Bill S-6 (Historical)

Canada–Madagascar Tax Convention Implementation Act, 2018

An Act to implement the Convention between Canada and the Republic of Madagascar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

This enactment implements the Convention between Canada and the Republic of Madagascar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and a related protocol.
The convention is 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 has two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Once implemented, it will provide relief from taxation rules set out in, or related to, the Income Tax Act. That implementation requires the enactment of this Act.

Canada–Madagascar Tax Convention Implementation Act, 2018

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Mr. Speaker, when I talk to businesses in my riding of New Brunswick Southwest, I often hear concerns about certainty and predictability in terms of investment, such as where and when they should invest. I wonder if my colleague could speak to the opportunities and the confidence that come from having a fairer playing field for investing for our domestic Canadian businesses when they know that there is a new tax convention in place with Madagascar.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Mr. Speaker, I appreciate the question from my colleague from New Brunswick. From the work that she has done with the industries that exist in and around her riding, she certainly knows that it is important for us to establish certainty through these kinds of international standards. We need that level playing field to give confidence to investors to take part in activities. This will not only profit Canadians; we will also be able to profit and share our know-how with people from around the world, and in this case, in Madagascar.

Given the profile of the country and the industries that Canada works in, such as the resource industry, which my hon. friend knows very well and in which she works very hard for her constituents, this type of tax treaty gives an opportunity for us to set the internationally accepted standard. It gives investors confidence that they are not going to be given less than reputable tax treatment. We need to make sure that we set those proper standards so that Canadians know what they are getting into and can share their know-how with the world.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Mr. Speaker, before I begin, I want to let you know that I will be sharing my time with the member for Leeds—Grenville—Thousand Islands and Rideau Lakes.

It is always a privilege to rise in the House and talk about matters of state. That is all the more true today as the end of the parliamentary session draws near. We have just a few weeks to go until the summer recess, and there is going to be an election this fall. With that in mind, I would like to express my support for Bill S-6, an act to implement a tax convention between Madagascar and Canada for the avoidance of double taxation and the prevention of fiscal evasion, as my colleague opposite just explained.

As a number of members have said today, we already have 93 such agreements, some of which were signed by our government before 2015 and all of which are meant to prevent tax evasion. I want to emphasize that tax evasion is a scourge that prevents the government from collecting monies owed, which it uses to provide services to Canadians.

Of course, the important thing is that there be trust between two countries. It is the reason why we are supporting the bill. Trust between the public and the government is equally important, but it has been shaken. It has been shaken because, as we are about to sign an agreement with Madagascar, we have to face the fact that Canada has its own major challenges with tax evasion.

For example, in an article published by the Journal de Montréal, Guillaume St-Pierre said that the Canadian treasury is losing up to $3 billion each year in unpaid taxes because wealthy Canadians are hiding money in tax havens.

A Canada Revenue Agency study revealed that Canada is losing significant tax revenue to tax evaders. These people use complex schemes to hide taxable income abroad. The $3-billion figure could be just the tip of the iceberg. It has been suggested that companies or individuals who evade or avoid taxes could owe as much as $17 billion in unpaid taxes.

Our system already has certain weaknesses. It is important that Canadians pay their fair share of taxes. This week, we learned that British Columbia also has challenges with money laundering, which is pouring huge amounts of money into B.C.'s real estate market. Several billions of dollars have been injected into the real estate market.

When the time comes to meet a need as fundamental as housing, the average Canadian who pays his taxes must turn to the real estate market, where he is in competition with unknown sources of money.

We support Bill S-6, but the trust between Canadians and the government has been undermined at a time when we are headed towards an election. I would like to remind those listening that, on taxation, which is the issue we are discussing today, the Liberal government looked us in the eye and promised that by now, so in 2019, there would be no deficit because the budget would be balanced.

Why is this important?

It is important to balance the budget, because a period of relative economic prosperity is the perfect time to generate revenue and pay down the deficit so we can get money flowing in the event of an economic crisis, in order to stimulate and support the economy. That is what our Conservative government did.

