Debates of Nov. 28th, 1997

The House proceeded to the consideration of Bill C-10, an act to implement a convention between Canada and Sweden, a convention between Canada and the Republic of Lithuania, a convention between Canada and the Republic of Kazakhstan, a convention between Canada and the Republic of Iceland and a convention between Canada and the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend the Canada-Netherlands Income Tax Convention Act, 1986 and the Canada-United States Tax Convention Act, 1984, as reported (without amendment) from the committee.

Income Tax Conventions Implementation Act, 1997

[Jim Peterson, Liberal, for the Minister of Finance]

moved that the bill be concurred in. (Motion agreed to)

[The Acting Speaker (Mr. McClelland)]

When shall the bill be read a third time? By leave now?

[Some hon. members]

Agreed.

[Jim Peterson, Liberal, for the Minister of Finance]

moved that the bill be read the third time and passed.

Mr. Speaker, as you have indicated, this involves tax treaties with a number of countries including Denmark, Iceland, Kazakhstan, Lithuania, Sweden and The Netherlands, but most important or certainly most in the news has been the amendments involving our treaty with the United States of America. This important amendment is taking place in terms of social security benefits which are paid by the American government to people living in Canada.

The effects of this tax apply basically to about 60,000 Canadians. About one-third of these are low income residents of Canada who are still in receipt of U.S. social security benefits.

Under the current law the Americans are entitled to withhold 25.5% of these social security payments they make to people living in Canada. Where these recipients, approximately 20,000 of them, lose out is if they were taxed at ordinary Canadian income tax rates on these benefits, their tax rates, because they are in lower income brackets, would be much lower. Therefore, this blanket withholding of 25.5% by the Americans is a detriment to these particular residents of Canada.

This is why we have undertaken on their behalf to renegotiate this treaty to ensure that they can be taxed not by the source country, the United States, by way of withholding, but in Canada where they would be taxed on their net income. Many of these low income residents of Canada will end up paying no taxes whatsoever.

For recipients of U.S. social security benefits who are in higher tax brackets, there will also be a relieving position which comes about because only 85% of the benefits will go into taxable incomes, rather than 100%. This is mirroring the way the United States would tax its residents on this income.

This bill has gone through the House for second reading where it received great support from all sides. It has gone to both committees where they have sent it back unamended. It is of course important that we enter into these new treaties with new trading partners so that Canada can continue to be at the forefront of avoiding double taxation and encouraging international investment, international flows of currency, international jobs, but particularly in terms of our provisions dealing with the Americans.

It is very important that we make these relieving provisions so that we can get on with the job of making sure that these people are treated fairly by both the United States and Canada as it relates to their social security benefits.

I would like to repeat what the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques said about getting the co-operation of all parties because the main purpose of this bill is to remedy a fundamental inequity for low income persons.

We expect that as soon as this passes—and we certainly hope to have the unanimous support of all members of the House—that it will be signed into law very quickly and receive royal assent. We understand that the United States has done all that is necessary except receive presidential signature on this bill. As soon as it goes through, we would expect that within a few weeks, or in as short a time as possible, refund cheques will be sent out. Revenue Canada will be co-operating with the U.S. revenue authorities to track down every person who might have been unfairly prejudiced over the last two years by these provisions.

We expect, with the support of all members, to be able to correct this inequity and to make sure that the taxpayers in Canada who have been unfairly prejudiced are going to get their refunds.

I thank all members of this House for their splendid co-operation on this excellent bill.

[Rahim Jaffer, Reform, Edmonton Strathcona, AB]

Mr. Speaker, I rise on behalf of the official opposition to address Bill C-10, an act to implement the convention between Canada and Sweden, a convention between Canada and the Republic of Lithuania, a convention between Canada and the Republic of Kazakhstan, a convention between Canada and the Republic of Iceland and a convention between Canada and the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend the 1986 Canada-Netherlands Income Tax Convention Act and the Canada-U.S. Tax Convention Act of 1984.

I will be sharing my time with my hon. colleague, the insatiable snack-packer from Calgary West.

It is clear that the proposed conventions with Sweden, Lithuania, Kazakhstan, Iceland and Denmark are important tax treaties. Neither myself nor any member of the official opposition would argue that these conventions are in and of themselves bad fiscal policy.

