Mr. Speaker, if the government wants to appoint me as minister and if it would actually table its documents, maybe I would reciprocate. That is part of the privilege of the House: to keep democracy going in this process. I am going to finish reading the document. The end of the quotation is very important:
Thus, business profits associated with service activities could be subject to taxation for many Canadian companies. These rules are currently set to take effect January 1, 2010 if ratification occurs during 2008.
Therefore, what we have here is the situation of a service industry that could have new taxation added to it through this process. We know that right now there are some concerns with the service sector and the economy and we do not have a full economic analysis of it. That is what is troubling about this bill being brought forth in this manner.
There could be some very valuable elements to the treaty. I think there are. There are some general things that are very good, but at the same time, why do we not have those answers? I find that very difficult to accept, especially given that this is an opportunity to correct historically significant problems.
I also want to touch on the issue of social security and Canadians who have paid in the U.S., are doing so now and face extra taxation. I am going to read another very important letter that talks about the history of this change.
Once again, this bill is not going to address the issue of those Canadians who had the tax treaty altered on them. The government is going to send them to some arbitration process, which is not even described. It could take literally years. We have no idea. And that is if they win, let alone having to go through that and relive the whole situation. That is a real concern, because the government has a private member's bill from its own member for Essex, who has been pushing that issue, and the government has not even listened to him.
Why the government is not adjusting that specifically in the bill, I do not know. Why it is turning its back on many residents of Ontario, Quebec and New Brunswick, I cannot understand. I want to read the letter for members because it describes, for the record, what has been happening to these ordinary Canadians. It describes what took place with the tax treaty and how it affects them and their lives. The letter comes from Mr. Craig Ridsdale and is entitled “Unfair Tax Laws Burden Seniors”. It states:
Many Canadian seniors across Canada have been sitting on their hands since 1997 waiting for the Liberal government to move forward on a pledge made to them to rectify a system of taxation that threatens to leave many of them, particularly low income seniors, in a very difficult financial situation.
In 1984, the Canada-U.S. Tax Convention Act was implemented, primarily to protect the citizens of both countries from being taxed twice on their pensions, be they Social Security in the States or the Canada (and Quebec) Pension Plan here in Canada. However, differences in our taxation systems (Canadians pay taxes when collecting benefits while Americans pay the taxes on their contributions) has meant that Canadians receiving Social Security benefits were being taxed twice.
A series of protocols to amend this bill have made matters even worse for many retirees. Specifically, the third protocol, implemented in 1995 and applicable for the 1996 fiscal year allowed the United States government to charge what amounted to a more than 25% withholding tax on Canadians' pensions. Previously, the second protocol to this treaty allowed only the country of residence to tax social security benefits. For many retired Canadians who paid into the American system over the span of their working lives, what this meant was that over one quarter of their income essentially disappeared overnight.
The fourth protocol, implemented after the disastrous third protocol, allows the Canadian government to tax 85 per cent of Social Security, an increase from the 50 per cent agreed upon in the 1984 act. It also provided the government with the latitude to reduce the 85 per cent limit which it has refused to do.
Since 2001, Canadians Asking for Social Security Equity (CASSE) have been lobbying the federal government to either restore the Second Protocol or at the least grandfather its provisions to include all seniors who were negatively affected by the Third Protocol. To this date nothing has been done.
It is also important that the current Secretary of State for Multiculturalism had a private member's bill on this back in 1998, so what is really troubling about this is that we have a pattern between the Liberals and Conservatives, who all have said that they want to fix the tax treaty.
Once again we are talking about pensioners, seniors, who are living in Canada. They worked abroad, they paid their taxes there and they paid their taxes at home, but when they actually got their social security benefits things changed and they now get taxed even more on those benefits. That is why the private member's bill to correct this would have been a more equitable situation. Why the government has not done that is unacceptable. This is a real hardship for many people.