The difference between what is happening now and what we went through is that we were faced with an economic crisis. The Conservative government did three things: we paid down debt, stimulated the economy in a period of economic crisis and balanced the budget.

The Liberal government's four-year term is almost over, and we have yet to see the government taking any of these measures. In fact, it has done the opposite and plunged us into a bottomless deficit pit.

Writing about the 2019 budget for the Journal de Montréal, Michel Girard mentioned the $71-billion deficit and called the budget blatant vote buying. He wrote:

True to form, the Trudeau government is spending like there's no tomorrow. That is why, for the fourth time in a row, it's kicking off the new fiscal year with a colossal deficit.

I mentioned trust, and members will recall that we were promised a balanced budget and modest deficits.

Michel Girard goes on to say:

How big will it be this time? Nearly $20 billion, including a “small” $3-billion cushion.

Adding it all up, since [this Prime Minister and the Liberals] came to power, they have dug a massive $71-billion hole with four successive huge deficits.

As a result, [at a time of relative economic prosperity, under the Liberals' watch] the net federal debt has skyrocketed by $100 billion.

Where is that $100 billion going? Is it being invested in families, in infrastructure or in the fight against climate change?

Most of the Liberal government's spending is the result of direct program expenses, particularly expenses associated with the federal government's departments, agencies and Crown corporations.

What concrete benefits are there for taxpayers? Most of that $100-billion deficit goes to the departments. Basically, it goes into bureaucracy, unfortunately.

Direct program expenses have skyrocketed by $30 billion. Who is footing the bill? Ordinary Canadians are. Since the Liberals came to power in 2015, government revenues have increased by $43 billion. Money does not grow on trees. The Liberals are taking that money out of taxpayers' pockets, the same taxpayers who have recently been burdened with a carbon tax whose effects are still unknown.

Such is the government's record. It has lost the trust of the people.

It is okay for the government to sign partnerships with Madagascar, as it has done in 93 other cases, but it is not okay for the government to break its word.

I was saying that the Conservatives restored budgetary balance and that we invested during the economic crisis and paid down the debt. The Liberals spend left and right with no real result. I just explained today how this money went to the bureaucracy and taxpayers are the ones paying an extra $45 billion. Unfortunately, that is not all. This deficit includes measures that taxpayers will not benefit from but will have to pay for. For example, the Parliamentary Budget Officer told us that the government paid $4.5 billion for a pipeline. Taxpayer money is being used to pay an expense that will not even help Canadian energy access the market at a fair price.

I see that my time is running out. I will simply say that it is important that there be trust between countries, as is the case between Canada and Madagascar in this agreement, but the trust between the Canadian public and the Liberal government has been broken.

[Michel Picard, Liberal, Montarville, QC]

Mr. Speaker, I want to come back to my colleague's speech about money laundering. I have been interested in this issue since 1995. We need to understand that these longstanding issues involve several authorities over a period of many years.

The report released in Vancouver describes a situation that goes back some time. This bill has been in the works for several years. In the previous government, it seems that my colleague was also the minister of public safety and responsible for these issues because he was responsible for the RCMP.

Why has the problem persisted?

Are we to understand that this is a longstanding problem or that the current reality is the result of cuts they made to the RCMP?

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Mr. Speaker, I thank my hon. colleague. If this was 2015 or early 2016, I would understand why he is asking the question. However, this government has been in power for four years. The Liberals sometimes have the irritating habit of saying that it is not their fault whenever there is a problem.

I encourage my colleague to examine the measures, or rather the lack of measures, that were taken over the past four years to address the problems of tax evasion and money laundering.

Some economists are even saying that if we did not consider the effect of this injection of money into the Canadian economy, we could even find ourselves in a recession. Therefore, it is important to act responsibly together with the provincial governments and our international partners.

