Debates of Nov. 9th, 2001

*Question No. 66

[Jim Pankiw, Canadian Alliance, Saskatoon—Humboldt, SK]

With respect to the Agricultural Income Disaster Assistance program (AIDA), what has the government determined to be since its inception: ( a ) the total amount paid out to farmers in each year by province; and ( b ) the total administration cost associated with the program in each year?

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, I ask that the answer to Question No. 66 be printed in Hansard as if read.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

[Karen Redman, Liberal, Parliamentary Secretary to the Minister of the Environment]

With respect to (a) the 1998 AIDA program received over 52,000 applications and approximately $688.3 million was paid out. The breakdown by province appears below. The 1999 AIDA program received over 51,000 applications and approximately $900.6 million was paid out. The breakdown by province appears below. To date, 1999 AIDA payments have been made at 95% of the federal share. Producers will soon receive their remaining portion of funds available for the 1999 AIDA program. In order to keep administrative costs to a minimum, AIDA was delivered through existing administrative processes in provinces where the Government of Canada did not administer the program. With respect to (b) the total national administrative expenses for the 1998 AIDA program were $33.7 million. The total national administrative expenses for the 1999 AIDA program were $54.2 million.

Questions on the Order Paper

[Karen Redman, Liberal, Parliamentary Secretary to the Minister of the Environment]

Mr. Speaker, I ask that the remaining questions be allowed to stand.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

The House resumed consideration of the motion that Bill S-31, an act to implement agreements, conventions and protocols concluded between Canada and Slovenia, Ecuador, Venezuela, Peru, Senegal, the Czech Republic, the Slovak Republic and Germany for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

Income Tax Conventions Implementation Act, 2001

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, it is a pleasure to speak to Bill S-31, an act to implement income tax treaties between Canada and various other countries, namely, Slovenia, Ecuador, Venezuela, Peru, Senegal, the Czech Republic, the Slovak Republic and Germany.

This bill goes along with the coalition's position on approaches to international trade, international business and international agreements. Certainly with recent events it is obvious we are going to be broadening our international interests. This type of treaty is important.

There are two reasons to justify why the bill was brought forward. One is to avoid double taxation on foreigners working in Canada. The other is the prevention of evasion of taxes by foreigners working in Canada. I suspect the latter was the real catalyst that brought this bill to fruition.

We support the bill, but we would like to put some issues on the record about taxation. The bill raises other issues. In regard to competitiveness it tries to bring us into line with our international agreements and competitiveness, but there are other parts of our taxation system which leave us very non-competitive.

The first purpose of the bill is to remove barriers to cross-border trade and investment which is obviously in our interests as a trading country. Canada is very dependent on trade and it is important to us for this reason.

The second reason is to ensure unintended consequences, which means to not have tax evasion. This is done through the bill in a number of ways. It allows tax authorities to deal directly with each other to solve international transfer pricing issues, complete audits and engage in other discussions aimed at improving tax administration. Mostly it opens the lines of communication and sharing of information, which raises some concerns which I will deal with in a second. Basically, we agree with this philosophy, but it does raise concerns that should be watched. We must be careful and prudent.

With respect to the Canada-Germany agreement, this is the only set of treaties that provides for mutual assistance in the collection of outstanding taxes. We have other agreements with other major countries, including the United States and the Netherlands. We tend not to have such agreements with smaller partners.

Parts 1 to 7 of the bill implement tax treaties with Slovenia, Ecuador, Venezuela, Peru, Senegal, the Czech Republic and the Slovak Republic. This is the first time that Canada has concluded a tax agreement with any of these states.

The tax treaties implemented by this bill reflect efforts to update and expand Canada's network of tax treaties, so as to have better access to information back and forth. This will increase the ability of Canadian companies to invest and deal in these other countries through financial agreements, business agreements and treaties.

There are some of the pros that we recognize. It goes along with a broader vision of international trade which the coalition and the Progressive Conservative Party have really established and led the way on with respect to free trade agreements. We have been traditional leaders in reducing the taxes and trade barriers between countries.

There is strong support for the bill in our party. Income tax conventions have been signed with countries where a commonality of security and other linkages was sufficiently and traditionally entrenched. In that way there would be some confidence in their taxation systems and they would mirror ours. There would be consistencies at least in the two systems.

The bill primarily seeks to serve the best interests of Canadian investors and the Canadian government. We support foreign trade. The bill allows countries that are not fully developed to create quality jobs and allows us to export our abilities, technologies, services, money, traditions and values. All of those certainly hold a lot of appeal especially to smaller countries. This will help us provide those services.

Canada's philosophy has always been to promote the economic progress of these countries. The more the wealth is shared, the more jobs and the more opportunities there are to educate the public. Again, the more the wealth is shared, the more stresses and tensions between countries are reduced, with a resultant lowering in terrorism acts and all kinds of different manifestations of misunderstandings and hate.

The more we work with other countries the more we understand each other by sharing cultures, business, educational ties and health care ties to better the chances of avoiding things like September 11 and the ongoing threats of terrorism.

