Evidence of meeting #64 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agreement.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Clerk of the Committee  Ms. Suzie Cadieux
Brian Ernewein  General Director, Tax Policy Branch, Department of Finance
Stephanie Smith  Senior Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Luisa Rebolledo  Chief Asia Representative, Export Development Canada
Gordon Houlden  Director, China Institute, University of Alberta
Brigitte Alepin  Tax Expert, Agora Fiscalité, As an Individual
Sarah Taylor  Director General, North Asia and Oceania, Department of Foreign Affairs, Trade and Development
John Weston  International Lawyer, McMillan LLP

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you both.

We'll come back to witnesses following Mr. Albas.

Mr. Albas, you wanted to move a motion. That is your right.

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Thank you, Mr. Chair.

I'll be brief. I do appreciate the patience of our witnesses today. This is time-sensitive.

I so move:

That the Standing Committee on Finance undertake a study on Bill C-240 An Act to amend the Income Tax Act (tax credit—first aid) on December 8, 2016; That Members of the Committee as well as Members who are not a member of a caucus represented on the Committee and independent members should submit their proposed amendments to the Clerk of the Committee no later than Tuesday, December 6, 2016 at 3:30; That the findings of this study be reported to the House.

I'm prepared to make a brief argument for it. We do have some openings over the next few days, both this week and next week. This bill received a tremendous amount of support in the House. I think we should try to cap this off before the end of the year.

Certainly, if members opposite don't believe that this Thursday is the right day but want to propose a day next week, perhaps the following Thursday, I'm more than open for amendments to that fact. I just want to make sure our committee can report back to the House on a timely basis, as I think there is a tremendous amount of support for the bill.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

The motion is on the floor. Is there any discussion?

Mr. Dusseault.

5:30 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Sorry, what is Bill C-240? Was it adopted by the House?

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

It's Mr. May's bill on a tax credit for first aid.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

It's Bryan May's private member's bill.

Anyone for, anyone against...?

Mr. Liepert.

5:30 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

It just seems to me, if anyone at the table is voting against this, they owe it to their constituents to suggest how we fill our meeting time over the next two weeks. If they don't have suggestions on what we should be studying over the next two weeks, then I suggest they should be supporting this particular motion.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Dusseault.

5:30 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

So I guess the bill was referred to our committee?

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Yes.

5:30 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Then why is it not part of the agenda for the next meeting?

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

It was referred to the committee and it has to be reported back to the House by March 23, 2017. At the steering committee meeting we had, we thought we would discuss it in the new year. I believe that was it. In any event, if someone wants to discuss it earlier, that's their choice.

The motion is on the floor. Are there any other points?

All those in favour of calling this bill under the terms of the motion? Opposed?

(Motion negatived)

We'll get back to the witnesses.

Mr. Ouellette is next on the list.

5:30 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

Thank you very much, Mr. Chair.

Thank you very much for coming. I'm not going to ask a lot of questions, because I think we already dealt with quite a number of them.

I was really quite surprised, obviously, by Mr. John Weston's experience in Taiwan.

It's very interesting that you lived there, and you had the experience where you got to see it move from a dictatorship into a functioning democracy.

I was also really surprised by Prof. Gordon Houlden's remarks around how it's become our twelfth-largest trading partner, and the fifth-largest in Asia for Canada.

I just feel that at the end of the day, a strong Taiwan, a prosperous Taiwan, probably leads in the long term to a strong China. They don't have to be mutually exclusive things, but they can interact. It makes China, I believe, a stronger place in order to do business. I'm not an expert on either China or Taiwan, but if I were looking for a place where I could do business, for a smaller location that would give some greater understanding of how Chinese people think, their values, and how to do business, that might be a good location to start, and then perhaps to the mainland later on.

To Mr. Houlden and Ms. Rebolledo, by increasing trade and opportunity with Taiwan, what would be the impacts in the long term for Canada regarding trade and exports?

December 5th, 2016 / 5:35 p.m.

Director, China Institute, University of Alberta

Prof. Gordon Houlden

Thank you very much.

It's a tricky question. PRC has been the dominant, most buoyant partner for the last 30 years. By my estimate, investment into Canada from China is 600 times greater than that from Taiwan. It's whole multiple orders of magnitude greater, and that's not going to change overnight.

Taiwan has a static population. Its economic growth rates are modest, and that's actually one of the causes, in my view, of the change of government recently: dissatisfaction, particularly among young people, over economic prospects. That said, this can help, and these sorts of arrangements are much appreciated by the Taiwanese government and the Taiwanese people.

You're quite right that Taiwan is.... When in government, when I ran our office in Taiwan, we had urged Canadian companies to operate in Taiwan. Beijing is formidable in that you have dozens and dozens of large cities, and provinces that are a multiple size of countries. Taiwan is a place with considerable respect for the rule of law. Most recently, in the last 20 or 30 years, perhaps 20 years, let's say, there is respect for intellectual property rules that wasn't the case in the early days. It is the case now. It's a safe place to do business by comparison with the PRC, which has a remarkably dynamic economy but just tougher to penetrate, much more difficult. Taiwan is a nice safer way station for Canadian companies to cut their teeth.

Hong Kong, to some extent, is as well. There are maybe a couple of hundred thousand Taiwanese in Canada, and two million or more on the mainland. Most of that capital that flows out of Taiwan doesn't come to Canada or North America, it goes to China where Taiwanese companies build massive factories, particularly in the electronics consumer products industries. Partnership with a Taiwanese company can have multiplier effects if you work on a broader Asia platform, so it is attractive.

