Evidence of meeting #7 for International Trade in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was withholding.
A recording is available from Parliament.
Bloc
Serge Cardin Bloc Sherbrooke, QC
We can write down their names, Mr. Chair.
Earlier, we mainly discussed the total cost of the changes. With respect to clause 3, are we evaluating the total cost of Annexes A and B to the Convention? When you mentioned the $180 million, that was strictly withholding tax, but there are also costs for all the other applications of this treaty. When you analyzed Annexes A and B, was there a cost directly related to these amendments?
General Director, Tax Legislation Division, Tax Policy Branch, Department of Finance
As I said earlier, as a general matter, the tax changes or the effects of changes or of signing of new tax treaties is not generally costed as an independent matter. When there's a change in our treaty policy that has a material fiscal implication, it is costed. That was the case with the elimination of arm's-length interest and the elimination in the Canada-U.S. treaty of non-arm's-length interest, and that was costed.
There hasn't been costing done specifically on the other measures themselves, but many of them, arbitration being an example, and many of the understandings expressed in the other annex accompanying the protocol would not be considered to have a material fiscal cost.
Bloc
Serge Cardin Bloc Sherbrooke, QC
For example, if you consider investments for taxpayers, Canadian and Quebec workers working in the United States will now be able to deduct their employer's pension fund from their taxable income here, thus enjoying a cut in their taxes. These things aren't necessarily evaluated as such. For workers, this represents an additional deduction, an additional amount of money at the end of the fiscal year. However, that was not evaluated.
General Director, Tax Legislation Division, Tax Policy Branch, Department of Finance
You're correct, there hasn't been. As I said, the only item that has been specifically costed is the elimination of interest, of the withholding of tax on arm's-length and non-arm's-length interest. You're also right, though, that there are other measures that will help taxpayers. A good example, I think, is the change to an institute, the deductibility of certain pension contributions for cross-border workers, and for temporary transfers from one country to another. That will represent some tax savings in some cases, and tax savings to taxpayers implies a revenue cost to governments. It's not considered to be a large amount. It works both ways as well, because it will facilitate American cross-border workers in Canada or temporarily working in Canada too, so that has to be taken into account.
Liberal
The Vice-Chair Liberal John Maloney
Thank you, Mr. Cardin.
Mr. André, do you have a question? No?
I'll call the question.
(Clause 3 agreed to)
(On clause 4)
NDP
Liberal
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Clause 4 of the bill adds new schedule VI to the actual schedule VI containing the fifth protocol. I would like some clarification as to exactly which section that refers to.
Senior Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Thank you, Chair.
Within the bill itself, there are indeed two references to the schedule. The first one, in clause 1, is merely for purposes of reference within the bill. The actual material change is made by this clause 4, which actually adds schedule VI to the existing schedules of the act.
Liberal
NDP
Peter Julian NDP Burnaby—New Westminster, BC
He simply reiterated what was in the backgrounder. It doesn't explain the exact sections that are covered, which is more what I was looking for.
Which articles within the protocol are covered by schedule VI?
General Director, Tax Legislation Division, Tax Policy Branch, Department of Finance
Perhaps I can help.
If the pagination in the version before members of this committee is the same as mine--that is, the bill as passed by the Senate--page 21 in annex 2 has schedule II, schedule VI. What this doing in clause 4 is seeking approval to add schedule VI to the Canada-U.S. treaty implementation act.
And for completeness, schedule VI comprises the amendments, the protocol amending the Canadian-U.S. Tax Convention.
Liberal
NDP
Peter Julian NDP Burnaby—New Westminster, BC
These are exactly the provisions, if I'm not mistaken, that we're concerned about.
I reiterate, Mr. Chair, given the amount of funds that are involved, I don't understand why the government would push through this convention without hearing witnesses, without having a full release of the impact study, so we can see what, over the next decade, government is losing and who, essentially, will be benefiting from it, as well. There are some benefits, there's no doubt, within this tax convention. There are some very positive aspects within this tax convention. There are obviously some that should be of concern to all who are interested in public policy and in furthering the work of our government. It just staggers me that the government is trying to ram this through.
Now, since Mr. Pallister's comments were in order, I'll respond to him that the NDP budget is the one the Conservatives seem to raise the most often in the House, both the housing grant--that foundation, that money came through the NDP budget--and public transit today, which they raised, as well.
The most often quoted aspects of any budget over the last few years have been in the NDP budget, and it's quoted by Conservative members because it's actually gotten the job done where the Conservatives have failed.
Liberal
The Vice-Chair Liberal John Maloney
I think we're getting off track here. I call the question.
(Clauses 4 and 5 agreed to)
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Okay, Mr. Chair, you're now responding to the question I asked earlier.
What you are doing, then, is going through schedule 1, annex A, annex B. We don't have any clause-by-clause diagram to follow, which has been the practice certainly for any bills that I've seen since I arrived here three and a half years ago.
Could you please tell us where you're going next, in terms of approval of this?
Liberal
The Vice-Chair Liberal John Maloney
We're going to approve all the schedules, schedule 1 and schedule 2, and then the bill, the title.
NDP
Liberal
Sukh Dhaliwal Liberal Newton—North Delta, BC
Mr. Chair, I have learned some really good tactics from Conservatives to filibuster the meeting—
Liberal
The Vice-Chair Liberal John Maloney
Mr. Dhaliwal, your comments are not really appropriate. Are you dealing with schedule 1?