Madam Speaker, the motion calls on the government to amend subsection 95(1) of the Income Tax Act and section 5907 of the income tax regulations to specify that no business that is entitled to a special tax benefit conferred by Barbados under the Canada-Barbados Income Tax Agreement Act, 1980, shall be exempt from taxation because of a tax treaty.
In essence, it asks the government to override the Canada-Barbados Income Tax Agreement Act. I appreciate the sentiments of the member who sponsored this legislation. It is refreshing to hear members of the Bloc Québécois, with ideas for the benefit of Canada, proposing legislation that would increase revenue for the Government of Canada. That being said, I do not feel that this motion should be supported.
The underlying premise would seem to be to score some political points and condemn Canadians who use foreign shell companies for tax avoidance purposes. Given recent publicity regarding the Canada Revenue Agency and offshore tax havens, that is bound to be a popular topic, but popularity and good legislation are not always the same thing, just as tax avoidance and tax evasion are not the same thing.
Canadians all want to do what they can to avoid paying tax that they do not owe. It is when they cross the line of the law into tax evasion that governments need to take notice and act. I think this motion confuses the two and seeks to condemn those individuals and companies who are doing something perfectly legal.
This year, we celebrate the 50th anniversary of diplomatic relations between Canada and Barbados, which were established on November 30, 1966, the day that Barbados became an independent country. However, our relationship goes back much further than that. The Canadian Trade Commissioner Service first established an office in Barbados in 1907. This long-standing connection explains in part why many Canadian financial institutions have long had a prominent presence in Barbados.
Barbados and Canada have several bilateral financial agreements, including a 1986 social security agreement, a 1997 foreign investment protection agreement, and a 1980 double taxation agreement, which we are discussing today. Barbados is part of Canada's constituency at the International Monetary Fund and the World Bank. We have ties through the Commonwealth, sharing a heritage as former British colonies.
I think that behind this current motion is the belief that its implementation would somehow magically result in more money in the hands of the Government of Canada. This is not necessarily the case. There are plenty of other tax havens globally. I cannot see that should Canada decide to unilaterally alter this agreement there would be any net benefit for our country. Those who are law-abiding people would not be paying more. Those who are hiding money from the Canada Revenue Agency would, I suspect, find somewhere else to hide their funds. The matter is more multifaceted than is accounted for under the motion.
The Canada-Barbados Income Tax Agreement Act was designed to limit double taxation and prevent fiscal evasion with respect to taxes on income and capital. It applies to residents of both Canada and Barbados. It was first signed in 1980, with an amendment in 2011. Amendments were made at that time primarily to follow in the framework of OECD treaty models, and to ensure that holding corporations, trusts, or partnerships that hold Canadian investments in real property and resource properties will be subject to Canadian taxation on sales of the shares of the holding corporation or the interests in the partnerships or trusts.
There is a general international tax principle that the country in which immovable property is located should have the right to tax the gains from the disposition of such property. The Canada-Barbados Income Tax Agreement Act is flexible, with the intention to limit unfair and inefficient double taxation practices.
I support the act. The Conservative Party supports the act. This motion to override the act's provisions should be regarded skeptically. To suggest that Canada should unilaterally decide not to live up to an agreement we have signed is, in my opinion, irresponsible.
To support the Canada-Barbados Income Tax Agreement Act, 1980, is not to suggest support for tax evasion. In 2013, the Conservative government, in order to enhance the integrity of the tax system, created the stop international tax evasion program, aimed at reducing international tax evasion and avoidance. That the Canada Revue Agency gained three times as much new revenue as was expected from the measures introduced in the 2013 budget is a tribute to Conservative management. The Conservative Party has a strong, successful record of standing up to international tax avoidance.
Canadians believe in a fair tax system. All of us want to know that we are being treated fairly and equally under the law. While the Conservative Party frowns upon tax evasion, it also upholds the view that this practice may be a response to unfavourable tax regimes within Canada. We believe that with fair taxation, there will be less desire on the part of some Canadians to look to other jurisdictions and to search for ways to avoid and evade Canadian taxation.
The Conservatives understand that when we make tax rates fair, when we make the system easier to navigate, it encourages businesses to invest in Canada. However, when we increase taxes, such as has been done with the recent payroll tax increases in the Canada pension plan, we discourage investment and kill Canadian jobs.
Investors, both domestic and foreign, are looking for a stable business climate where government understands the importance of allowing the private sector to lead job creation efforts. Creating an unstable business climate by, for example, unilaterally changing a longstanding international agreement is guaranteed to convince entrepreneurs that Canada is not worth the risk.
I can see that the actions of the current government, which has deferred the tax cut for small business to some mythical future date, would cause many businesses to investigate opportunities in other jurisdictions that might provide more consistent tax policies. That Canadian corporations legally transferred a record amount to tax havens in 2015 can be seen as a resounding vote of non-confidence in the Liberal government.
This, indeed, is a problem that should be addressed, but this motion is not the way to address it.