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House of Commons Hansard #266 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was treaties.

Topics

Tax Conventions Implementation Act, 2013Government Orders

8:45 p.m.

NDP

Matthew Dubé NDP Chambly—Borduas, QC

Mr. Speaker, that is precisely the problem. The situation gets worse every year. It is a downward spiral. There is no light at the end of the tunnel. Every year, the government seems to make more and more cuts and does nothing concrete.

I will now come back to what I was saying in my speech. Not only is the government not making the necessary investment and giving CRA the resources it needs to fight tax evasion, but it passes up the opportunity to take part in multilateral discussions at the international level. This has been going on for years. Everyone seems to have the answer, but no one seems to know the results.

Tax Conventions Implementation Act, 2013Government Orders

8:45 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, we are dealing again with another closure motion. The most important thing we could ever face in the government right now is that we sign six fairly routine international tax treaties with six different countries.

Canada's international reputation with treaties is not good. Canada's international reputation with treaties is that we sign them and then we break them, or we sign them and we do not keep them up, or we sign them and ignore them. An example is the tax treaty we have now with the United States. If people are American citizens or people that the United States deems to be American citizens, because even people who are born here are deemed by the United States to be American citizens, if they come to Canada after the age of 14 and have children in Canada, those children are now American citizens.

A woman in Calgary wrote to me because she was experiencing some serious financial pressures as a result of the lack of updating of the tax treaty with the United States.

She had a disabled son who the U.S. determined was a U.S. citizen because she came from the United States when she was 15. That U.S. citizen son had taken advantage in Canada of the disability tax credit. She had taken advantage of it and he had taken advantage of it. As a result, they had some tax savings in Canada.

However, when they filed their U.S. taxes, they discovered that the U.S. government did not recognize Canada's disability tax credit and did not recognize the disability caregiver tax credit. As a result, any savings that they had were lost. Plus, they had to pay accountants $2,000 each time to file these taxes with the U.S.

Canada has not taken any action on that. We are by far the furthest behind when it comes to these treaties with the U.S., our biggest trading partner. By far, the greatest number of Canadians who are of American descent and who are accidental Americans, as it turns out, are affected by that. Yet here we are under closure dealing with these treaties which are routine. They are not, as the government has suggested, going to provide wealths of money to the Canadian government.

Therefore, this is part of a series, I think, of treaties that the Canadian government has signed that are not necessarily being kept up by the government.

I wonder whether these treaties actually go far enough and whether they will be kept up by the Canadian government, whether we will go after people who are trying to cheat on taxes in any systematic or realistic way.

We also have the examples of the Kyoto accord, which was an international treaty that was signed and then abandoned.

We have the UN Convention on the Rights of Persons with Disabilities, which was signed in 2010 and the government promised the UN that it would provide a report card in March 2012. We are still waiting and the UN is still waiting. This is another example of an treaty that was signed internationally and that was abandoned.

It is bad for Canada's reputation, a country that wants to sign tax treaties with other nations, that wants to be a progressive part of the tax system in the world, not just for tax purposes but for all kinds of purposes, for trade purposes, for environmental purposes, to have the ability to convince the United States to run a pipeline down through the U.S.

That is just a smattering of the examples of ways that Canada's reputation, internationally, has been suffering under the Conservative government.

Switzerland is one of the countries that is part of this bill. Right now, Geneva is hosting the United Nations Human Rights Council as we speak, which is looking into the issue of violence against women. We understand that Canada is reported to be disregarding recommendations on taking action against sexual violence against women and to be opposing sexuality education programs

Those reported actions are part of a trend of the government that I have noticed, which is leaving women out of economic action plan ads, leaving women out of suggesting that women's training should be equal to men, that women should be only trained as hairdressers and nail salon people. That is another example of the kind of attitude the government brings to these kinds of things. Women pay taxes, too. Women deserve the same kind of rights as men. Women should not be left out of the equation.

