rule of law. When an institution uses your personal information and data about you to decide that you don't get a loan, your neighbourhood's going to be the one under more police surveillance, you don't get to go to university, you don't get the job, or you don't get out of jail, and those decisions can't be explained by anyone in a meaningful way, such uses of your data interfere with your privacy rights.

I think this is the sort of reason that a number of experts have come before you to talk about what they called algorithmic transparency, but in my respectful submission, transparency doesn't go far enough. It's not enough for governments or companies to disclose what information's been used or collected when AIs affect our life chances and opportunities. Those who use AIs have a duty to explain those decisions in ways that allow us to challenge the decision-making process itself. That's a basic privacy principle that's enshrined in data protection worldwide.

I would therefore submit that PIPEDA requires a duty to explain decision-making by machines. A duty to explain addresses transparency and consent but goes further in order to ensure fundamental rights to due process and the presumption of innocence. This is the approach that's taken in GDPR. I would go even further, following EU GDPR article 22, and suggest that PIPEDA should also enshrine “a right not to be subject to decisions based solely on automated processing”.

PIPEDA was enacted to protect human beings from technological encroachment. Decision-making about people must therefore maintain meaningful human control. PIPEDA should prohibit fully automated decision-making that does not permit human understanding or human intervention, and to be clear, I make this submission not to ensure EU adequacy but because it's necessary to protect human rights.

Mama raised me right. Among other things, she taught me that you don't accept a dinner invitation and then complain to your hosts about what is being served. Mama's gentle wisdom notwithstanding I would like to conclude my remarks with two uncomfortable observations.

First, as I appear before you today, I think it's fair to say that my sense of déjà vu is not unwarranted. With the exception of a few new points like my submission in favour of a duty to explain, much of what I have said, indeed much of what everyone who has appeared before you has said, has all been said before.

Although many honourable members of this committee are new to these issues, those who have done their homework will surely know that we've already done this dance in hearings around Bill S-4, Bill C-13, the Privacy Act, the privacy and social media hearings, and of course the PIPEDA review of 2006. Yet we see very little in the way of substantive legislative change.

Although ongoing study is important, I say with respect that you are not Zamboni drivers. The time has come to stop circling around the same ice. The time has come to make some important legislative changes.

Second, as I prepare for the question period, I look around the table and pretty much all I see are men. Inexplicably, your committee itself is composed entirely of men. Yes, I realize that you have called upon a number of women to testify during the course of these proceedings. This, of course, makes sense. After all, a significant majority of privacy professionals are women. Indeed, I think it's fair to say that the global thought leadership in the field of privacy is by majority the results of contributions by women.

I find it astonishing and unjustifiable that you have no women on this committee, a decision to me as incomprehensible as many of those made by algorithms.

I feel compelled to close my remarks by making this observation a part of the public record.

Thank you for your careful attention. I look forward to questions.

Message from the Senate

[The Deputy Speaker, Conservative, Bruce Stanton]

I have the honour to inform the House that when the House did attend His Excellency the Governor General in the Senate chamber, His Excellency was pleased to give, in Her Majesty's name, the royal assent to the following bills:

C-2, An Act to amend the Income Tax Act—Chapter 11, 2016.

C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act—Chapter 14, 2016.

C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures—Chapter 12, 2016.

C-35, An Act for granting to Her Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2017—Chapter 10, 2016.

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—Chapter 13, 2016.

It being 4:53 p.m., the House stands adjourned until Monday, January 30, 2017 at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).

(The House adjourned at 4:57 p.m.)

Tax Convention and Arrangement Implementation Act, 2016

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I would remind the member that he is not supposed to refer to members by their given names in the House of Commons. There is something to consider for the new year.

Pursuant to order made earlier this day, 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, is deemed read a third time and passed.

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

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Speaker, I will begin by saying that the Bloc Québécois will be supporting Bill S-4, to implement various tax agreements with the countries listed therein.