The thought of unchecked tax duplication is enough to make any of us a little uneasy. Much of Bill C-10 concerns simple—

[The Acting Speaker (Mr. McClelland)]

If the hon. member would forgive me, I think I heard that the hon. member would like to share his time. At this particular point in the interventions, we, without unanimous consent, cannot split his time. I just wanted to make you aware of that.

[Rahim Jaffer, Reform, Edmonton Strathcona, AB]

Can I seek the unanimous consent of the House?

[The Acting Speaker (Mr. McClelland)]

Does the hon. member have unanimous consent to split his time?

[Some hon. members]

Agreed.

[Rahim Jaffer, Reform, Edmonton Strathcona, AB]

Mr. Speaker, much of Bill C-10 concerns simple parliamentary housekeeping. I think my hon. colleague from Calgary West would agree with that.

However, as my hon. colleague from Calgary Southeast has pointed out in past debates on this bill, part VII of this act concerning tax treatment of social security payments from the U.S. social security fund to Canadian residents reveals another Liberal tax gouge.

I am losing track but I think this is tax hike number 38, what a record.

Arguments have been made in this House and in committee that this bill will make amendments to the 1995 third protocol that will increase tax fairness and provide tax relief for lower income Canadian seniors.

Tax relief and fairness for low income seniors is an important and noble goal but unfortunately it is a goal that will not be achieved through this legislation.

In fact, I find it difficult to belief that tax relief is the goal of a Liberal government at all because the very tax treaty that imposed a 25% flat withholding tax for U.S. social security payments coming to Canadian residents was negotiated and agreed on by this government, the very government whose members are saying that it was an unfair agreement.

To fully understand this issue, I have to review the history of public policy on social security payments and taxation. It has given me a pretty clear idea of the low quality of the legislation before us today.

The 1984 U.S.-Canada Income Tax Convention Act allowed 50% of social security payments to Canadian residents to be included for purposes of Canadian taxation. That made a lot of sense because it was the same treatment that U.S. recipients of social security have. That is to say 50% of their social security payments were included for the purposes of taxation. With only 50% of their social security payments included for taxation, many low and middle income seniors avoided paying any taxes on their social security income.

This policy was changed in 1995 when the government entered into negotiations with the Americans to produce the third protocol which imposed a 25% flat withholding tax on those payments being made to American residents retiring in Canada.

For low income seniors, this meant 25% of their income disappeared. After Canadian seniors let this government know that their treatment under the third protocol was completely unacceptable, the government went back to the table.

The fourth protocol, the results of which are included in Bill C-10, would see the inclusion rate of U.S. social security payments rise from 50%, as it was before 1985, to 85%. That is a 70% increase on the inclusion rate.

Every senior who pays taxes will now pay more under this legislation. It is not just wealthy seniors, it is all taxpaying seniors who will be hit by this tax grab. This very fact was admitted in committee and, while I was not privy to the discussions, it was a matter of public record. Section 7 of part VII of Bill C-10 is clearly another Liberal tax grab.

When seniors suffering under the 1985 treaty asked for tax fairness, when they asked the government to do something about the 25% withholding tax, they were not looking for a 70% tax increase.

What this policy will do is penalize any and all seniors who have private savings that supplement their incomes so that they are at least within the lowest tax bracket.

Middle income seniors who have made sacrifices and wise financial choices about their retirements are being punished. This is not exclusively the very rich. It is every senior who pays taxes and who collects the U.S. seniors benefits, whether they make $10,000 a year or $1 million.

I am sure that this point will be ignored and my colleagues from across the way will remark that Reform is protecting the interests of the wealthy. This is simply not true and I would ask my colleagues to think about the facts before they perpetuate misunderstandings and misinformation.

Further to the issue of U.S. social security payments to Canadian residents it must be known that unlike CPP payments that are taxed only as income when they are withdrawn, U.S. social security payments are taxed at the time they are made and not when they are withdrawn. So Canadians receiving U.S. social security benefits have already paid taxes on those benefits.

A Canadian working in the U.S. would pay taxes on his or her premiums but would pay little or no taxes when he or she claimed the benefits. This makes sense since seniors are less able to pay the taxes when they are on a fixed income in their retirement years.

