Mr. Speaker, there are days like this when we must promote the interests of the Bloc and Quebeckers. We have before us a bill with a title that is a bit long and a bit grand-sounding, namely, An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation—the first objective—and the prevention of fiscal evasion with respect to taxes on income—the second objective. Are these objectives being met?
Everyone, particularly those who have done business abroad based out of Quebec or Canada, knows that taxation is a very complex area that only becomes more complicated with each budget speech. Sometimes people ask us why taxation is so complicated. It is because, every year, we have finance ministers who go into all of Canada's legislatures or national assemblies to announce what they plan to do. Since 1867, I do not think that Canada has ever seen a single finance minister stand up to give a budget speech and simply say that the taxation, treaties, taxes and fees are fine as they are and that no changes are needed, and then sit back down. This is the ideal, but it has never actually happened. Instead, each year, more and more layers are added to the giant fiscal onion making it harder and harder to digest.
This type of bill emulates treaties that prevent a source of income from being taxed twice for the same purpose. I am using this term because personal income, in Quebec for example, is taxed once by the Government of Quebec and then a second time by the Government of Canada or vice versa. Thus, it is not unusual for income to be taxed twice in Quebec, Ontario, Nova Scotia and elsewhere. That is an everyday occurrence.
Under this legislation, at the international level, income would be taxed by the country where it is earned or by the country where the taxpayer is a resident. There are thousands of treaties. The OECD has a model tax convention that has been used thousands of times over. Canada has about one hundred such treaties.
Which tax jurisdiction will apply? In the case of remuneration, a person's income will be taxed based on their residency, no matter where they earned the income. Thus, the parliamentary secretary from Calgary will be taxed by Alberta. Or, if I am from Hochelaga, my income will be taxed by Quebec under the treaty because I am a resident of that province. The residency rules are considered next. For example, to be considered a Quebec citizen with income taxable by Quebec, one must have lived there for at least six months plus one day.
Under international agreements, capital gains will also be taxed by the country where the asset that gave rise to the gain was sold.
The earnings of a company should be taxed based on its residency, or if the company is established—with a subsidiary—in a foreign country, local taxation laws apply. And that is where a number of problems arise.
For dividends, interest and royalties, each country basically gets its share. In the agreements we have before us with Colombia, Greece and Turkey, this varies between 5% and 15% for dividends. It is 10% for interest and 10% for royalties. That tax is payable to the foreign country and is deductible from taxes paid in Canada. So we essentially have an agreement. Why? To encourage free trade. Quebec has always been in favour of free trade. Everyone in Quebec and Canada knows that Quebec was the driving force behind the Canada-U.S. and Canada-U.S.-Mexico agreements. It goes without saying that Quebeckers support it.
But the tax systems must be comparable. We must ensure that the Canadian and Quebec tax systems are comparable to that of the country with which we are signing a tax agreement.
We have three countries here. For example, Quebec exports to Greece, Colombia and Turkey represented $550 million in 2009. So we cannot say that these three countries will change anything for Canada or Quebec with respect to international trade. With all due respect, that is rather minimal. For example, among these three countries, we do the most trade with Greece, and that represents only 0.64%, or one-third of 1%, of our imports.
In principle, we agree with it. We need to know the difference in the application, since we want to avoid double taxation, but we do not want this arrangement to encourage tax evasion or tax avoidance in the countries in question.
We apply section 26, as suggested by the OECD. Section 26 is often mentioned in these agreements. In Canada, we used it once with the Canada-Netherlands agreement on the Dutch Antilles in 2009. We applied the OECD principles to the letter. That is one country out of 87. As for the rest, it seems as though either the Canadian political system or the negotiators are in a hurry to go slow.
For example, there are 14 countries. And I remember that these negotiations were mentioned at second reading. They have been negotiating since that time. What are they negotiating? What are they discussing? Are they exchanging documents? Are they just chatting and visiting? We do not know. There is Anguilla, Aruba, the Bahamas, Bahrain, Bermuda, Gibraltar, Guernsey, and all kinds of islands, such as the Cayman Islands, the Isle of Man, Turks and Caicos, the British Virgin Islands, Jersey, Saint Kitts and Saint Lucia.