The government suggested that today was Tax Freedom Day, whatever the heck that means. I went on the Fraser Institute website to see what Tax Freedom Day means and, in fact, in 2009 Tax Freedom Day was last Friday. Therefore, we are going backward. We are paying more tax now under the current government. How did that happen? It was earlier in the year in 2009. Is it a mistake maybe? It is all lies, damned lies and statistics when it comes to facts and figures.

The government has also suggested that Canadians, on average, are paying $3,200 less in tax. Again, the Fraser Institute says that the average Canadian is paying $3,100 more in tax now than in 2006. Where does the Conservative government get these unabashed statistics about taxes? It is part of the government's responsibility to deal with these tax treaties with other countries and this is a fairly routine thing that we support, although we do not want the government to try to take credit for this bill doing more than it would actually do. This bill would not find a way to solve a tax cheat problem.

If $29 billion of money is waiting to be collected by the government, why is it not collecting it? More than signing this treaty, why is it not doing something about finding that money and putting it back in the coffers of the government? Can anyone imagine what the tax savings would be for ordinary Canadians if the government could find that $29 billion? Can anyone imagine the amount of good that could come from it? We could almost afford the Senate—no, we could not.

Tax Conventions Implementation Act, 2013Government Orders

8:50 p.m.

An hon. member

Not that much.

Tax Conventions Implementation Act, 2013Government Orders

8:50 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Not that much, no.

Under the Conservative government, the uber-rich in Canada actually pay less as a percentage of the overall tax pie than they did in 2006. The people in the 1% are getting hit less and less and the rest of us, the 99%, the ordinary Canadians, the ordinary working people of our country, are paying more.

Tax Conventions Implementation Act, 2013Government Orders

8:50 p.m.

An hon. member

That's unfair.

Tax Conventions Implementation Act, 2013Government Orders

8:50 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

That is completely unfair. This legislation does not actually deal with that, but it does deal with the notion of taxes, taxes that should be fair and should be treated fairly. People should not be doubled taxed. Yet the woman and her son in Calgary are being double taxed because they will pay tax in the U.S. that they did not have to pay in Canada, which is not fair.

There is also spectre of the government now deciding that it is going to use technology, as the member for Don Valley East suggested, to go after the tax cheats. I had a phone call from a constituent just last week when he heard about the great tax cheats out there who made the mistake, he thinks, of writing to the Prime Minister because shortly after that he was audited. This is a senior on a fixed income.

That audit determined he owed $80 from three years ago. He got a letter from Revenue Canada saying that if he did not pay that $80, he could go to jail for five years. If he agreed with the CRA, he could pay the $80, he would be fined and maybe not have to go to jail, but if he disagreed, he certainly would go to jail. That is what he thought was going to happen. He ended up paying the $80 and a $150 fine. Why are we going after this little fish in this big fish pond? There are so many more people who are evading taxes by so much more than that. By spending the resources to go after a poor senior who apparently did not pay $80 three years ago is doing ourselves a disservice.

Tax Conventions Implementation Act, 2013Government Orders

June 10th, 2013 / 8:55 p.m.

Conservative

Phil McColeman Conservative Brant, ON

Mr. Speaker, listening to the member's speech and knowing the party he represents is quite interesting. He talks about the notion of tax cheats, people who do not pay their taxes. The NDP knows that full well because there are members of its caucus, one being the critic for this very file, who have not paid their taxes. When he puts those people in that category, he is putting his own colleagues in that category. They are members of the House of Commons who have not fessed up and the Leader of the Opposition has not taken any action at all to ask those people to pay their taxes back and remove themselves from the party while they do that. We have heard nothing.

What is the member's opinion of that cheat situation?

Tax Conventions Implementation Act, 2013Government Orders

8:55 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, it is one thing to park money offshore and avoid taxes, but it is quite another situation for individuals such as those the member referred to, who are in fact paying their taxes.

There was a dispute, and they are paying the taxes. There is no question that the money is getting paid.