If that worker who contributed to the U.S. social security system moved back to Canada he or she would have to pay taxes on 85% of his or her social security income. They are being taxed twice. This is not only unfair, it violates the intended goals of our tax convention which is to eliminate any tax duplication.

I want to stress some key points before I conclude. First, this legislation was rushed through the industry committee. The critic for this bill, the hon. member for Calgary Southeast, only discovered that Bill C-10 would proceed through the industry by chance at the last minute. This makes me pretty suspicious that this legislation contains merely house cleaning matters.

Second, as I understand, the chair of the industry committee disallowed the hon. member for Calgary Southeast to request that seniors affected by Bill C-10 be allowed to testify before the committee. If there were nothing offensive in the legislation, the government would have nothing to fear from being transparent.

Another unfounded concern that came up in committee is that Reform is trying to delay the issuance of cheques owed to seniors by not allowing Bill C-10 to be fast tracked through the committee. Bill C-10 provides for the partial or full refund to some seniors of the IRS to a 25% withholding tax which occurred because of the original Liberal bill that was flawed.

The government has also said that Reform is doing this in an attempt to protect a small group of high income seniors from taxes. This is not true. The facts are every senior who receives U.S. social security and who pays taxes will pay more under this legislation. The inclusion rate for calculating taxable income moves from 50% under the pre-1996 convention to 85% under this bill, the fourth protocol.

By suggesting that Reform somehow wants to protect its idle rich supporters by supporting this bill, the government apparently feels that any senior who pays taxes is a high income senior and an idle rich supporter of the Reform Party.

For the record, let me remind the House that demographic studies show that the Reform supporter on average is less wealthy than the average Canadian. Our supporters are not very rich. They are average Canadians who are hurt by the heavy burden of taxation. However, I am not here today to speak exclusively on behalf of Reform supporters. I am here to speak on behalf of Canadians.

I would like to bring the attention of the House to the fact that the committee reports contain a clear statement by senior tax bureaucrats that the inclusion rate would rise from 50% to 85% under Bill C-10, and that this rise would cost all taxpaying seniors.

Reform resents the suggestion that we are responsible for delaying Bill C-10. We did not create the problem in the first place; the government did. Reform did not delay bringing forward this legislation until after the election; the government did. Reform did not wait three weeks since the debate to bring Bill C-10 to committee; the government did. And Reform did not refuse to hear witnesses explain the impact that this would have on their livelihood; the government did.

I am not naive to the fact that government backbenchers followed the lead of their cabinet. But an issue that involves raising taxes of Canadian seniors is just the sort of issue that should compel hon. members of the House to either change their caucuses or defy their caucuses.

Canadian seniors need a unified voice in the House, a voice that will speak resolutely whenever the government reaches its hands into their pockets. I fear that they do not have this voice with the government. This is not just about money, it is about seniors with retirement dreams and it is about seniors who will face their retirement years in government imposed poverty.

[The Acting Speaker (Mr. McClelland)]

For the benefit of hon. members who were not here earlier, the hon. member for Edmonton—Strathcona had asked that his time be split. There are no questions and comments at this time.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, I was under the impression that the Reform Party was going to put forward another speaker. However, I appreciate having the opportunity to speak in support of this bill.

First, any attempt which this House makes to simplify the tax acts of Canada is something which I support and celebrate.

Bill C-10 would organize tax treaties for efficiency and fairness where there is a specific benefit to seniors in Canada. However imperfect, I believe it should be supported by all parties.

I would like to pick up from where the hon. member for Edmonton—Strathcona left off in his remarks. He talked about the fact that members on the government side of the House should debate and challenge the tax system of this country. The fact of the matter is we do. This party is not made up of lemmings. The government is not asking members to suppress creativity on how to improve or reform the tax acts. Quite frankly, I think the hon. member for Edmonton—Strathcona knows that.

This is purely coincidental today. There is a book which a group of us put together called “The Single Tax System” back in 1990. When I look at the acknowledgements of the people who contributed I notice the name “Rahim Jaffer, Ottawa”. I acknowledged the hon. member for Edmonton—Strathcona as one of the people who helped me put this effort at tax reform together.

The hon. member for Edmonton—Strathcona is here as a newly elected member of Parliament. I celebrate his being here. He is a creative, intelligent and thoughtful individual. However, I think that the challenge for the opposition is not just to criticize the flaws which exist in legislation, it is also the responsibility of the opposition to put forward constructive alternatives.