I am mentioning this right away because I am going to be rather hard on the government with respect to its previous position and its approach to tax treaties, and also because I may not have enough time to finish my speech given that members only get five minutes.

It is becoming increasingly common for taxpayers, both individuals and businesses, to have revenue in more than one country given the rapid rate of globalization we are experiencing. This requires co-ordination and is an additional challenge for countries around the world. In fact, they have to adapt and have good legislation to deal with the problems that this situation creates. Hence, it is important that we enter into good tax treaties, like those we are debating today.

The government often says that the purpose of tax agreements is to avoid double taxation and prevent tax avoidance. That is what they are supposed to do. However, tax agreements also make certain things possible. Any measure to avoid double taxation may be accompanied by a certain degree of non-taxation. That can cause problems. People who know how to game the system can find loopholes in the agreement to avoid double taxation and take advantage of them to end up paying no tax. We have to fight that, and that is why we cannot support any old tax agreement. Not every tax agreement is a good tax agreement.

Here is a good example. Here, as in most places around the world, taxation is based on residency. I live in my riding of Pierre-Boucher—Les Patriotes—Verchères, which is in Boucherville, which is in Quebec, which is in Canada, at least for now. I pay income tax to Quebec and I pay income tax to Canada even though I do not really like doing so.

However, all citizens must pay taxes in the country in which they reside. Normally it is easy to determine where someone lives: we look at where his credit card comes from, where his spouse lives, where his children live, and where his house is. That gives us a good idea of where he lives, and normally, it is hard to fake that.

The problem lies with businesses. We cannot always be sure where a company has set up shop. Sometimes a company claims to be located in one place, while its board of directors is somewhere else. Sometimes it is located in one place but all the shareholders are somewhere else. In those fuzzy situations, we have to ask what is really going on. We have to ask if they are not tyring somehow to distract from the reality in order to take advantage of the system and avoid paying the taxes they owe.

It is in these situations that tax treaties and our fiscal regulations become important, which is why it is so important for governments to remain vigilant to this. The same is true in both Canada and Quebec. We are hitched to Canada's train, fiscally speaking, and so we are often subjected to Canada's decisions, even if we do not like them. In fact, we were almost subjected to the Canadian government's policy decision in Bill C-29.

We therefore have to look at who is making the real decisions and where things are really happening for the company. That is where the company needs to be taxed. It is not enough to register a company in Barbados. That should not be how it works. The company actually needs to be doing business in Barbados. The company needs to be located there.

The United States does not have the same rules as Canada. In the United States, a company is taxed in the place where it is registered. We therefore have a problem. In Canada, we are supposed to tax a company in the place where the board of directors is located and where the decisions are made, while in the U.S., it is where the company is registered.

If a company is registered in Canada but makes its decisions in the United States, the Americans see the company as Canadian,. while Canadians see it as American. The company is therefore in tax limbo. It does not make any sense. We need to do something to prevent situations like that. Some jokers came up with the idea of doing that in the past.

Fortunately, those types of situations were dealt with most of the time. However, this is not over because there are new ways to evade taxes, as we saw in the case of the tax treaty with Barbados.

My colleague to my right, Mr. Ste-Marie, the member for Joliette, tried to do something about that, but unfortunately the members across the way decided it was perfectly all right for companies to use the tax treaty with Barbados for tax evasion.

We hope that Bill S-4, which implements various tax conventions, will put an end to these situations.

Merry Christmas, everyone, especially the banks.

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

Madam Speaker, I am pleased to rise in the House at third reading stage of Bill S-4. I would like to take this opportunity to wish everyone happy holidays.

I realize that I will be the second last person to speak in the House and that my colleague from Pierre-Boucher—Les Patriotes—Verchères will be the next and last speaker. He will have the honour of ending the debate. I would just like to extend my best wishes to the House.

We are not debating the most controversial bill. All parties worked together making it possible for the government to move the bill quickly through all stages in the House, including study by committee. All parties collaborated to ensure that everything went smoothly.