Ordinary working Canadians are paying taxes. These people are paying taxes, as any ordinary working Canadian could and should. The issue is not that; it is that the $29 billion that is not being paid to our treasury would go a long way toward alleviating some of the difficulties the government is in after losing track of $3.1 billion.

Tax Conventions Implementation Act, 2013Government Orders

8:55 p.m.

Liberal

Jim Karygiannis Liberal Scarborough—Agincourt, ON

Mr. Speaker, I wonder if my colleague would share his views on the taxes that should have been paid by former Conservative prime minister Brian Mulroney when he took the $300,000 and put it in the safe.

I wonder if he would also like to comment on whether Senator Mike Duffy should also be paying taxes on the $90,000 present that he got from the Prime Minister's Office.

Tax Conventions Implementation Act, 2013Government Orders

8:55 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, there are always good questions from that corner.

When a former prime minister admits to pocketing $300,000 in cash and not paying taxes on it until many years later, it calls into question some of what our tax system is all about.

The people being complained about are apparently not avoiding taxes, because eventually they paid it. The same is true of Mr. Duffy. If Mr. Duffy has received money in the form of a gift that he has not reported to the tax department, there are serious consequences.

Tax Conventions Implementation Act, 2013Government Orders

8:55 p.m.

NDP

Niki Ashton NDP Churchill, MB

Mr. Speaker, my colleague referred in his speech to the government's general doublespeak on issues, including tax fairness, and I would like to read into the record something that connects to the points he raised. It was said by Dennis Howlett, from the Canadians for Tax Fairness organization:

...the capacity of the CRA to go after tax cheats using tax havens needs to be increased significantly. While tax havens will require a concerted international effort, there is much more that Canada could be doing itself. The CRA internal audit document revealed that tax practitioners believe the CRA is not doing enough to catch or prosecute tax evaders.

Here we have a government that claims to be tough on tax fairness, when in fact we are hearing about significant cuts to the CRA and an inability to deal with the real issue of tax evasion and taxes being directed toward tax havens.

Could my colleague speak to that?

Tax Conventions Implementation Act, 2013Government Orders

8:55 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, cutting CRA at a time when the Auditor General says there is $29 billion out there that needs to be collected is a very strange move indeed.

If a government finds that there is money to be collected, it should increase the size of the tax-collecting agency and actually go after the very people who are hiding this tax.

The money in offshore bank accounts is not the money of ordinary working Canadians. It is not from the person running a mom-and-pop store on the corner of a street in Winnipeg or from people who are working for a living by putting in plumbing; it is from those with the ability and the wherewithal to hide money offshore.

Those are people much richer than you or I. Those are the people who are able to hide money, and we are allowing it to happen. The government ought to be spending a whole lot more money on the CRA to make sure those kinds of things stop happening.

Tax Conventions Implementation Act, 2013Government Orders

9 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, it gives me pleasure to rise today in the House to speak to Bill S-17 the tax conventions implementation act, 2013, at second reading. This is technical legislation that would implement Canada's recently concluded tax treaties with Namibia, Serbia, Poland and Hong Kong, as well as tax agreements with Luxembourg and Switzerland.

The conversation has gone far and wide and far beyond the extent of the treaties and what we are discussing today with respect to the legislation itself.

Bill S-17 is part of Canada's ongoing efforts to update and modernize its network of income tax treaties with other countries, which is one of the most extensive of any country in the world.

Canada has comprehensive tax treaties in place with 90 countries, and our government is hard at work on agreements with other jurisdictions in connection with tax evasion, if we want to call it that. The double taxation that we spoke of relates to occurrences between countries and to movements of income, capital and properties between countries.

I want to make it clear that Bill S-17 does not represent any new or significant change in policy and should be considered standard and routine, but very important, legislation. In fact, tax treaties covered by this bill, like their predecessors, are patterned on the OECD model tax convention, which is accepted by most countries around the world. The pattern has been set, and these treaties are negotiated along that line.