We have some disagreements with this proposal which does not focus on the tax issues. They focus on the human rights records of some of the countries involved. We feel that we should encourage countries to increase their focus on human rights as part of these ongoing negotiations.

We do not want to be seen endorsing countries that have bad human rights records. We could be perceived to be endorsing their policies by signing treaties with these countries. We want to ensure that is not what we are doing. We are signing business treaties and not endorsing human rights policies.

There are parts of the bill that we applaud. The bill was in fact referred not only to the Senate banking committee for the study of tax conventions but also d to the foreign affairs committee for the study of human rights aspects. That was a good feature of the bill and we would support future bills of this nature going through the same process.

Canada's influence has expanded into other countries around the world. The tax department does not perform a full and complete country by country analysis of the acceptability of the taxation system and the procedures surrounding taxation to determine what issues in those countries were receptive to such an agreement. It goes back to the human rights issues and should be an integral part of the negotiation process.

Another issue that concerned us was the privacy aspect. There is a lot of information in our tax files on Canadian citizens. If a double taxation agreement was in place the information could and often would get into the hands of other countries. We want to ensure that our privacy laws and standards would apply to other countries that had access to our information.

The coalition supports the bill and encourages it as a further step in the enhancement of Canada's international relationships.

I mentioned earlier that the bill raises other aspects of competitiveness as far as taxation is concerned. There are many ways in which Canada is not competitive in its tax regime. The bill would attempt to bring some tax aspects in line with other countries. However it does not address Canada's income tax rate, which is much higher than the average rate of OECD countries, and many other aspects of our capital gains tax and other taxes that discourage competitiveness, investment and jobs.

The United Kingdom, Germany, Norway and Sweden have adopted more aggressive tax cutting strategies than Canada with respect to capital gains. Germany reduced its capital gains tax by 50%, Great Britain by 75%, and Norway completely eliminated all forms of double taxation on capital income. The United States has an accommodating capital gains rate of approximately 20%. Last year Canada reduced the capital gains inclusion rate to 50% putting it closer to the U.S. level of 20%, but there is still a vast difference. It discourages investment and people from withdrawing their funds from one investment and reinvesting in another way.

The coalition encourages the government to review taxation at all levels to see if there are other ways to reduce taxes which would put Canada in line with other countries in the same way it is doing with Bill S-31.

Committees of the House

[Karen Redman, Liberal, Parliamentary Secretary to the Minister of the Environment]

Mr. Speaker, I rise on a point of order. I believe you would find unanimous consent for the following motion. I move:

That the members of the Standing Committee on Citizenship and Immigration be authorized to travel to Washington, D.C. during the week of November 19 or the week of November 26, 2001 in relation to its Study on Security at Ports of Entry in Canada and that the necessary staff accompany them.

[The Deputy Speaker]

Does the hon. parliamentary secretary have unanimous consent of the House to propose the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill S-31, an act to implement agreements, conventions and protocols concluded between Canada and Slovenia, Ecuador, Venezuela, Peru, Senegal, the Czech Republic, the Slovak Republic and Germany for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

Income Tax Conventions Implementation Act, 2001

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am again pleased to participate in debate in the House of Commons. It has been a little over eight years since I was first elected with the class of 1993. My hon. friend from Edmonton North used to tell us that we would probably wonder for a long time how we ever got here. We also wonder from time to time how some of our colleagues ever got here.

It has been a very interesting time. I feel particularly honoured and privileged to represent not only the people of Elk Island but hopefully the views of Canadians across the country as we discuss various issues.

I hope in my short intervention that I will be able to get past the first letter in Bill S-31. When I hear the letter S I think of various words. The letter S means that the bill originated in the Senate. I pretty well take every opportunity I can to put in a little barb in this regard.

The member from the NDP spoke about the Senate in his intervention. That party has the erroneous idea that it would like to eliminate the Senate. I would like to retain and strengthen it. I would like to see the Senate have a genuine democratic role to play in parliament. I wish its members were elected so they would have a high degree of respect and legitimacy in our parliamentary system instead of being, as so many have said, a source of patronage appointments. That is very unfortunate.

Some of our colleagues in the Senate probably work as hard as some of the lesser working MPs in this place, so we ought to be very careful.

The standing orders state that I am not supposed to say anything to denigrate any other member of parliament, including those in the Senate. I am very careful not to do that. However the fact that those individuals are not elected is a flaw. The bill is diminished by the fact that it originates in the Senate and that senators are not elected but are instead appointed at the will of the prime minister.

When I think of the letter S I also think of some other priorities that the government should have. Softwood lumber is an example of a high priority issue. The conflict in this regard is costing people in British Columbia and Alberta jobs on an ongoing basis. I would like to see our time in parliament spent on high priority items such as this one.

Another issue which is consuming Canadians and North Americans these days is the issue of security. I wish we would pay more attention in the House to the issue of security.

I think of Shawinigate and the fact that there is not enough accountability in government. I had a conversation with some people the other day from Alberta, not from my riding, about how we could make government more accountable. We had a pretty good indepth discussion on this subject. I said that one of the things we ought to do was to have more openness and public disclosure.