We listened attentively to the member's remarks during the last 10 minutes and all he did was criticize this piece of legislation. I have never seen a piece of legislation which was flawless, but not once did the member talk about a constructive alternative. I am beginning to wonder if the hon. member for Edmonton—Strathcona has gone soft on the notion of comprehensive tax reform. He is in the index of this book as being one of the strong supporters of a single tax system and comprehensive tax reform, but not once during his remarks did he talk about what he would put forward as his alternative or his party's alternative.

The day that the member was elected I was happy and hopeful that when he came to this Parliament he would be a champion of comprehensive tax reform. I thought that the member and the hon. member for Calgary Southeast, the former head of the Canadian Tax Foundation, were passionate supporters of the single tax system before they were elected. We have been here for months and we have heard barely a peep out of those members. All they do is criticize. They do not talk about comprehensive tax reform any more. They do not talk about the single tax system.

I listened attentively to the member's notice that there may be a couple of flaws in Bill C-10. I repeat myself. There could be areas requiring improvement in any piece of legislation, but I think we need to hear from the opposition parties on an issue like this one where they stand on comprehensive tax reform. Are they going to whisper about it from time to time, or are they going to get passionate in the House about real reform?

The time is right. We hear right now that not a day goes by in the United States that Democrat and Republican senators and congressmen are not looking at the notion of comprehensive tax reform. If the United States government has a simplified tax act because it flushed out and cleaned up many of the credits buried in the tax act, we know that we must follow.

We should not avoid taking advantage of this opportunity. We should get right into the debate, put our best creative minds together and see if we can create some momentum and some political will.

In the last 10 years I have watched our government and the previous government cut, cut, cut, offload all direct grants; but the fact of the matter is that the biggest or the largest grants to individuals or corporations are buried in the Tax Act of Canada. There is no accountability or very little accountability in these tax preferences.

I stand here today appealing to the Reform Party to stand up for comprehensive tax reform, the same way they did before they were elected. I also say to the Reform Party that it is fair ball to critique a flaw or two in a piece of legislation, but I appeal to my friend from Edmonton—Strathcona to put forward a constructive alternative.

[The Acting Speaker (Mr. McClelland)]

Hon. members, before we go continue with the debate I should point out that the first three speakers had 40 minutes. We are now going to our fourth speaker, and it will be 20 minutes and 10 minutes for questions and comments.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, I am not sure I understood right. Do I have ten, or twenty, minutes for my speech?

[The Acting Speaker (Ms. Thibeault)]

Twenty.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Very good, thank you.

I am pleased to rise in the House today, particularly after the speech by the representative of the government, the hon. member for Broadview—Greenwood. I trust he was not generalizing, when he said that all the opposition did was criticize. I believe I am very well placed to point out that this was a half-truth.

I trust that he was not generalizing and was referring specifically to one, or all, Reform members. Since the beginning of this Parliament, looking back to when the government has presented bills, it has on a number of occasions had the complete co-operation of the Bloc Quebecois because not only were the rights and obligations of Canadians being advanced, but Quebeckers were also demanding to be properly represented and defended. That the Bloc has done. We have done it since June 2, and even before that, since the 35th Parliament.

In justice, I have personally given 100% co-operation to the new Minister of Justice and I have always offered constructive debate to move legislation forward, to advance the law.

I hope that the member was referring only to a member of the Reform Party or to the Reform Party as a whole and not to the Bloc.

That said, Bill C-10 is another example of the Bloc's leading the way in asking the Liberal government to act in this area, given its importance for a number of Quebeckers and Canadians. This is another area where Canadian and Quebec interests merge, and this bill is a striking example.

What is this bill about and what does it contain? It implements a series of tax conventions between Canada and other countries in order to avoid double taxation. Furthermore, Bill C-10 amends the 1984 tax convention between Canada and the United States, resolving the problems of Quebec and Canadian retirees receiving American pensions.

I am going to talk on behalf of the Bloc Quebecois and Quebeckers because I am in a good position to do so. A number of Quebecers worked in the U.S. and decided, on their retirement, to return to their homeland, the beautiful country of Quebec. They returned to Quebec and received American pensions. Because they had problems with taxation, these people were taxed in the United States and what little they had left from their pension was then taxed in Canada so they were doubly penalized and doubly taxed. Something had to be done.

