Mr. Speaker, it gives me pleasure today to speak on Bill S-2, the Income Tax Convention Act, which deals with a number of tax conventions. My intention in the next few moments in the debate is, first, to support the principle of the bill; second, to raise some general questions; third, to raise our specific concerns with regard to points in the bill.
As I listened to the debate so far on the bill there is a lot of latitude I could take. I could move all the way from the countries we are dealing with here-Hungary, Nigeria and Zimbabwe-and into the bedrooms of the nations, it seems, in a very easy and facile way in this assembly.
In looking at the bill, as was mentioned by the Parliamentary Secretary to the Minister of Finance it is certainly a housekeeping bill, but there is a very important principle in it. The extent to which we deal with the principle and apply it in relationships with various countries of the world is very important not only to Canadians but to the other countries because today our world is certainly changing as never before.
Technology is allowing us to deal with every country of the world. Whether they are friends or semi-friends, we can deal in a businesslike way with countries. People in this country can sit in their living rooms, their kitchens or small offices in their homes and deal with countries anywhere in the world in terms of our technology and making business arrangements. That is one aspect of it.
Another aspect is that we want people in our country to use their skills, abilities, knowledge and technology to work with the people of other countries. They can exchange the same attributes we have so that they can be of benefit not only to other countries but also to persons who work within the confines of other government jurisdictions.
As was mentioned, the purpose of the bill is to prevent income tax evasion, double taxation or unfair taxation of people who work between one country and another. That principle is certainly important.
The countries we are dealing with at this point in time are Hungary, Nigeria, Zimbabwe, Argentina and the Netherlands. If there are other areas of the world we should deal with, we should do so to make sure there is consistency. This is a good first step.
What are some of the general questions I would like to raise for the parliamentary secretary or the Minister of Finance to consider in their response at a later period in the debate?
First, why are we only signing on with the limited number of countries listed and not some of the emerging markets we will be trading with in the future?
Second, is the reason for these conventions that tax evasion exists in Canada due to our comparatively high level of taxation? Or, is it that the government is not willing to prevent the problem from occurring by bringing our tax level in line with those of other countries? Is the problem we are facing a tax question rather than the consistency question that has been raised here?
Third, is it realistic to expect these conventions to be workable when Canada's tax system is considerably more complicated than that those of the countries with which we are signing these conventions?
Fourth, is our high taxation level responsible for people leaving to go to these countries and is that the reason we need these conventions?
There are some specific concerns I wish to raise with regard to Bill S-2. First, article 21 on page 43 of the bill allows for Canadian professors teaching in Nigeria to be tax exempt from both the Nigerian government and the Canadian government. Is the government allowing tax loopholes to exist that we should deal with in terms of our tax policy?
The second concern I raise is with regard to article 10, paragraph 2(b), at page 60 which allows Canada to tax dividends emulating from Zimbabwe funds invested in Canada at 15 per cent but Canadian dividends from investments in Zimbabwe can be taxed at 20 per cent. Is this contrary to the concept of reciprocity?
The third question I raise is with regard to article ll, paragraph 3(a), at page 61 concerning interest arising from Canadian bonds held by Zimbabwe investors that can only be taxed in Zimbabwe. In this case the converse is also true. This is a questionable article because it is unlikely that very many Canadians will invest in Zimbabwe government securities. This is interest that will leave Canada and probably will not return.
Those are some of the general questions I have with regard to the bill and some of my specific concerns. I would appreciate it if the parliamentary secretary, or one of the government members who has investigated the bill further, could respond to those questions.
On behalf of the Reform caucus I would like to say that in a specific sense with regard to the principle we support Bill S-2 and will do so on the floor of this assembly.