We have had testimony at the House finance committee by individuals affected by this. They have come forward and talked about people in their circle who have been fighting this and who have died and about how others have had to sell their homes and how others are having a hard time getting back to the quality of life they thought they were going to enjoy when they retired. That is important, because the human dignity aspect has been lost with regard to this taxation bill.
We were talking earlier about the member for LaSalle—Émard and his issues related to his steamships, to his company and the flag and so forth. This issue is so important. I remember that in Windsor when the member for LaSalle—Émard, as finance minister, was attending the Caboto club, one of the most memorable moments was the fact that he had to slip into the kitchen to avoid the demonstrations out front. He used the back door and walked through the kitchen to go to the event as opposed to meeting with the individuals who were affected by this taxation policy that had been changed.
There have been many statements made by Liberals and Conservatives both, who are fighting over this. Members of the NDP have been consistent on it. What is unfortunate is that it has not led to any changes. I cannot understand that. I cannot understand who in their right mind would want to create an arbitration process for seniors at a time when they need their issue addressed now.
The member for Burnaby—New Westminster was right to ask the government and its officials how much this tax treaty is going to cost. What they estimate is half a billion dollars over three years. That is what is going to be lost in terms of government revenue.
We do not know whether the banks are going to enjoy that money. We do not know who is going to be the real net beneficiary of that arrangement. What we do know is that to fix this historic problem related to seniors who had double taxation, and who were caught in this crossfire of tax treaty analysis and neglect through the United States negotiations, it would cost around $60 million.
Thus, we have $1 billion for that sector, which we do not even have a prescribed analysis from. The department said it would come back with more information. At the same time, it would cost around $60 million if we did not tax at an increased rate seniors who paid their social security in the United States.
That is bizarre, because we know from the evidence presented to us that those individuals are going to spend that money in this country. They are going to use it to get by. They are going to continue to renovate homes and to be in our communities more, and they are going to be able to pay off some of their debts. That is important, because that economic push comes to that collective group.
I cannot understand this. Maybe it has been the hostility. I went on a national campaign for a seniors' charter of rights, which passed in the House of Commons. The member for Hamilton Mountain did a terrific job and pushed the issue through, but we have not had full implementation of the charter. The House and the government have ignored seniors in many respects.
I do not know why they are motivated to move in this direction. In conclusion, I find it really frustrating that the Liberals have joined with the Conservatives on this issue to prevent debate, analysis and full due diligence.
We do want to see our tax treaties updated. We are not opposed to that. They are very beneficial in many respects. Living on the Canada-U.S. border as I do, I have spoken at length in the House of Commons about the Windsor-Detroit border and its importance. We are not opposed to going forward on this, but why, for heaven's sake, are we not doing it properly? Why is it so convenient to let this group of seniors be basically thrust to the side, forgotten and left out of the whole picture? Why is that being contemplated? Why is that being allowed?
Why have the Liberals joined with the Conservatives to prevent the debate about this to even take place? I do not understand that logic. I do not understand why they could not at least have some hearings to get to the root of this structure or maybe move an amendment to fix the situation.
It really shows the lack of influence, I think, of the member for Chatham-Kent—Essex and the whole area around there and of the Conservatives in southern Ontario. When they have a tax treaty this significant and an issue that has been a thorn in the side of the Liberals because they broke promise after promise on it, an issue that has been politically manipulated over the years, they have chosen not to do anything on it in this bill. That is remarkable in itself. It speaks to why the ineffective Conservative caucus of southern Ontario is basically being swallowed up by the oil companies, because the petroleum club is served only by the government.
The Conservatives could not even get a minor tax treaty agreement passed to protect seniors as they had promised in their campaign. This shows disinterest. It also shows arrogance, which they have quickly adopted from the previous government. They are going to have to explain to people why they have to go through arbitration to get this fixed. This is going to be very traumatic.
It is a shame that we did not do the proper due diligence. The member for Burnaby—New Westminster wanted to bring forth witnesses to vet this so it could be a better bill and give us a better tax treaty. Most important, it would give us the chance to address historical problems that the House has never dealt with before.