Naturally, the government used the excuse that without royal assent and diplomatic notification before December 31, the convention with Taiwan could not go into effect on January 1, and if it was not in effect on January 1, 2017, we would have to wait until January 1, 2018.

It goes without saying that we have been working together in order to advance this file, even though we have some reservations about tax conventions overall. In this case, the new concerns with respect to Taiwan are not problematic, nor is the use of the OECD model to update the agreement with Israel, which was signed in 1975. There is also a technical update for the Hong Kong agreement, which clarifies the status of Hong Kong as a territory of China.

It goes without saying that we support the bill and that we are letting the government proceed. The Governor General will thus be able to sign it soon, give royal assent and, a few days later, notify Taiwan that the convention has been ratified and that it can take effect on January 1. We will be monitoring this file during the holidays.

During those proceedings, I gave a very serious yet broad overview of tax conventions that can be problematic in some instances. That is why, during my speech at second reading, I encouraged the government to keep a closer eye on our 92 and soon to be 93 tax conventions with 93 nations in the world, in order to ensure that these conventions are used properly and for the right reasons and that they do not facilitate tax evasion, as is the case in Barbados.

The title of Bill S-4 mentions combatting tax evasion. However, we know that in some situations tax conventions to avoid double taxation facilitate tax evasion because the businesses can claim resident status if they are sufficiently set up in the respective country and then claim the right to be taxed only once, which means, in the case of Barbados, to be taxed in Barbados only. When those businesses bring their money back here to Canada, they do not have to pay any additional tax since they already paid the taxes that they owe. Barbados has a low tax rate of 0.5% to 2.25%, if memory serves me correctly, and in that case, a tax convention is totally unacceptable.

However, it goes without saying that this sort of convention would work well in the case of Taiwan or Israel because they have tax rates similar to those in Canada. We do not see a problem with this. However, I would like to remind the government of the importance of having a formal mechanism for the periodic review of these conventions. This would ensure that the countries with which we have conventions continue to have tax rates similar to ours and that we are not creating an even bigger problem and acting contrary to the spirit of these conventions by not seeking to prevent tax evasion.

I wanted to mention that again in this debate at third reading and commend the government for passing this bill, which we hope will come into effect on January 1, if all goes well.

I would like to say happy holidays to all my colleagues, yourself included, Madam Speaker. I hope to see everyone back here in good health in 2017 so that we can continue the important work that we do in the House and that we will continue to do in co-operation with all parties. We will see everyone in 2017.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Madam Speaker, first, I would like to thank all my colleagues for allowing my colleague from Regina—Qu'Appelle to table a petition. It was a very nice gesture with Christmas just around the corner. I would like to say that we are really in the spirit of Christmas. It really shone through in the last speech that we heard. However, this evening, I am a bit torn between the happiness I feel about going back to my riding for Christmas and the sadness I feel at having to react to the speech that my colleague before me gave with regard to the passing of Bill C-29 today.

He said himself that Bill C-29 is something that Canadians will remember. Unfortunately, yes, young Canadians will remember this bill when they have to pay off the $100-billion deficit that Bill C-29 will leave them. They will remember a $100-billion deficit for a long time to come.

That is why I cannot share my colleague's enthusiasm for the Christmas spirit that he did such a fine job of expressing.

Let us come back to the very important bill before us, 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.

I want to highlight the work that our critic, the member for Louis-Saint-Laurent has done on this file. To most Canadians, tax agreements are pretty abstract. Here in Ottawa, we talk about issues that may or may not be interesting, but tax agreements and free trade agreements between different countries create jobs for Canadians. They create jobs for young Canadians. That is important because the market is now global. We have to acknowledge the tremendous work that all members of the House have done in recent years to sign more and more free trade agreements under the leadership of our former prime minister, Stephen Harper.