My riding of Berthier—Montcalm is not near the American border, like other ridings along the Canadian border and the border between Quebec and the States. Despite that, there is a municipality in my riding called Rawdon where there are a number of anglophones who have worked in the States. For a while in the 35th Parliament, a number of my constituents in Berthier—Montcalm contacted me to draw my attention to this tax inequity.

Other members of the Bloc were also contacted. We thus became aware of the problem and rose on a number of occasions in this House with questions and worked in committee to oblige the government to act quickly. It did not act as quickly as we wanted, but it did act. A sin confessed is half forgiven. At least the government acted and introduced a bill. You know how the Liberals across the way are. With them, nothing is ever simple. You know how the many Liberals listening to my remarks today are. They had to cloud the issue.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

We are all here.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

You are all here. Fine, they are all here listening carefully to what I am saying. They should listen more carefully, this way they would speak less nonsense than they have in the past little while.

That having been said, more seriously, the government confused the issue somewhat by putting together a bill containing a series of tax treaties between Canada and various countries which we cannot all treat equally because of their respective tax systems. Around the world, there are countries with tax systems very similar to that of Canada and countries with completely different tax systems.

We would have liked—this is admittedly a criticism I am making this morning, but a constructive and very positive one—Bill C-10 to deal exclusively with the American issue, a second bill to deal with other countries with a tax system similar to ours and a third one to deal with countries with a tax system completely different from ours.

It seems to me that this would have been less confusing and, particularly given the urgent, pressing need of many Quebeckers and Canadians and the fact that the United States are withholding money, I think that a tax convention, a bill dealing specifically with the U.S. would have helped expedite matters. These people who have been waiting for a cheque from the U.S. would have received it by now if we had worked diligently on preparing separate bills to expedite the process.

But the Liberals crammed everything into a single bill. For example, the purpose of parts 1 to 5 is to implement income tax conventions that have been signed with Sweden, Lithuania, Kazakhstan, Iceland and Denmark. These are countries with taxation systems that are, by and large, quite similar to Canada's.

The purpose of these conventions is to avoid double taxation and prevent fiscal evasion. They are based largely on the OECD model. It is not a case of reinventing the wheel. What is good is retained and used in the conventions with these countries.

There are also other countries with taxation systems less similar to ours, however, and a convention has also been produced to help in these cases. There is a tax convention signed with these countries. But many of them are considered to be countries where the rich hide their money, so-called tax havens. It is somewhat disappointing that they have all been lumped into one bill, Bill C-10.

Let us compare Canada's taxation system with the taxation systems of these countries. As I said earlier, a comparison of the maximum corporate and individual income tax rates reveals some differences and some similarities. For instance, the maximum corporate rate in Canada is 30.74% and the maximum individual rate is 52.94%.

In Sweden these percentages are similar. But in Lithuania, while the maximum corporate tax rate is 29% instead of 30.74%, not a major difference, the individual tax rate is 35% compared with Canada's 53%. You can immediately see the clear advantage for businessmen with a bit of money to pay their taxes in Lithuania rather than in Canada.

There are rather significant differences at various levels. One thing which is not really a concern, but which must be addressed is the fact that, over the years, Canada has signed many treaties with other countries. The figures I am quoting were given at a meeting of the Standing Senate Committee on Banking, Trade and Commerce, held on April 24, 1997. As of April 24, Canada had signed 57 tax treaties that were in effect between Canada and various countries, while 34 other ones had yet to be ratified.

As a member of the opposition, one wonders—again, this is not a negative criticism, on the contrary—whether the government allocated adequate resources to ensure a follow-up on all these conventions.

The tax treaties signed between countries are usually not for the benefit of ordinary citizens. Ordinary people do not have bank accounts in Switzerland or in Barbados, and they do not do business with Lithuania, Denmark, the Netherlands or the United States. Usually, the provisions of these treaties are used by multinationals, or by very wealthy people who have accounts here and there, such as in Switzerland or Barbados, and who travel frequently.

As an opposition party, we are the keepers of this government's sometimes deficient moral rectitude, and we have the right to wonder whether there are sufficient resources. With 57 treaties already signed and 34 other ones to be ratified—and more have probably been signed since April 1997—we wonder how many public servants are following up on all these conventions.