As respected international tax commentator Jeffrey Owens, current senior policy adviser at Ernst & Young and former director for tax policy at the OECD, has noted, “Quite simply, the OECD model has established itself as the means of settling the most common problems that arise in the field of international taxation”.

Once again I would remind members we are talking about international taxation and not taxation within the country and the residents of that country itself. Therefore, it goes without saying that the provisions in these particular treaties comply with international norms and are based on standards that are generally acceptable.

The tax treaties in this bill have been designed with three goals in mind.

The first is to prevent double taxation and provide a level of certainty about tax rules that will apply to particular international transactions. That is important. Every business wants to know what the rules are. Businesses want to have a measure of certainty and know what to expect, and of course we want to do away with double taxation to ensure that appropriate investments take place.

The second goal is to prevent avoidance and evasion of taxes in various forms of income flows between the treaty partners. If the income flow is simply done to avoid tax, it needs to be dealt with.

The third goal is to facilitate international trade and investment, both incoming and outgoing.

These goals are consistent with the findings of the 2008 report of the advisory panel on Canada's system of international taxation, convened by our government to make recommendations to enhance Canada's international tax advantage. Not only is Bill S-17 consistent with the findings of that report, but the panel's observations helped clarify the importance of today's legislation for the Canadian economy. This allows for investment to take place, it allows for jobs to be created, and it allows for the long-term prosperity of Canada.

According to the report:

Canada's system of international taxation is important to our country's competitiveness. At the global level, competitiveness is crucial to attracting high-value activities, spurring innovation, and creating skilled jobs. ... Improving the international tax system will enhance Canada's advantage to the benefit of all Canadians.

I will speak further about this legislation's specific objectives, but first I would like to highlight how the tax treaties help contribute to a competitive tax system in Canada.

As members will know, our government is committed to expanding Canada's network of tax agreements with other countries. Better transparency and information exchange for tax purposes are critical to ensuring that Canadian taxpayers report their income earned from all sources and pay the right amount of tax in Canada.

We are serious about combatting tax evasion through the negotiation of tax treaties and tax information exchange agreements, sometimes known as TIEAs.

Since 2007, our government has brought into force 16 such agreements, signed three others and is actively negotiating with 11 other jurisdictions, including negotiations launched last year with Panama. Not only that, but we have provided the Canada Revenue Agency with even more tools to conduct international tax audits and enforcement.

As a direct result of action taken by our government, Canada continues to contribute actively to the efforts of both the OECD global forum on transparency and exchange of information and the G20, in order to further support the effective implementation of the OECD standard by all jurisdictions.

Our government understands the importance of open markets and full participation in the global economy and has shown continued leadership on the world stage by opposing protectionism and trade-restrictive measures. Canada believes open markets create jobs and economic growth for people around the world.

Indeed, the advisory panel identified the importance of trade as a key driver in improving Canada's system of international taxation. As the report noted:

Cross-border business investment has become central to the world economy. Global two-way trade is important to Canada’s prosperity, as it is to that of other countries. New competitors are emerging, notably from developing economies. ... Canadian businesses need to be able to compete with them for investment on both the outbound and inbound fronts.

To support Canadian business investment abroad, attract foreign business investment at home, and strengthen our open economy, tax policy must keep pace with global trends.

Our government strongly supports cross-border trade and investment, but we must ensure that cross-border investment is not used to avoid taxes with complicated tax schemes. In this spirit, the advisory panel identified a type of cross-border transaction, generally referred to as “foreign affiliate dumping”, as being abusive. These kinds of transactions reduce the Canadian tax base without providing any significant economic benefit to Canadians and need to be dealt with by legislation.

The panel recommended that a targeted measure be introduced to curtail these transactions while ensuring that legitimate transactions are not affected.

Foreign affiliate dumping transactions often involve a Canadian subsidiary using borrowed funds to acquire shares of a foreign affiliate from its foreign parent company.