We have free trade agreements with Europe, Peru, Colombia, Jordan, Panama, Honduras, and South Korea. Under the previous government, we signed other major free trade agreements with Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, the United Kingdom, Slovakia, Slovenia, Spain, and Sweden. Santa Claus will be visiting all of those countries in just a few days. I am sure that he will be bringing the children in those countries gifts that may have been made here in Canada. Why? Because free trade agreements enable Canadian companies, perhaps with the help of Santa Claus, to export their products to other countries. That is the good thing about free trade agreements.

Regarding our relationship with Israel, when it comes to trade, I would remind the House that in 1996, trade between Canada and Israel was worth only $507 million. In 2012, it totalled $1.4 billion. Bill S-4 will mean that companies will not have to pay taxes in both countries if they are doing business in both countries. If we do not want to stand in the way of those companies, stand in the way of increased investments and trade with Israel, it is important to create an environment that facilitates trade and, above all, does not penalize them.

I wanted to read a passage from the press release issued at the time by the former prime minister, Mr. Harper, on the advantages of signing and improving free trade agreements, particularly with Israel. Unfortunately, all of Mr. Harper's press releases have been removed from the Global Affairs Canada website by the current government. I cannot read it, but I certainly share Mr. Harper's intention at the time, which was to sign agreements and make sure that Canadians benefit as much as possible.

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 third time and passed.

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

Madam Speaker, I believe that this will be one of the last speeches, if not the last, of this session that is coming to a close.

We have taken a historic step with Bill C-29. I know that one day, when current members are all retired and, like many Canadians, will be able to enjoy the enhanced pension plan, we will remember this historic day when we took a step forward for Canadian society by advancing the rights of seniors, young people, and the middle class. It is a great day for Canada.

I would like to talk about Bill S-4, which concerns another very important issue.

I welcome the opportunity today to speak to Bill S-4, the tax convention and arrangement implementation act, 2016. I know a number of members of the House have spoken already to this important bill. This is in the best interests of Canada. It is about ensuring we grow our economy and tax fairness.

People understand the objective, and I think all members in the House will support the bill. It is the right thing to do for Canada. It is also the smart thing to do for Canadians. Canadians gave us a mandate to grow the economy and ensure we engage with our trading partners, whether it is the state of Israel, Taiwan, or Hong Kong, and work with them to grow our economy. This is what I will talk about today.

I seek the support of all members. They know we need to send our notice before the end of the year in order for these agreements to come into force in 2018. This is very important for Canada and our trade relationships with Taiwan, the state of Israel, and Hong Kong.

As Canada's economy is increasingly intertwined with that of the global economy, the importance of eliminating tax impediments to international trade and investment has grown in importance. I think every member in the House understands that. Whether one sits as a Conservative, NDP, Liberal, or Bloc Québécois, one must understand that it is in our best interest to invest and ensure we have more trade and trade that is fair.

One way to remove these impediments is through tax treaties or double taxation agreements. These treaties are used internationally to eliminate tax barriers to trade and investment.

Canada's network of 92 income tax treaties currently enforces one of the most extensive in the world, and that is something we should be proud of as Canadians. We are a fair trading nation. However, as with any measure of efficiency, there is an ongoing need to update and modernize this network with foreign jurisdictions.

By modernizing our tax treaties and expanding our network, we will help facilitate international trade and make it easier for our treaty partners to invest in Canada. That is the mandate we have been given. The people who sent us to the House expect us to grow the economy, create jobs for Canadians all across our nation, in every riding in our country. They want us to work for them. I hope my colleagues from the NDP, the Bloc, and the Conservatives will support this, because I am sure they too believe in creating jobs for Canadians.

This will help our economy and businesses, and strengthen the middle class. I still believe that everyone in the House should be working with us to help the middle class. There is nothing more important in our country that we can do than to support the middle class, families, youth, and seniors.

On the international scene, the Canadian economy always faces headwinds. However, Canada can count on some solid economic fundamentals in order to seize the opportunities presented by the global economy.