Mr. Speaker, I hope you are firmly seated in the Chair, because the committee learned that only one public servant was conducting this follow-up work. Thankfully, this person is working full time, which is something, given the cuts made by the government. We know there is an official monitoring this full time.

It is not being critical in a negative way to say that more than one official would have been better, considering what has gone on in the past and how people have been tricked in Canada and in Quebec. I think taxpayers, Quebeckers and Canadians, have been had in the past, including at roughly this time last year.

Of course, I am referring to the scandal of the family trusts. Everyone knows that it is rather frightening when officials, just before Christmas, can have a little meeting and decide to allow companies to send money outside Canada without paying any taxes. We are not talking here about $100, $1,000 or $100,000, we are talking about billions of dollars. I think that taxpayers, in these difficult times, could legitimately expect that there would be fair treatment for these companies but that they would be treated fairly too.

People who have means, who have two billion dollars in liquid assets and who want to transfer this money can afford to pay for very good legal advice, for good lawyers, but also for good tax experts. I am not saying that what they did was illegal, but it was certainly immoral, I want to state that very clearly, especially since everyone in Canada and in Quebec has to pay taxes, their fair share of taxes. I do not think it was proper for them to transfer this money without paying their fair share.

There are also other examples, when tax treaties are applied, when companies can afford good advisers, we see that certain people, certain companies can sidestep the law and avoid paying their fair share of taxes.

Briefly, I will give you a small example everyone knows about, Canada Steamship Lines. Everyone knows what that company is. Everyone knows that it is a Canadian company, but that its ships fly the flags of other countries, including Barbados and various countries. But why is that? It is to avoid paying their fair share of the taxes that they should be paying in Canada. This is not normal, especially considering who owns these ships. It is not normal that in Canada people should do such things.

Is the Bloc's criticism negative? No, this is positive criticism. We want as much as possible—

[Some hon. members]

Hear, hear.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

I do not understand why the Liberals are not applauding me this morning, when what I am saying is a self-evident truth.

I think it is normal for the opposition parties, including the Bloc Quebecois, which are seeking the greatest equity for the people of Quebec and Canada, to try to get legislation that is as free of flaws as possible. We want to remedy those flaws. These two examples, I think, are striking. What is involved here is not to have huge quantities of international tax conventions. We just want to have quality tax conventions so that there can be proper follow-up and everyone can pay his or her fair share of tax.

Earlier, the government member, the hon. member for Broadview—Greenwood, was criticizing Reform members. He was accusing them of giving up on tax reform.

I understand why he did not say this about the Bloc Quebecois, because we have been talking about tax reform for a long time for both corporations and individuals.

If we look more specifically at this morning's topic, international tax conventions, I can refer you to two proposals made by us in the fall of 1996 focusing on corporate taxation.

This could have been included in international treaties as part of a mini-tax reform. It did not have to be a major reform, but they could at least have shown some degree of good faith in ensuring that it is not always the same ones who have to pay. I believe that a certain equity must be sought, and I can understand the taxpayers who are sitting in their living rooms and watching the government members over there. They are saying that the same ones always end up paying, and I understand that.

The government has thus missed a great opportunity to show its good faith with this bill. One of the proposals made by the Bloc Quebecois in the fall of 1996 is the deductibility of interest charges. When a Canadian company has a branch in a tax haven, not only does it first of all take advantage of very low tax rates on profits earned outside the country, but it can also deduct from its income earned in Canada the interest on loans used to invest in that offshore branch. We think the tax system is too generous in this case.

We would also have liked the government to amend the Income Tax Act to put a stop to this abuse. I think everyone has got the point, but so people understand better, I will give you a specific example. I have a company in Barbados; I borrow money in Canada to invest in Barbados to increase my profits in Barbados; I pay practically no taxes in Barbados, but, moreover, I deduct my interest costs in Canada. This is a bit crazy. I think the government could help people by putting a stop to these tax shelters.

The other proposal—and I will be brief, because time is passing quickly—concerns the deduction for intercorporate dividends. When a Canadian company has a subsidiary in a country Canada has a convention with, the dividends paid by the subsidiary to the parent company are not taxed in Canada. There are certain conditions, but they are easily met. This Canadian rule is much more generous than what is done in the States.

