Evidence of meeting #39 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site.) The winning word was amendment.
A video is available from Parliament.
NDP
Murray Rankin NDP Victoria, BC
You conferred with the Privacy Commissioner, but you testified that they don't give advance tax rulings, and they don't give advance privacy rulings, so you don't have anything to go on from her either.
General Director, Tax Policy Branch, Department of Finance
Well, we have her testimony before you, I think, in an exchange with you about the view that it has a higher standing than ordinary law, if you will.
NDP
Murray Rankin NDP Victoria, BC
But we had a discussion, you may recall, sir. When you were here, we talked about this. I was left unclear about which law would prevail in the event of a conflict. The government has defended the use of the CRA as opposed to simply, as with other IGAs in other countries, allowing the information to flow from our banks to the IRS. We proposed the CRA precisely because the Privacy Act would give us some protections, but now it may be the case that the Privacy Act will not prevail, and that's why we're seeking clarification to that extent. That would appear to be a very reasonable amendment. It would seem to do what the government has said is one of the reasons we put the CRA in the middle in the first place.
General Director, Tax Policy Branch, Department of Finance
To that I think what I had said earlier and sort of amplified or perhaps more authoritatively spoken to by the Privacy Commissioner is that there doesn't appear to be a conflict to overcome.
NDP
Murray Rankin NDP Victoria, BC
One of the things that's in our proposed amendments, Chair, is the Canadian Charter of Rights and Freedoms. I'd like to read to you something from Mr. Peter Hogg, who the government, you'll recall, consulted on the Nadon appointment recently, and obviously they think of him as an important constitutional scholar. He writes as follows:
In my opinion, the procedures mandated by the Model IGA are discriminatory in a way that would not withstand Charter scrutiny. These procedures effectively treat individuals differently, and adversely, based on an immutable personal characteristic, specifically citizenship.... If Parliament were to enact legislation authorizing and permitting this type of differential and adverse treatment, the legislation would contravene the equality protections in section 15 of the Charter.
That is why we seek clarity that their charter rights would prevail. That is one of the acts that we've asked be addressed in our proposed amendment. That's the reason for the amendment.
Conservative
The Chair Conservative James Rajotte
Thank you.
I just want to clarify, Mr. Ernewein, how many of these tax treaties have you worked on over the years?
General Director, Tax Policy Branch, Department of Finance
Myself, personally?
General Director, Tax Policy Branch, Department of Finance
I couldn't say. There are 90 treaties in place and 20 TIAs. We have our own chief of tax treaty negotiations. I'm not that person, but I've been involved in some manner in a lot of those.
Conservative
The Chair Conservative James Rajotte
I guess my point is that you and Mr. Cook have appeared many times with respect to budget legislation, with respect to treaties of this type. As I understand it, the normal process with a treaty or legislation is it's the Department of Justice that has the responsibility for ensuring that it is constitutionally valid legislation, which you were telling this committee was done in this case. Is that correct?
General Director, Tax Policy Branch, Department of Finance
Yes, the same assessment is made of this legislation as all other, I think, yes.
Conservative
The Chair Conservative James Rajotte
It's standard practice, I think as you said, the Privacy Commissioner does not bless legislation ahead of time. The Privacy Commissioner is free to comment at any time on legislation or any other issue, but it is the Department of Justice that you go to as a Department of Finance official, whether it's with respect to a tax treaty or with respect to legislation. It is the Department of Justice that has all the constitutional questions that they must address.
General Director, Tax Policy Branch, Department of Finance
With respect to constitutional questions and other questions as well, though in the privacy world, we are certainly interested in sharing at least for their benefit and possible feedback with the Privacy Commissioner those issues.
Conservative
The Chair Conservative James Rajotte
Okay, I appreciate that clarification.
Mr. Allen on that same point.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
I have a question on that. To follow on your comments, Mr. Ernewein, when you talked about the 93 treaties and the number you have dealt with, I do have concerns with the wording used, like “fundamental values”. What does that mean? There are a lot of definitional aspects in there.
Are there any other tax treaties that we have which would include language like that, and start to specify acts like the Charter of Rights and Freedoms? Are there any other tax treaties that actually have that kind of language in them?
General Director, Tax Policy Branch, Department of Finance
I was going to say all, but I should be careful not to do that. I think it's certainly the case that at least most of our tax treaties and their implementation legislation provide that their terms are to apply or to prevail over any other inconsistent legislation. It's not my understanding—and I'm offering an amateur opinion here—that it extends to override constitutional law or the like. What it does is intend to override other domestic tax rules that would be inconsistent with the tax treaty.
Conservative
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It's good news then, in following up on Mr. Allen's question. If what this amendment does is reaffirm or confirm what it is that we do in our tax treaties, then I think we might have unanimous support, because it's confirming what we already do and what is already law, and that's not for you Mr. Ernewein.
I have a follow-up question to one by the chair. In terms of that constitutional check that we do through justice, there are different ways to have a constitutional test. One of them is with a very high bar. These are all done by probabilities. You and I discussed this earlier. Government used to seek an 85% constitutional probability test.
Do we know what test percentage or probability was applied to the question put to the Justice department, what likelihood of a charter challenge this act would receive?
General Director, Tax Policy Branch, Department of Finance
I know you said specifically that your earlier comment wasn't applicable to me, but may I just say that what we do in our tax treaties is what's been done in the proposed legislation, not the motion that's been proposed.
In answer to your question, I don't know that. I can only refer to what the Minister of Justice responsibilities are and it's my understanding that they've been discharged.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
When your department goes to Justice and asks if this would survive a charter challenge, for example, Finance or any other department doesn't ask what the probability of that survival is. It doesn't say, “Do we have a 5% chance or a 95% chance?” You're agnostic to that question?
General Director, Tax Policy Branch, Department of Finance
Oh, I think they may, in fact, tell us what the assessment is, but it's not something I think I'm in a position to share.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Mr. Cook, does anyone know what the likelihood was of a charter challenge?
Ted Cook Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
I think the response to the question is the one that I gave when we met on Tuesday, that we're prohibited from discussing any legal opinions or advice that we may or may not have received.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I understand, but you're not prohibited from discussing what test was applied. If Justice has changed what the test is, you're not prohibited from discussing what that test is. If Canadian government practice up until this point was to say that we expect an 85% challenge test and we then lowered it to 50% or 15%, there's nothing in the statutes that prevents you from discussing that, does it?