Government expenditures are subject to loose privacy laws. If taxpayer money is being spent, taxpayers should be able to see what it is spent on. We want to guard people's privacy, but at the same time we must be aware of some of the mismanagement that has occurred in government not only under the watch of the present Liberal government but also under the watch of the previous government.

There would be a much greater appetite for accountability if parliamentarians, cabinet ministers and bureaucrats knew that these things would become public, if not now, three or five years down the road. Disclosure is one of the things we all recognize as being an important feature. Other things came to mind when I saw the letter S. However I must move past the first letter and get to Bill S-31 that is before us today.

I do not hesitate to compliment colleagues when they do some really good work even if they are not from my party. I listened intently and with great interest to the speech given by my Bloc colleague, the member for Saint-Hyacinthe--Bagot. I recommend to individuals who happen to be reading this part of today's record in Hansard 10 years from now that they page back to that speech because it was an excellent one. I commend the member for it. He made many interesting points that were relevant to the bill.

We had a great time with the teachers this week discussing parliament, democracy and how government works. One teacher asked me how we get along with members of other parties. I said that we treat them with respect as friends and colleagues even though we may differ with their ideas. We are like a hockey team: When we are on the ice we fight like crazy but when we go to the restaurant after the game we are colleagues and friends.

I would say the same thing about the Bloc members even though we disagree very strongly and emphatically with the main reason for their being here. They have softened their stance a little bit in the last couple of years but they want out of the country. I disagree profoundly with that concept but at the same time they are wonderful people and I respect them. I have no hesitation giving an accolade to the member for Saint-Hyacinthe--Bagot for his excellent speech earlier today.

One of the things he talked about was the taxation agreement. He did not use the word tax avoidance, or at least it did not come through that way from the interpreters. The purpose of the bill is to make agreements with eight countries.

Canada has two reasons for making agreements with respect to taxation.The first reason is to avoid double taxation. It is not fair for people to pay taxes in the country where their business operates or where they may have investment income and also in Canada and vice versa. Someone who is from another country who has business interests or investment interests, or somehow earns income here should not have to pay taxes on both. This would make it impossible because if we take federal, provincial and property taxes into consideration, Canadians work approximately half the time for the taxman. Our total cumulative tax rate is about 50%. This is underlined by organizations such as the Canadian Taxpayers Federation proclaiming June 30 as taxation freedom day. We work for the taxman from January to the end of June and for the rest of the year we work for our families to provide for them.

If we had two countries that had similar tax rates, 100% of everything that one earned would go to the taxman. Double taxation is something to be avoided. That is one of the purposes of the bill. It would provide for agreements between Canada and the other countries so that only one country would tax the individual.

There are, however, exceptions. I do not know how many members have read the bill but it is a lengthy one. There are many different clauses in it that indicate a few exceptions where both countries could get a portion of the tax from earnings. I noticed one interesting clause that dealt with certain pension income.

I forget which country it was. It may have been with all of them, but I did not have time to check the similar clause for all seven or eight different agreements with respect to certain pension income. However I found it intriguing though, that with respect to certain pension income, the first $12,000 of income is considered tax free. There is no tax on the first $12,000 of pension income from the other country. When tax is paid on the amount over $12,000, lo and behold it is a single rate of 15%. I feel sort of good about that because as members know we have tried to work on reducing the punishment of people who earn money.

We say that if a person earns twice as much, let them pay twice as much tax. However under the graduated system, a person who earns twice as much could pay five or eight times as much tax, depending how much of that proportion they are hitting before they have used up their basic exemption.

It is very important for us to recognize that there is an important principle here, and I commend the government for utilizing that principle in this particular instance.

I could carry on at length about the bill. In principle, it is good because it solves the problem of double taxation for people who have business interests and who have earned income from more than one country.

The second one of course is the issue of tax avoidance. The actual preamble in the bill states that the purpose of it is to prevent fiscal evasion. That is basically a case of doing what we have to do so that we do not have to pay taxes at all. That is when Canada might think the person is being taxed in Slovenia and Slovenia thinks he or she is being taxed in Canada. Without an agreement that is specific, it could be that the person gets away with being taxed no where.

In conclusion, it is very important for us to have these tax agreements. I would like to see them enlarged, as my hon. colleague from the Bloc stated, so that we do not have people avoiding taxes or hugely reducing them by registering their companies in tax free havens and thereby avoiding their share of being part of the Canadian citizenry.

I would be remiss if I did not really emphasize that. We all know of some significant examples of individuals who have said taxes in Canada are too high and we agree with that. However they have a mechanism to avoid the taxes by simply moving offshore. We think that all citizens, including all members of parliament, should pay their fair share of taxes to fund a very good government that we should have, which would be one that spends taxpayer dollars in a careful way.

It is my intention to vote in favour of Bill S-31.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

The question is on Bill S-31 at second reading. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

Accordingly the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I rise on a point of order. I think you would find consent in the House to see the clock as 1.30 p.m. so that we may proceed to the consideration of private members' business.

[The Deputy Speaker]

Is it agreed?

[Some hon. members]

Agreed.