As there are only a few seconds left before we adjourn, I just want to wish every member a merry Christmas. I thank members for working with us to make sure that we do what matters to Canadians.

Let us always remember when we rise in the House and raise our voice to bring something forward that we do it on behalf of the good people who have sent us here to make a difference in their lives, not just for the current state of affairs, but for the future. Canadians expect the best.

To will quote our Prime Minister “better is always possible”, so let us work together in 2017 to make sure we strive to always be at our best, not for ourselves, but for the people we serve who have sent us to Ottawa. These people expect the best out of us, and that is what we will deliver.

[Amarjeet Sohi, Liberal, Edmonton Mill Woods, AB]

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 third time and passed.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you.

Of course, this is deemed moved under the terms of the motion that I objected to but which this committee passed and which requires that I be here. There are always conflicts; if I weren't here, I could be speaking to Bill S-4 in the House. That is one of the reasons that I find these provisions that require members of parties with fewer than 12 members to submit amendments 48 hours in advance and have them deemed moved not really a fair or equal opportunity, but it's the one I have. I appreciate that you've given me the floor, Mr. Chair.

The amendment here, just to situate you in the proper part of the bill, is to clause 11, which deals with approval and representation on the CETA joint committee, and specifically the powers of the minister under clause 11. You may recall the evidence of Professor Gus Van Harten from Osgoode Hall Law School, when he testified before the committee. He made a number of very quick points, but one of them was that under clause 11, in his words:

...the Minister of Trade is given the power to appoint members of the roster.... I...want to stress...this is a very significant power, because we could think of the members of that roster as, very simply, almost equivalent to Supreme Court of Canada judges in the extent of their powers to review the passage of laws, passage of regulations, and so on in Canada.

I won't read the rest of his testimony, but his point was that to have this solely vested in the trade minister without a broader consultation could leave some public interest matters.... No offence to any current or future trade minister, but these are very significant powers to appoint members of the tribunals. The amendment I'm proposing is in two parts, as follows:

(1) The Minister may, in consultation with the Attorney General of Canada,

It's just like appointing a judge. It's in consultation with the Attorney General, the Minister of Justice.

Then we add another line to ensure that, for the roster, the pool of potential nominees from which the minister, in consultation with the the Attorney General, chooses someone to be a member of the tribunals, should exclude any individual:

who has served as legal counsel in an arbitration proceeding in respect of an investment dispute.

Let me just say, as you may anticipate this, that we do know that the text of the comprehensive economic trade agreement specifically says that people can't be members of the tribunal if they have served or take up a position as an advocate in a CETA dispute. This amendment is to broaden that, so that we couldn't have people serving as members of a tribunal on CETA who had been, for instance, legal counsel under a chapter 11 suit, where they were representing a corporation against the Government of Canada, or under a bilateral investment agreement, such as we have with Ukraine, a one-off bilateral.

If you've worked in that investment climate as an advocate, the argument that I'm asserting is that you don't have the same neutrality that you really want for a judge. That principle of neutrality is enshrined in CETA, but they just kept it to the comprehensive economic trade agreement, not that whole other sphere of work of a very elite group of lawyers who have a pattern of, can we say, not necessarily fair or neutral arbitration.

I have put these before you. I hope you'll consider them. I'm certainly, at the chair's discretion, happy to answer any questions.

Finance

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

Mr. Speaker, I have the honour to present, in both official languages, the 12th report of the Standing Committee on Finance in relation to 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. The committee has studied the bill and has decided to report the bill back to the House without amendment.

[The Chair, Liberal, Wayne Easter]

I call the meeting to order. This meeting is called pursuant to the order of reference of Thursday, December 8, 2016, in regard to 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.

With us we have Ms. Smith and Mr. McGowan, who we seem to see a fair bit of at this committee. Welcome, both of you.

If anybody has any questions on the bill generally, we can start with that or we can go to clause-by-clause consideration.

Pierre.

Tax Convention and Arrangement Implementation Act, 2016

[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.

[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.