Consistent with the advisory panel's recommendation, economic action plan 2012 announced rules to curtail foreign affiliate dumping transactions while at the same time preserving the ability of Canadian subsidiaries of foreign parents to undertake legitimate expansions of the Canadian-based businesses.

What we are trying to do is set the rules to ensure that people pay the tax they ought to pay and are not double-taxed, but also that they are not using means or mechanisms to create expenses or obviate income so that they do not have to pay taxes.

The new foreign affiliate dumping rules, where certain conditions are met, deal with deemed dividends to be paid by a Canadian subsidiary to its foreign parent to the extent of any debt funding incurred by the Canadian subsidiary, or other non-share consideration given by the Canadian subsidiary, for the acquisition of the shares of a foreign affiliate. Any dividend that is deemed a dividend in that fashion would be subject to non-resident withholding tax, which would generally be reduced to 5% of the gross amount of a dividend by an applicable tax treaty.

Going forward, our government will continue to monitor developments in this area to determine whether further action is required.

Now I will return to the measures contained in the legislation before us today and speak further to the importance of tax treaties, a vital part of the government's overall approach to improving the tax system. Indeed, they are an integral element of our economic action plan to bring jobs, growth and long-term prosperity to all Canadians.

Tax treaties like those in Bill S-17 directly affect cross-border trade in goods and services with our tax treaty partners, which in turn impacts Canada's domestic economy. In fact, over 40% of Canada's annual GDP can be attributed to exports. Moreover, Canada's economic wealth each year also depends on foreign direct investment as well as inflows of information, capital and technology.

In other words, the tax treaties contained in Bill S-17 would benefit Canadian businesses and individuals with operations and investment in the countries covered by this legislation, not only for their investments abroad but also for those investments that come into our country and bring all of what I mentioned with them.

Not only that, but tax treaties foster an atmosphere of certainty and stability for investors and traders that can only serve to enhance Canada's economic relationship with each country.

Another important aspect of these treaties is that they include a mechanism to settle problems encountered by taxpayers, in particular when double taxation arises. It is very important that if there is a dispute, there is a way to settle it, and there is provision in these agreements as to how that might happen, not only with respect to the taxpayer but also with the two countries involved as well. Under this mechanism, taxpayers can bring to the attention of taxing authorities issues that arise from the interaction of our tax system with that of the other treaty partner and seek a resolution to the issue.

Eliminating administrative difficulties and unnecessary tax impediments is an important priority for the Government of Canada and an important component of international tax treaties. In short, these treaties will provide individuals and businesses in Canada and other treaty partner countries with predictable and equitable tax results in their cross-border dealings, which can bring only positive outcomes for the Canadian economy.

As is common for tax treaties legislation, Bill S-17 would address double taxation issues, which occur internationally when two or more countries impose taxes on the same income for the exact same time period. Obviously that can happen, given the tax regimes of each country, and when it does, it needs to be dealt with. This would obviously be extremely unfair. Double taxation is not something that anyone would like and no parliamentarian would endorse, except, perhaps, the NDP, which is interested in spending and taxing on just about everything, not to mention the $26-billion carbon tax.

Addressing this issue, it is an non-partisan one. It is very common for tax treaty legislation. I want to underline that by reading verbatim from a speech given by the current member for Scarborough—Guildwood, who was the parliamentary secretary to the minister of finance under the former Liberal government in 2004. I will quote at some length, because I think he establishes the premises of why these treaties are as important as they are. He said:

The first, and probably the most important, objective of tax treaties is to avoid double taxation and provide a level of certainty about the tax rules that apply to international transactions.

Again, I want to re-emphasize that we are talking about international transactions. The member continued:

Relief from double taxation is so very necessary and deserves to be discussed in some detail. The potential arises when a taxpayer lives in one country and earns income in another. Without a tax treaty, both countries could claim tax on the income without providing the taxpayer with any measures of relief for the tax paid in the other country. This is simply unfair.