One of these measures would be to strengthen the regulatory system for real estate agents to deal with money laundered in the real estate market, which I mentioned in my speech.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Mr. Speaker, the investment made in my riding, New Brunswick Southwest, was responsible investment. In rural communities, it takes a lot to get applications in, so I differ on that sentiment.

I recall very vividly the all-night voting, and I wonder if my hon. colleague could tell us why the opposition voted against any increases to the RCMP that night when, during his speech today, he talked about the importance of the RCMP being able to investigate.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Mr. Speaker, I thank my colleague for her question. I actually had the opportunity to meet at the very beginning of this parliamentary session.

In the last budget, the Conservative government increased funding for the RCMP to combat terrorism, among other things. The RCMP naturally has to have access to the tools it needs to keep Canadians safe.

I would like to refer my colleague to the Parliamentary Budget Officer's report on investments in infrastructure. In his update on investments in the territories, the Parliamentary Budget Officer noted that there is no infrastructure money to be seen. One concrete example is that the City of Lévis was forced to invest in its pool project with a grant from the provincial government alone. The federal government did not step up. The same thing happened with the construction of an overpass.

Where is federal money going? We are not seeing it in infrastructure back home—

[The Deputy Speaker, Bruce Stanton]

I apologize for interrupting the hon. member, but the interpretation is not working.

Is it working now? Okay.

There is one minute and a half remaining for another question or comment.

There are none. Resuming debate, the hon. member for Leeds–Grenville–Thousand Islands and Rideau Lakes.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Speaker, I am pleased to rise today to speak about Bill S-6, an act to implement the Convention between Canada and the Republic of Madagascar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

There seem to be good measures found in this bill, especially on double taxation. This bill contains provisions for tax in both Madagascar and Canada.

In the case of Madagascar, double taxation shall be avoided as follows:

(a) where a resident of a Madagascar derives income which, in accordance with the provisions of this Convention, may be taxed in Canada, Madagascar shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Canada. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Canada.

It is great to see the government is making a move that might keep more of people's money in their own pockets instead of going toward paying for the government's reckless spending. It is also good to see the government is concerned about double taxation. It is just a shame that it is only concerned about it when it is happening in the Republic of Madagascar and not here in Canada.

Would it not be great if the government made such an effort to avoid double-taxing Canadians? However, the government is doing exactly that with its carbon tax on everything. The Prime Minister is charging GST on top of that carbon tax. I would say that is a tax on a tax. That is just it. The government does not particularly care about the average Canadian, and especially rural Canadians, such as those in my riding of Leeds—Grenville—Thousand Islands and Rideau Lakes.

When the carbon tax took effect, it immediately raised the price of everything, from gas to home heating to groceries. Canadians are being taxed twice for living the life of luxury by heating their home and driving to work or driving their children to soccer or dance, or even driving to the doctor.

If the carbon tax were actually an environmental plan, would it not be logical that the great emitters of pollution in this country would pay most of this tax? They are not. Canada's biggest emitters are exempt from the carbon tax, while small business owners, commuters, hockey moms and dads, and farmers are expected to take public transit. That is not possible for many rural Canadians.

The Prime Minister expects rural Canadians to just hop onto public transit or buy a new Tesla. That does not jive with what is happening across Canada, and certainly not in my riding of Leeds—Grenville—Thousand Islands and Rideau Lakes. It does show how disconnected the Prime Minister really is with average Canadians. Average Canadians, at least half of them, are $200 away from insolvency, but they had better rush out and buy that new Tesla.

We have amazing farmers in my riding, and it would be great if this bill protected them from double taxation, but it does not. They are hit by the carbon tax and the GST on top of that.

The farmers in my riding are some of the greatest stewards of the land that we have in this country. They have long been at the forefront of sustainability and innovation. The way farmers have incorporated new technologies like biofuel and robotics into their operations is very interesting. The prevalence of the use of biogas and biofuel on today's farms is particularly noteworthy. Biogas is methane that is produced with the use of anaerobic digesters on the farm. Usually manure and leftover waste like corn stalks and husks are introduced into the anaerobic digester to create methane for use on the farm; then the solid byproduct of the methane production can be used as fertilizer.

