Mr. Speaker, I am pleased to have the opportunity to say a few words on Bill S-2. I am making these comments on behalf of the member for Kings--Hants, who is the official critic in this area but cannot be in the chamber at the moment.
As we are all aware, the bill lets Canada ratify income tax treaties with Kuwait, Mongolia, the United Arab Emirates and Moldova. Canada did not previously have tax treaties with any of these states. It also ratifies treaties with Norway, Belgium and Italy and corrects errors in the English version of the treaties with Vietnam, Portugal and Senegal. These treaties set out a framework for taxes on investment income flowing between Canada and other countries. They provide mechanisms to avoid double taxation and prevent tax evasion.
Over the past several years, Canada has negotiated tax treaties with about 80 countries. These agreements deal with problems that arise when residents of one nation earn income in another country. They are based on the model double taxation convention prepared by the Organization for Economic Cooperation and Development.
A key problem that these treaties address is that of double taxation. That can occur when the same person or business pays comparable taxes in two or more states on the same taxable income for the same period of time. For example, double taxation would occur if a resident of Italy were taxed in both Canada and Italy on dividend income received from a Canadian company. Preventing double taxation helps facilitate investment.
To prevent double taxation, each treaty limits the application of each country's respective tax law and ensures that taxes paid in one country are recognized in the other country as well. Limits on withholding taxes in the country where the income is earned are established. An exemption is provided for certain income that would otherwise be taxed in the country where it is earned.
The treaties outline the maximum withholding taxes that may be charged on different forms of income, such as dividends, royalties and interest. These will vary by country. When the income is then received in Canada, double taxation is prevented by subtracting the tax already paid from what would otherwise be payable on that income.
The treaties also provide for measures to prevent double taxation of income earned in Canada by residents of the countries concerned.
Another problem addressed by tax treaties is that of tax evasion, whereby income earned abroad is not reported in Canada. To prevent tax evasion, the treaties provide for the exchange of information.
A further area that needs addressing is one that transcends fiscal, taxation and investment issues, and that is the very important area of human rights. Canada must ensure that the countries we have tax treaties with recognize the importance of human rights. Also, it must be more than a perfunctory recognition. It must be a real and cognizant recognition. If some of these countries have a checkered history of human rights, then the government should undertake all steps to ensure that the human rights record of the foreign signatory is improved.
That issue was studied recently by the foreign affairs and international trade department and it indeed has reported back on it. The specific issue is this: Should Canada enter into double taxation agreements with countries possessing poor human rights records? The response from the department is as follows:
The protections that a Double Taxation Agreement...can provide for Canadian businesses (e.g., transparency, rule of law, and greater predictability/stability) are consistent with Canada's policy of encouraging governance, democratic and human rights reforms wherever necessary. The increased trade and investment that may result from such agreements can lead to economic development (an important factor related to the promotion of human rights) and provide additional vehicles for promoting Canadian beliefs and values--central among which are the promotion and protection of human rights. We encourage and fully support ongoing Canadian private sector efforts to work with stakeholders such as local communities, NGOs and labour unions to develop and implement innovative environmentally and socially responsible business practices.
For these reasons we would have no concern in finalizing DTAs with the following countries: Belgium, Norway, Italy and the United Arab Emirates. In doing that we would make these comments.
The UAE has acceded only to the convention on the elimination of all forms of racial discrimination and the convention on the rights of the child. Canada is not aware of excessive human rights violations in the UAE. Canadian concerns include the general lack of transparency in judicial proceedings and the fact that there are no elections or legal political parties in the UAE.
Mongolia is a party to all six major human rights instruments. Canada is not aware of excessive human rights violations in Mongolia. We are, however, concerned about the weaknesses of the penal system and reported discrimination against women.
Moldova has acceded to all six major human rights instruments. Human rights are generally respected in Moldova, and the concerns that Canada notes have to do with the problematic administration of governance and justice. Complaints arise, of course, about the mistreatment of ethnic Albanians on the grounds that they harbour separatists and terrorists, but the government and the governing system understand the need for reform and seem to be making progress.
Kuwait has acceded to all six major human rights instruments. Canada is not aware of any excessive human rights violations in Kuwait. Canada remains concerned, though, about the denial of political rights for women.
Just because the various countries do not have any egregious human rights violations does not mean that the human rights records of the various countries could not be improved. For instance, in regard to Kuwait, how can the government talk about Kuwait's humanitarian record as no longer egregious if it still denies political rights for women, who make up about one-half of the population? In Canada would this not be seen as egregious human rights violations?
Furthermore, what is the difference between gender and race with respect to human rights? What if the same violations were being made in Kuwait or some other country that we have a tax treaty with and one-half of the population was denied political rights and they were black? Case in point, we do not have a treaty with Cuba. I assume this is for many reasons, but one could surmise that one of the reasons is that Cuba does not have a great human rights record.
My point in all of this is that the government must be satisfied that the human rights records of these countries are on a par with Canada's or must at least be seen to be improving. After all, these countries want investment from Canada. In return, it is high time that any of these human rights violations be rectified. This is one of the positive effects emanating from globalization.
Our concerns notwithstanding, we support the bill.