They are negotiating. But what has been happening in the meantime? We are beginning to wonder if Parliament can have a say in it and not just be asked to pass a bill and its schedules.
We think that we should have some say. What has been happening while they have been in talks with the 14 countries I just mentioned, which are not exactly large industrialized, trading or manufacturing countries? In 2008, Canadian direct investment in Barbados, Bermuda and the Cayman Islands totalled $86 billion. Canada is in talks with these three countries, but does not have agreements with them. They represent 14% of Canada's direct investments. That is a lot.
In 2000, direct investments totalled $33 billion, compared to $86 billion in 2008. After eight years, investments were 2.6 times higher. Using a cumulative interest rate, this equals an annual increase of 12.7%. How could we, from 2000 to 2008—remember 2009 and 2010 are not included—have gone from $33 billion to $86 billion of direct foreign investment in countries that are considered to be tax havens? All that time, there have been so-called talks.
We want the negotiations to produce results. We want them to sign agreements following negotiations with these countries. We want them to come to the House to report on all of these agreements.
The former revenue minister, who is responsible for these agreements, said at one time that tax agreements between countries should be as unrestricted as possible. I would love them to be as unrestricted as possible, but there have to be some restrictions. That is why we think parliamentarians need to get the information directly. It is good to have information, but that information needs to be accurate and complete.
The OECD has defined tax havens. What does the OECD say about tax havens? They are countries with little or no taxation. I was saying earlier that we agree that Canada and Quebec should enter into international agreements with countries that have similar tax rates. When tax rates on dividends, corporation income and individuals are similar to those of a tax haven with very low tax rates, we need to ask some questions.
Furthermore, since the bill very clearly says that the goal is to prevent tax evasion, we need clear, transparent information.
Just a couple of hours ago, I spoke to another bill, the bill concerning information the PBO was requesting from the government. As we said, the danger is that the government would ostracize the PBO and prevent him from getting accurate information.
Once again, for the second time in less than two hours and regarding another bill, we are saying that the information we get from countries with which we want to negotiate must be accurate and clear, not like pea soup. Clear information is needed.
We also need to avoid all legal and administrative barriers. We are coming up against more and more administrative barriers when trying to get this information. Requesting information is all well and good, but we need to obtain the information.
Again, I am referring to the Parliamentary Budget Officer's statement in fall 2010 that he still had not received the information requested from the government in June 2009. That is an administrative barrier. Is the government becoming a tax haven for information? It is not far off the OECD definition of one.
According to the OECD, to determine whether a country is a tax haven, you have to ask yourself whether the country advertises or invites other countries or businesses to invest in it because of its rather lax tax system. Quebec might invite countries to invest in it for its technologies, aerospace sector and people who understand hydroelectric energy. In this country we truly have the information, technology and resources. However, when a country invites us to invest in it because it has a rather lax tax system, that is the definition of a tax haven. It is a very good definition because it is easy to understand.
On April 1, 2010, the OECD came up with a grey list of 17 countries that are making efforts to move from the black list to the white list by signing a few treaties. However, we have to be careful.
I am all for signing tax treaties with countries such as Belize, the Cook Islands, Dominica, Grenada, Liberia, the Marshall Islands, Montserrat, Nauru, Niue, Panama, Saint Lucia, Vanuatu, Brunei, Costa Rica, Guatemala, the Philippines and Uruguay, but let us be careful.
A tax treaty has to include five conditions: exchange of relevant information, no restrictions, the possibility of accessing information, respect for rights and complete respect of confidentiality. Our electors and taxpayers are sometimes sick of the agreements reached with that type of country. They get the impression that rich people or people who work for companies that have the means to go elsewhere take advantage of the situation to benefit from the tax rate that simply cannot be compared to the tax rate here. They are fed up and they wonder why they are paying so much tax when others who are much wealthier pay far less in tax.
In closing, all these treaties should respect the commitments already made by the Conservative Party. The House should take part in the process and the government should also respect the jurisdiction of the provinces and Quebec.