What has to be done, though, is sequencing. There was a question about a free trade agreement, for example, with Taiwan, and that's wonderful, but generally I would think that would be a risky exercise if you hadn't already concluded one with China. China does watch very carefully. Right now, thanks to President Ma Ying-jeou, we're at the end, perhaps, of a honeymoon period between Taipei and Beijing. Already just based on the commentaries generated by President-elect Trump, we're seeing a stiffening of Chinese attitudes towards Taiwan. I don't know if that will continue or not, but I'd say there's a prospect that this will be the case.

So yes, do business with Taiwan, but keep an eye on Beijing, because they have a relevance to what you can get away with and what you can do in Taiwan.

5:35 p.m.

Chief Asia Representative, Export Development Canada

Luisa Rebolledo

I have just a minor point to add.

A lot of Canadian companies use Taiwan as a springboard to other Asian countries, not only mainland China but all of southeast Asia. This is a huge, lucrative market for Canadian companies. Just by population itself, Canada is dwarfed by what's going on in Asia. So this is a huge opportunity for Canadian companies. It's also a destination that is accustomed to receiving export, and continue to “on-bound” it to the rest of Asia.

I think that is also an important component to the discussion.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

5:35 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

Thank you very much.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll turn to Mr. Deltell.

5:35 p.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Thank you, Mr. Chair.

Ladies and gentlemen, welcome to this House of Commons parliamentary committee.

My first remarks are for Ms. Alepin.

You were here earlier when we heard from the first group of witnesses. We asked them, among other things, whether Bill S-4, which includes a new agreement with Taiwan, Hong Kong, and so forth, could impact our relationship with China and Japan, our two most important partners and the two economic powerhouses of Asia. Those witnesses did not appear to have any concerns in this regard whatsoever, but I believe you said it could have an impact on China.

I know that some colleagues have already asked about this. In your opinion, are there any yellow lights or flags that should be raised regarding certain aspects of this bill that could unfortunately have a negative impact on our relationship and trade with China in particular?

5:40 p.m.

Tax Expert, Agora Fiscalité, As an Individual

Brigitte Alepin

Thank you for your question.

Time will tell how China will react. The tax regime in Taiwan and Hong Kong seems to be more favourable than the one in China. In Hong Kong, for instance, dividends, interest income and capital gains are not taxed. No tax is deducted at source. This is a more advantageous regime than China's.

We are now concluding agreements with these jurisdictions which are fiscally competitive with China. In the past, people were not offended, for instance, when a country started being a fierce fiscal competitor to another country in the area. Is this viewed favourably in today's world, in 2016? Could there be reactions if we conclude agreements with territories or jurisdictions that compete with China fiscally? Time will tell. For now, I don't think we can discuss this or these important agreements without asking this question.

Similarly, in the agreements currently under consideration, with Taiwan and Hong Kong, for instance, regarding information sharing, the protocols clearly say, as does the agreement with Taiwan, that information sharing should not be considered—not the exact wording—as automatic.

As we just said, this is 2016 and I have questions about this. I wonder why that is specifically included in the protocol, although we know very well that, recently, the two Canadian governments appear to have made a commitment to the automatic sharing of information.

As to the sharing of information, does that mean that Canada has slightly less restrictive agreements with Hong Kong and Taiwan than it does with China? What will the future hold as to the sharing of information? That is hard to say right now, but these are very important questions.

5:40 p.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Thank you, Ms. Alepin, for raising these concerns. It is my understanding that we can nonetheless proceed, while keeping a careful watch on our relationship with China, specifically as regards the sharing of information

Mr. Weston, welcome again. This is your House of Commons, and we're very pleased to see you here again. As Mr. Liepert said a few minutes ago, thank you so much for serving our country these past years, and thank you for serving it again here at this committee.

Mr. Weston, you heard Madam Alepin expressing some reservations about the relations we could have with China based on this bill. What are your thoughts on that? Do you think it could be difficult, on thin ice with China, with this bill?

5:40 p.m.

International Lawyer, McMillan LLP

John Weston

Thank you for the question.

Over the past 20 years, as we negotiated this accord, this was the greatest obstacle. Moreover, this accord is not a treaty or an agreement. If there were reasonable problems, we might in fact pause to reconsider. There is no reasonable obstacle, however. Reading the accord carefully, we see that the words “jurisdiction” and “territory” were deliberately used to prevent problems with China.

Second, the way the accord is set up between the two trade offices is clearly meant to send a signal that this is not an affront to China.

Third, there is a famous leader—your leader—who said not so long ago that love is better than anger, if I remember correctly. It's better to encourage people to voluntarily pay their taxes than to pay them angrily or against their sense of justice. By removing double taxation, we are encouraging people in both places to adhere to the rule of law. We're encouraging them to do business with one another. We're encouraging people who are already good friends to increase the level of the friendship.

To me, many bills that come before this place are very difficult and hard to decide upon, but this one seems very, very clear. Without reserve, I would say that this makes sense for the people you represent: all Canadians.

5:45 p.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Thank you for your answer, Mr. Weston, and thank you also for answering in French.

5:45 p.m.

International Lawyer, McMillan LLP

John Weston

Thank you very much.

5:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you both.

Mr. Grewal.