Finance Committee on Feb. 28th, 2019

[Blake Richards]

Oh, I certainly can, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Okay. Get it done.

[Blake Richards]

Thank you. I appreciate that.

You mentioned the idea of consistency with the way you're applying these, and that was actually what I wanted to follow up on. What some of these campgrounds are finding is that they're doing exactly what they've always done and then all of a sudden they're being reassessed going back several years. How does that speak to consistency?

[The Chair, Liberal, Wayne Easter]

Mr. Hamilton.

[Bob Hamilton]

What I'll do, in the interests of time, is give a brief explanation, but I think at the last meeting we did commit to get back to you in writing, and I believe we did that.

In terms of consistency, the way that I was using the term was to say that at any given point in time we consistently treat one taxpayer the same as another. There can be circumstances where, for a variety of reasons, something gets administered in a slightly different way, based on new facts or new evidence that's come to light, so over time we can see some of that.

I will get back to you, though, on this particular case. I'll just note that we are trying to apply the law as it should be and consistently across all taxpayers, but I'll elaborate on that.

[The Chair, Liberal, Wayne Easter]

I'm going to Peter, but do you have any data that would show if some campgrounds had to close down as a result of this change or this application of the rules as they're applied now? Do you have any data to that effect that you can provide? I expect it would be difficult to come by.

[Bob Hamilton]

Mr. Chair, certainly not at the moment, off the top of my head, no, but I'm willing to go back and see if there is anything that we have that might be helpful.

[The Chair, Liberal, Wayne Easter]

Have a look, if you could.

Mr. Fragiskatos.

[Peter Fragiskatos]

Thank you, Mr. Chair.

I know it's the view of at least the vast majority of the members of this committee that you have been more than reasonable, more than fair. Certainly I've been serving on this committee since September, and you've always been fair. I need to say that.

Beyond that, I will put questions to the officials on the matters at hand, but since the issue of climate change has already been raised, I know my colleague opposite put forward some perspectives that are now on the record, and I want to do the same. Let me read into the record the following quote:

For 25 years countless people have come to the UN climate conferences begging our world leaders to stop emissions and clearly that has not worked as emissions are continuing to rise. So I will not beg the world leaders to care for our future. I will instead let them know change is coming whether they like it or not.

Since our leaders are behaving like children, we will have to take the responsibility they should have taken long ago. We have to understand what the older generation has dealt to us, what mess they have created that we have to clean up and live with. We have to make our voices heard.

That quote comes from Greta Thunberg, who is 15 years old. I think that view needs to be put on the record. She is a Swedish teenager. Sweden, long ago, as you know, Mr. Chair, put in place a price on pollution, and its economy is doing remarkably well. In fact, there are many studies that indicate its economy is doing so well precisely because it has put a price on pollution, which has acted as an incentive for innovation and has helped Sweden really combat the issue of climate change and become a world leader in that regard. Canada is seeking to do the same.

On what should be a non-partisan issue, we continue to see fearmongering from the opposition around the issue of our time, which is climate change. In fact, I would point my honourable colleague, and indeed his party leader and in fact the entire party, to not any Liberal or NDPer or member of the Green Party but to Preston Manning, who is well on the record. In fact, he's written numerous op-eds talking about how a price on pollution is necessary to combat climate change. Once and for all, I hope we can move forward in a meaningful way both at this committee and in general terms to dealing with the issue of climate change, because fearmongering hasn't gotten us very far at all.

I do want to live up to my promise to stay on the issue of the estimates. In fact, I'd like to go back to what we discussed before, which is the whole issue of knowledge sharing and the global knowledge sharing platform.

Mr. Hamilton, what countries will Canada be working with in this regard? Where are we planning on forging partnerships, exactly?

[Bob Hamilton]

There are two types of countries we'll be working with. We're working with other developed countries, such as the U.S. and European countries, to develop the platform, and design the content that would be put on it. We'll be looking at how we can best design this tool to be helpful, and how we make sure that we put the right material on it.

In addition, we'll be working with developing countries. It could be countries in Africa, such as Liberia, or countries in South America. It will really be countries across the globe that want access to this material; the kinds of countries where we might normally think to send one of our auditors or experts to help them design their system. We'll be working with both of those, and we have been already, to both design the system and the content, and to make sure it's user-friendly and giving the countries what they demand.

[Peter Fragiskatos]

Thank you very much.

I have one minute left, so I'll continue on this issue. I think this is underappreciated, the importance of ensuring that Canada is doing everything it can, vis-à-vis countries in the developing world having issues, for very complex reasons, with tax collection.