We asked the federal government to amend the Income Tax Act in order to tax foreign subsidiaries in Canada and to give a credit to them for tax already paid. That did not come about, but you know how determined the Bloc is. When we have an idea we do not let go of it, especially when it is a good idea like Quebec sovereignty and income tax issues. We will continue, we will keep at the government and perhaps soon, the government will concede as it did with Bill C-10 on the tax convention between Canada and the United States.

I repeat, and I conclude on this point, this was a real battle horse for the Bloc. We won. We were there for our constituents and we will be there again, every day, until Quebec becomes a country.

[Susan Whelan, Liberal, Essex, ON]

Mr. Speaker, I believe the hon. member has just mentioned the importance of this bill and the time urgency of it as it affects Canadians receiving U.S. social security. This includes all Canadians, not just seniors but those who are disabled and spouses and children of those who worked in the United States.

I believe the hon. member has already partially corrected the record where the member for Edmonton—Strathcona earlier said that it was rushed through the industry committee.

As chair of the industry committee I want to confirm that I spoke to every member on the steering committee, including the member who represents the Reform Party. It was agreed by all parties that we would have no witnesses because of the urgency of this bill and get it back to the House as quickly as possible for debate. It was not that witnesses were disallowed.

For two years this bill has been debated. For two years this issue has been out there. If the Reform Party wanted to do its research, it would see that this has been going on for two years. As the member for the Bloc said, it has been going on too long. It is now before the House and we must deal with this as quickly as possible.

I hope that all members will recognize the importance of getting the refunds back to people as quickly as possible. We must recognize the importance of this bill to put Canadians on parity with their neighbours who live next to each other whether they are seniors or not seniors, that those who receive income will pay their taxes based on what they should pay. We recognize that they pay tax on U.S. social security by the fact that they are only going to include 85% and not 100% of their income whereas their Canadian neighbours who worked in Canada and receive only Canadian benefits will pay tax on 100% of their income.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, the member is right about not hearing witnesses in order to speed up passage of the bill, given the Bloc Quebecois' repeated demands, given that we understood that we would not be getting separate bills, as I was saying we would have preferred, but so as not to further delay implementation, given that the government had not acted as quickly as we would have liked.

The federal machine can only move so quickly, however. We therefore did agree with the government not to hear witnesses. These were issues the Bloc Quebecois and the Liberal government looked at very closely. We therefore knew where we were headed. There were precedents: Canada had signed several international treaties; that was also on the agenda. There were also treaties with the OECD.

What it all boils down to is that we have this bill. It is not what we would have liked, but I think that at this stage, in the interest of speed, all parties, government and opposition alike, should cooperate in order to ensure the speediest possible passage of this bill, the purpose of which is to have everyone paying their fair share of taxes.

This does not mean, however, that there is no need for vigilance. It does not prevent the government from taking a very close look at its tax system to ensure that corporations taking advantage of tax havens are not encouraged but, on the contrary, watched very closely. We are therefore going to cooperate in ensuring that this bill is passed as quickly as possible.

[The Acting Speaker (Mr. McClelland)]

Questions and comments. Hon. members, we have just a couple of minutes before we go to statements by members. If we have enough of the members in place, let us get started with statements and we will come back to the hon. member for Churchill on debate because he would have to be interrupted after about two minutes.

We will now proceed to Statements by Members.

Canadian War Museum

[David Pratt, Liberal, Nepean—Carleton, ON]

Mr. Speaker, as the Canadian War Museum moves forward with plans for a long awaited expansion, I am very pleased that an advisory committee has been established.

The war museum holds a special place in the hearts of many with its mandate to stand as a memorial to those Canadians who defended peace, freedom and democracy.

It is essential that Canadians of all ages as well as future generations be informed and reminded of Canada's proud military heritage. Those concerned with the future of the museum, such as veterans groups should become actively involved in reviewing and commenting on future policy proposals.

It is intended that the Canadian War Museum advisory committee would work together with the war museum, the friends of the war museum and many other organizations that care deeply about the future of this institution.

Not everyone can make the pilgrimage to Vimy Ridge or Dieppe, but by working together we can ensure that the war museum explores new ways and continues to be a focal point for national remembrance.