To alleviate the potential for this happening, a tax treaty between the two countries allocates taxing authority with respect to a given item of income in one of three ways: first, the income may be taxed exclusively in the country in which it arises; second, it may be taxed in the country in which the taxpayer resides; or, it may be taxable in both the source country and the residence country, with relief from double taxation provided in some form, usually the country of residence.

The member was saying that there are a lot of factors at play and we want to establish that these are the rules of the game. If a person earns income, he or she will be taxed only once, in one place, by one country and if that does not happen, here is the mechanism that can correct that.

I also want to speak about withholding taxes, because a lot of this deals not only with earning income, but with dividends, the disposition of shares, the disposition of capital property and so on. Another way to ensure that double taxation does not exist is to lower or reduce something called "withholding taxes". This is another common feature of tax treaty legislation. Obviously, it can be burdensome, with a lot of red tape and hassle, not to mention tying up huge sums of money by virtue of withholding.

These taxes are levied in one country on a certain income earned in that country and are paid to residents in another country. Again, I am quoting from the member for Scarborough—Guildwood from when he was the parliamentary secretary to the minister of finance under the formal Liberal government, who said:

Withholding taxes are a common feature of the international taxation system. In Canada's case, they are levied on certain payments that Canadian residents make to non-residents. These payments include interest, dividends and royalties, for example. Withholding taxes are often levied by a country on the gross amount of certain types of income paid to non-residents and such taxes normally represent the non-resident's final obligation with respect to income tax payable in that country with respect to that particular income.

There are obligations in the other country, there is withholding tax here, usually equally to what might be paid over there, when there are fairly large amounts of money being held. Tax treaties are important because they reduce the rates of withholding taxes and help to avoid double taxation.

Specifically with regard to Bill S-17, the treaties with Namibia, Serbia, Poland and Hong Kong provide for a maximum withholding tax on dividends between the affiliated companies at 5%. In respect to all other dividends, the treaties in Bill S-17 provide for a rate of withholding tax set at 15%. I should note that reductions also apply in respect of interest and royalties.

Our government is working with other countries to address the problem of double taxation. Another problem it is working on is to address tax evasion and avoidance, both tremendously unfair and steps that are harmful to our economy. The loss of revenue resulting from tax avoidance and evasion has the potential to adversely affect the efforts of governments in reaching important policy objectives.

Of course there will be certain sharing of information between the countries with respect to tax evasion, and that will help. Not only that, but tax evasion obviously places a disproportionate share of tax burden on honest taxpayers as has been mentioned in the House here earlier today. The government recognizes that one key component of the defence against international tax avoidance and evasion is through improved and expanded mechanisms for international co-operation and information sharing.

To facilitate that goal, treaties like those found in Bill S-17 permit the exchange of tax information between revenue authorities in accordance with standards developed by the OECD, and in doing so help them to identify cases of tax avoidance and evasion, and to act on them.

In conclusion, I would like to remind all members that Bill S-17 is not controversial, nor does it contain any surprises or contentious issues. There is little doubt that its benefits are clear. The treaties covered in this proposed legislation will promote certainty, stability and a better business climate for taxpayers and businesses in Canada and in these treaty countries.

Moreover, these treaties will help to secure Canada's position in the increasingly competitive world of international trade and investment. They comply with international OECD standards and will help ensure a stronger tax system for Canadians. They will help ensure our goal of tax fairness for Canadians.

They provide the rules of the road for foreign investment, for foreign movement of capital and income. This is something that investors and business would expect Parliament to deal with. It is important that Parliament deals with it at this stage, because the take-effect date is someplace down the road. We would like to see this particular legislation passed into law before the summer break.

I would ask all members to support this legislation.

Tax Conventions Implementation Act, 2013Government Orders

9:15 p.m.

Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, the idea behind the legislation is positive. I have made comment on that. It has the support of the Liberal Party.

However, one of the things that we need to acknowledge right up front is that times are changing rapidly. There is so much more that the government could and should be doing to combat tax evasion. One of the things is to look at more of a multilateral approach based on information and the sharing of information. This would go a long way in dealing with the issue, more so than bilateral agreements that have been more of the norm but which I believe are nowhere near as effective.