Cavendish Farms, a large potato processing operation with plants in Alberta, Ontario and the Maritimes, has reduced emissions by 50% over the last decade through the use of biogas, not because they were forced to by a nonsensical carbon tax on everything but because it made good business sense and because it was the right thing to do.

In addition to that, biodiesel can be created on the farm through high-energy waste such as vegetable oil. We know that most of the machinery on the farm will run on diesel. If farmers can meet some 20% of their diesel needs by creating biodiesel, then they are reducing emissions and helping their bottom line at the same time.

These investments in sustainability and innovation have occurred because it makes good sense for farmers, their families and businesses, not because they were threatened with taxes.

Now the Prime Minister's carbon tax is raising the cost of bringing crops to market, buying fertilizer and drying grain, which causes margins to shrink, and farmers cannot afford new investments in innovation when they are worried about that bottom line. The question still stands as to why the government is concerned with people abroad keeping more money in their pockets while it neglects people at home. The answer is clear: The Prime Minister simply needs the revenue to pay for his reckless spending, which will be paid for on the backs of everyday Canadians.

This reckless spending has come with massive deficit after massive deficit, the latest of which came in the form of the 2019 cover-up budget. In the midst of the SNC-Lavalin scandal, the Prime Minister must have sat down with the Minister of Finance to make a plan to distract Canadians from the corruption and contempt the Liberals have shown for the judicial system, which they continue to demonstrate, so the Liberals announced a budget with a $20-billion deficit and $41 billion in new distraction-spending.

We saw a large corporation, with the clock ticking, launch a full-court press lobbying campaign. The corporation got the Prime Minister's top advisers and top government officials on board. Then we saw a former attorney general who respected the rule of law and would not cave to pressure from the PMO. Then there was a convenient cabinet shuffle that saw the attorney general fired and replaced with a Montreal MP from right next door to SNC-Lavalin, one who was willing to support the government's disregard for the rule of law.

Knowing the trial of Vice-Admiral Mark Norman was soon to be in court, the Liberals released this cover-up budget. It is clear the Prime Minister was trying to cover his tracks with this budget. There is overwhelming evidence that the Liberals politically interfered in this case and tried to destroy a decorated military officer, the vice-chief of the defence staff, Vice-Admiral Mark Norman. The prosecution made clear that the documents the Prime Minister and the Liberals were fighting to keep secret were the very documents that caused the charges to be dropped. This fact strongly suggests the government was deliberately withholding and suppressing documents to prolong the politically motivated attack on the vice-admiral.

From withholding documents that would have exonerated the vice-admiral to using code names in emails to having government lawyers coach witnesses, the interference and the lengths to which the government was willing to go were very clear. It is no wonder the government needed to rack up record spending and record deficits to distract Canadians.

If my memory serves me correctly, 2019 was supposed to be the year the budget would balance itself, like so many babies on the campaign tour that the Prime Minister is now on. In 2015 he said, “I am looking straight at Canadians and being honest the way I always have. We said we are committed to balanced budgets, and we are. We will balance that budget in 2019....”

That could not be further from the truth. The free-spending Prime Minister's and finance minister's own finance department documents show the budget will not be balanced until 2040. What they are engaged in is nothing short of intergenerational theft.

It is shameful. The government spent $50 million to impress a celebrity on Twitter, gave $10.5 million to a convicted terrorist who murdered U.S. Army Sergeant Chris Speer, and the Prime Minister is willing to raise taxes on everyday Canadians to pay for it.

While Bill S-6, an act to create a tax convention between Canada and the Republic of Madagascar for the purpose of avoiding double taxation and the prevention of fiscal evasion with respect to income taxes is a solid measure, the real issue is that the government has neglected to take the same measures on double taxation here at home. Canadians should not have to pay for the Prime Minister's reckless spending through raised taxes and double taxation for generations to come.