In the prototype stage, did we talk to other countries that have employed a similar policy in their engagements with developing countries? Has the United Kingdom done something like this, or the United States, Germany and Sweden? I like the Swedes.

[Bob Hamilton]

I like Swedes too.

Mr. Chair, yes, we certainly talked to all of those, and other countries, as we developed it. It's not that anybody else has a knowledge sharing platform like we had. We are taking something from another country and incorporating it because it is new. It's a Canadian innovation. All of the developed countries you've mentioned, and more, have experience in trying to build capacity in developing countries. Whether they send officials to help on the audit side, or technical officials to help them build their systems, there is a rich experience in developed countries—I could call it roughly the OECD countries—in providing that kind of assistance to build capacity in developing countries. We've learned from those to think about what is most helpful to developing countries.

On the issue of the KSP and the web-based platform, that's something new. I think all of the countries involved, developed and developing, are seeing this as a very useful tool. It's obviously a demand on resources to send someone somewhere for two weeks at a time. If you can get a long way there by putting the relevant material and manuals on the platform, it can be accessed electronically, and then you can save those in-person visits for discussions that are a bit more precise.

[Peter Fragiskatos]

Thank you.

[The Chair, Liberal, Wayne Easter]

With that, we will have to go to our next session.

On behalf of the committee, I want to thank you, Mr. Hamilton, and all the other witnesses who came with you, for providing the information you did.

We will suspend for two minutes and ask Mr. McGowan and Mr. Boychuk to come forward on Bill C-82.

[The Chair, Liberal, Wayne Easter]

We shall reconvene.

Pursuant to the order of reference of Monday, October 15, 2018, we're dealing with Bill C-82, an act to implement a multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting.

We have with us, as witnesses from the Department of Finance, Mr. Trevor McGowan, who is the Director General, Tax Legislation Division, who has been with us many times before; and Mr. Boychuk, Expert Adviser, Tax Legislation Division.

I understand that you're here basically to answer questions. You don't have an opening statement.

On Bill C-82, on which we've had a number of witnesses before the committee, are there any questions for the witnesses from the Department of Finance before we go to clause-by-clause consideration?

Mr. Dusseault.

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

Thank you, Mr. Chair.

Last week, I believe, I asked an expert from outside the department a question, and I think it would be worthwhile to put it to the Finance Department representatives today.

Gentlemen, since everyone here's already up to speed on the issue, there's no need to confirm today that the new international convention contemplated in Bill C-82 has to be ratified by the partner countries in order to come into force. Every country has to follow the necessary legislative process as we are doing. Does that implicitly mean that, if a country fails to ratify the convention within a few months or years, the former convention will apply to that country?

[The Chair, Liberal, Wayne Easter]

Mr. Boychuk, go ahead.

[Daryl Boychuk, Expert Advisor, Tax Legislation Division, Tax Policy Branch, Department of Finance]

That is correct. The multilateral convention will apply only in circumstances where both Canada and the other country have ratified and have listed each other in terms of a treaty they wish to have covered by the convention.

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

With your permission, Mr. Chair, I have here a document from the OECD itemizing the signatories and parties to the multilateral convention.

If my calculation is correct, only 19 have deposited the required instrument of ratification and brought it into force. Is that roughly the figure you have?

[Daryl Boychuk]

I think the number is a little over 20 right now. I know that Finland just recently ratified. I think it's 20 plus right now.

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

Looking at the list, I see that most countries have merely signed the convention at one of the formal ceremonies that have been held, as in October or November 2017, or January 2018. However, those countries have done nothing more since signing. What do you expect of all those that thus far have merely signed the convention without taking any further measures? Do you expect that a majority of those countries will ratify the convention and bring it into force or that nothing will change in the next few years?

[Daryl Boychuk]

No, our expectation is that countries that are signing the MLI have indicated an intent to have it apply, which means they will go through their domestic procedures to bring it into force and file their instruments of ratification eventually.

All I can say on that is that sometimes those domestic processes take some time and they take some debate. This is a complicated instrument. But no, our expectation is that those countries that are signing the MLI will eventually ratify it.

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

I see.

Do you expect that to happen within a year, 5 years or 10 years? Do you have any idea of the timeline? I understand that it's complicated, as we can see today, and that every country has to go through its legislative process, but what are your expectations in that regard?

[Daryl Boychuk]

It's really hard to speak for what other countries are doing and what their domestic procedures require and what the political situation in that country may be at any particular time, but I can say probably just as a general comment that you would normally see a ratification within a couple of years of a signature.

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

Can you confirm what you previously said, that it's possible for taxpayers to abuse the present tax conventions—hence Bill C-82—to avoid their Canadian tax obligations?