Mr. Speaker, I rise to speak on Bill S-9 to draw out some of the points that are in the bill. First I want to congratulate my colleague, the member for Gander-Grand Falls, for bringing this important issue forward in a number of ways.
There are a number of good points in this bill and there are a couple of points I have very grave and serious concerns about. It is important to try to put on the record what some of those changes are so that we can distinguish between the areas of concern and the areas that may be positive.
The agreement makes a number of important changes to the earlier treaty, including bilateral reductions in withholding tax rates and dividends, interest and royalties reflecting the rates now accepted and enforced between most industrialized countries. That is an area I have some concern with.
A complete withholding tax exemption for payments for the use of technology, I think is a good point.
There is significant relief for Canadian residents from the application of United States estate taxes, increasing the maximum estate tax exemption from $60,000 to between $600,000 and $1.2 million U.S.
The expansion to the exemption from United States tax for income earned by RRSPs, RRIFs and Canadian pension plans I believe is a good point.
There is the authority to impose withholding on CPP and old age security payments made to American residents. The 1980 treaty by contrast allowed only the state of residence to tax such payments.
There are two other points I should mention. There is the provision for mutual assistance in the collection of taxes owed by a citizen of one country who resides in the other, thus assisting in the prevention of tax fraud and evasion. Finally, there is authority to enter into arbitration to resolve disputes where the two countries' revenue authorities cannot agree.
My point is that there are good points in the bill but also some areas which I think we should be concerned about. I want to draw attention to my major area of concern. I agree fully with the member for Gander-Grand Falls on this point. The member raised it in his point of order with the Speaker. He referred to a letter dated July 17 from the Minister of Finance. That letter makes these points. I quote from that letter:
I am not aware of the basis for your suggestion that the cost associated with the reductions in withholding tax rates and certain dividends will total $250 million annually. The only estimates that have been made post that figure at $125 million for 1995-96 and $145 million for 1996-97. It is important to note that these figures do not attempt to account for the effects of increased investment and the consequential growth of income tax revenues that may be anticipated because of the steps we are taking to bring our withholding tax rates in line with our major trading partners.
That is the nub of the issue. To me the statements indicate there is certainly a benefit to the wealthy in that part of the bill which I have to be concerned about. To be up front about it, one of the concerns I have about this Parliament is that I firmly believe for a Parliament to operate effectively, one has to have good government and good opposition.
I am amazed. I am extremely angry at what I hear from the opposition parties in terms of the issues sometimes. They have failed in previous debates to draw out these points so that they can be looked at early enough to try to address them.
The Reform Party is always willing and able to criticize some of the social programs in Atlantic Canada, to criticize the unemployment insurance program. Here is a case where there are benefits to the wealthy and its members have kept mum and been highly supportive. As members of a good opposition party, they did not even draw out these points in debate.
I am confident as a member of the government that there will be a counterbalance found in future legislation to reinstate some of the money back into the tax system, either by looking at RRSPs, corporate taxes or other taxation. As the government whip said in his speech, there are certainly some areas where we will gain finances as a result of this bill in terms of what is happening to the American residents.
In the future we have to find a counterbalance to the mesh, to the finances, that have been lost as a result of the tax dividends being forgiven here.
I would hope and encourage the government to look at that in the future.