The Prime Minister advertised that he would balance the budget in 2019. As Canadians have learned over the last three and a half years, the current Prime Minister is just not as advertised.

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

Mr. Speaker, the member across the way is so wrong in so many ways.

If we want to talk about advertising significant things we have done, we could look at trade treaties and tax agreements. These are all important to Canada and to our economy. Our government has set a record in three and a half years with the creation of over one million new jobs for Canadians. This is a direct result of the types of policies that we have put in place.

The Tories are in wonder-wonderland. They have no idea what they are going to do about Canada's environment. They know they want to criticize the Liberal government, but they have absolutely no idea of what the environment should look like in the future. There is no plan, as my colleague says. They are the no-plan party.

When can we anticipate the Conservative Party sharing its plan for the environment with the rest of Canada?

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Speaker, there is so much there to talk about.

As the Leader of the Opposition has said, we will release our environmental plan before the end of June as part of his announcements on his vision and our vision for Canada.

Our environmental plan will be just that, a plan to help the environment. Unlike the tax-and-spend Liberals, we will not dress up a tax and call it a plan. What they are doing to Canadians is shameful. They are trying to balance the books on the backs of hard-working Canadians.

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

Mr. Speaker, I want to thank my hon. colleague from Leeds—Grenville—Thousand Islands and Rideau Lakes for his passion since he has entered the House of Commons. I really appreciate his enthusiasm.

The member talked in his speech about ways to tackle climate change in his own riding, and I am really grateful to him for that. He said businesses in his community are taking action.

Conservative members have raised concerns over the carbon tax in 2,100 interventions and there have been over 762 questions in the House of Commons against the carbon tax, so it is refreshing to hear that member talk about solutions. Those were lost opportunities. Those 2,100 interventions and 762 questions could have been pressing the government with solutions. I really am excited to hear about their plan.

Let me get back to Bill S-6, the bill that we are talking about today and a bill we all agree with.

A bigger problem in this country is tax avoidance. Billions of dollars are leaving this country, a country where hard-working people are paying their fair share and where large corporations, the elite and those at the top are not. Would the member agree that we should be making legislative and regulatory changes to prevent that from happening?

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Speaker, it is important for everyone to pay their fair share. Although the government campaigned on a promise to do things differently, it turned around and cut millions of dollars in cheques to billionaires. That is not the right thing to do. The Liberals have not done the heavy lifting when it comes to enforcement on tax evasion, and it is important that they signal that they are serious about that issue. Certainly we are serious about making sure that people pay their fair share.

What is most important is that Canadians who are within $200 of insolvency do not get hammered by the Liberal government by regressive taxes on the consumption of everything.

[Chris Bittle, Liberal, St. Catharines, ON]

Mr. Speaker, thank you for allowing me to speak to Bill S-6. I will be splitting my time with the hon. member for Sydney—Victoria.

Bill S-6 proposes measures that would make the tax system fairer by addressing aggressive international tax avoidance.

To have an economy that works for everyone, we need a tax system that is fair, and we need all Canadians to pay their fair share. A fair tax system instils confidence and helps create opportunities for everyone. That is why, as one of our first measures upon coming into office, we introduced a middle-class tax cut. Single individuals who benefit from this middle-class tax cut are saving, on average, $330 per year. Couples are saving, on average, $540 per year.

We are providing simpler, more generous and better-targeted support for Canadian families who need it the most: the Canada child benefit or the CCB. As a result of the CCB, nine out of 10 Canadian families with children are better off than they were under the previous system of child benefits. On average, families benefiting from the Canada child benefit are getting $6,800 this year, to help pay for things like healthy food, back-to-school clothes and new winter boots for growing kids. Since its introduction, the CCB has lifted approximately 300,000 children out of poverty.

[Ken McDonald, Liberal, Avalon, NL]

Say that again.