My question to the member is, what does he feel the government should be doing in regard to the whole multilateral approach, and the issue of providing financial resources so that CRA has the ability to actually enforce this legislation?

Tax Conventions Implementation Act, 2013Government Orders

9:15 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, there is always the opportunity to do more. Obviously we need more legislation. However, it is important to pass the legislation that is before us that specifically deals with the countries outlined in it. As I mentioned before, these tax agreements have been signed with over 90 countries. The OECD has set sort of a pattern of what these tax treaties should look like, and the kind of rules of the road that should be incorporated and that most countries have started to adopt.

Obviously there will be an increase in the number of treaties that are being signed, and I think we need to continue pursuing them and pursuing them actively. More could always be done, but for now this is the treaty that is before the House. It has been negotiated. It is a positive thing that business would like to see passed. It is important that this particular government does that.

Additionally, and contrary to what has been said here, there have been significant investments targeted with respect to the enforcement provisions and the seeking out provisions that CRA may have with respect to international investments.

Tax Conventions Implementation Act, 2013Government Orders

9:20 p.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, my colleague did not deal with the issue of the failure of some of the existing tax treaties to deal with the changes in Canadian tax law. For example, the tax-free savings account is not part of what is reciprocated in the U.S. so people who have to pay U.S. taxes have to pay on any money that they invest in a tax-free savings account in Canada.

However, of more concern to me as the deputy critic for persons with disabilities is the disability tax credit, which is not available to those people who file taxes in both Canada and the U.S., who live in Canada, whose children live in Canada but who, by reasons of the U.S. government, are deemed to be U.S. citizens. As a result, those individuals are paying tax twice. I would think that the Conservative government would be working hard to try to resolve the issue of double taxation with our biggest trading partner, the United States.

I would ask the hon. member what the government intends to do about that.

Tax Conventions Implementation Act, 2013Government Orders

9:20 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, I would remind the member that this tax treaty deals with Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. That is the legislation we are discussing. That is the legislation that needs to be passed. The member should look at it and read the bill as it applies to all these countries to see if there is are improvements, changes or amendments to make. If he supports it, he should support it.

With respect to the United States, it is nowhere in this document. It has nothing to do with this bill. I agree that there are probably a lot of issues that need to be dealt with between the two countries that I am sure are being looked at by the various levels and will be dealt with. However, that is not what we are talking about today, which is this particular legislation and ensuring that the rules of the road are understood by the parties of both countries.

I might also add that the OECD has set out what it thinks it should be. Basically, this ties into that. There should be more of these happening, notwithstanding there are other issues that need to be addressed as well.

Tax Conventions Implementation Act, 2013Government Orders

9:20 p.m.

Green

Elizabeth May Green Saanich—Gulf Islands, BC

Mr. Speaker, my question for the member for Souris—Moose Mountain is this.

I am well aware that we are here tonight to debate Bill S-17 and that it deals with tax treaties. I have not heard a single member of this place suggest that they do not want to vote for it. I find it strange that on a treaty and a bill of no consequence, which everyone supports, we have time for debate and we have committee hearings, but on something that threatens the sovereignty of Canada, such as the Canada-China investment treaty, we have neither had hearings nor adequate time for debate.

Would my hon. friend from Souris—Moose Mountain like to join me in urging that we still have time for debate before that treaty is ratified?

Tax Conventions Implementation Act, 2013Government Orders

9:20 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, I might remind the member that soon we will be off on summer break so time will be short.

To say that this treaty is of no consequence surely must mean the member has not read the legislation or has not listened to business, because business is quite clear. It wants this agreement. It wants to know what the rules of investment are. Billions of dollars are transferred that create jobs and long-term prosperity in both countries. Therefore, it is important that we deal with the legislation here today and that members are given the opportunity to debate this.

If we had said that members do not have the opportunity to debate this particular tax treaty, I cannot imagine what the member might have said. Perhaps, “We must have the time to debate it.” We have provided the time to debate it and the member talks about something else.

I know there are a lot of other issues and a lot of other pieces of legislation. However, today we are dealing with this legislation. If the member wants to debate she should debate this legislation, not something else.

So far what I have heard from the opposition is a debate on all kinds of other issues that may be of some significance but nothing to do with the tax treaties. If you want time to debate, when time to debate is given, debate the issues before you and not something else.

Tax Conventions Implementation Act, 2013Government Orders

9:25 p.m.

Conservative

The Acting Speaker Conservative Bruce Stanton

I would just remind hon. members to direct their commentary to the Chair and not directly to hon. members.

Questions and comments, the hon. member for Scarborough—Agincourt.

Tax Conventions Implementation Act, 2013Government Orders

9:25 p.m.

Liberal

Jim Karygiannis Liberal Scarborough—Agincourt, ON

Mr. Speaker, it is indeed important that the member said that we should be debating issues that are important and this issue is certainly not less important than others.

Can the member can stand on his feet and say how many bills that are very important to this country the government has brought closure to and has tried to asphyxiate the rest of this chamber from talking about?

Tax Conventions Implementation Act, 2013Government Orders

9:25 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, I do not know where the question is coming from with respect to this legislation. However, there is an opportunity for the member to debate this legislation, and it is important because it deals with the rules of the road for investment.

Notwithstanding what the member and other members have said, there has been specific funding allocated to ensure that appropriate investigation takes place and that CRA has the finances to increase the size of the national audit program, in fact, by 40%. There is a $30-million investment to target international tax evasion and aggressive tax avoidance. That is what we are talking about and this legislation would provide for that. The government has taken some very concrete steps.

With respect to the member's question, which is not related to this legislation, when a particular piece of legislation does come before the House, he will have the opportunity to ask questions on that and he will get an answer. However, what he is talking about here has absolutely nothing to do with the legislation at hand and it does not matter how much he would—

Tax Conventions Implementation Act, 2013Government Orders

9:25 p.m.

Conservative

The Acting Speaker Conservative Bruce Stanton

Order, please. Questions and comments, the hon. member for Burnaby—New Westminster.

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9:25 p.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Mr. Speaker, we are speaking about Bill S-17. The reality is, as the member full well knows, that it is also a question of how the Conservative government implements these tax treaties. That is why we want to have a full discussion.

As well, the reality is that the government has been a colossal failure both in terms of uncollected tax debt and tax havens. We have seen a skyrocketing. Over the seven years of the Conservative government's watch, we have seen a 57% increase in uncollected tax debt because the government is fumbling the whole file. We have seen a doubling, almost $170 billion, of money that is invested in 12 global tax havens.

Given the government's massive failure on both files, the question is very simple. In terms of Bill S-17, how can we trust the Conservative government to implement it properly when it has failed every other time?

Tax Conventions Implementation Act, 2013Government Orders

9:25 p.m.

Conservative

Ed Komarnicki Conservative Souris—Moose Mountain, SK

Mr. Speaker, this agreement will be implemented and it will save a lot of dollars. However, I will address the question the member asked, which is not related to this bill.

Last year alone, over $40 billion in tax debt was recovered and $100 million collected in fines from 1,182 people who were convicted of tax violations. As well, in closing tax loopholes, the New Democratic Party opposed that legislation.

We are setting a culture that is taking place at several levels. Tax enforcement ensures that people are obligated to not only indicate what their income is so they can be taxed, but also that they pay their taxes when they are obligated to pay them. It is a culture of saying that not only should we get rid of tax avoidance, not only should we get rid of aggressive tax planning that tends to avoidance, but when we owe taxes, we also ought to pay them. It is a culture that says it is important to follow the rules and to pay when people ought to pay tax and not try to avoid that by putting money in an offshore account. I should have asked the other member about—