House of Commons Hansard #328 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was guidelines.
Andrew Leslie LiberalParliamentary Secretary to the Minister of Foreign Affairs (Canada-U.S. Relations)
Mr. Speaker, pursuant to Standing Order 32(2), I have the honour to table, in both official languages, a document entitled “Canada's National Action Plan for the Implementation of United Nations Security Council Resolutions on Women, Peace and Security, 2017-18 Progress Report”.
Dane Lloyd Conservative Sturgeon River—Parkland, AB
Mr. Speaker, I rise today to present a petition on behalf of my constituents and Canadians who oppose the Liberal government's ideological and discriminatory summer jobs program attestation.
This petition, signed by over 500 Canadians, calls on the government to respect the deeply-held beliefs of millions of Canadians. Any government that requires an attestation of belief violates the Charter of Rights, chiefly sections 2(a) and 2(b), which guarantee freedom of conscience and religion and freedom of belief.
I call on the government to repeal this hateful attestation.
The Speaker Liberal Geoff Regan
I remind honourable colleagues that presenting petitions is not the time to take part in debate and express their personal opinions on matters, but to simply present what the petitioners are saying.
The hon. member for Beloeil—Chambly.
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, I have the honour to present a petition initiated by David Morin of Mont-Saint-Hilaire and other residents of my riding who attended various events over the summer to gather signatures. They are calling on the government not to spend taxpayers' money on the Trans Mountain pipeline and to halt the expansion.
I am very proud of these constituents of mine, and I am very proud to present the fruit of their efforts. I hope the government will listen to them.
Gord Johns NDP Courtenay—Alberni, BC
Mr. Speaker, it is an honour to table a petition on behalf of residents from Tofino, British Columbia.
The petitioners call on the government to create a national strategy to combat plastics from entering our waterways. They are looking at regulations aimed at reducing plastic debris discharged from stormwater outfalls; industrial use of microplastics, including microbeads, nurdles, fibrous microplastics and fragments; and consumer and industrial use of single-use plastics, including polystyrene, which is filling up our ocean, cigarette filters and beverage containers.
The would like permanent, dedicated and annual funding for the clean up of derelict fishing gear and community-led cleanup projects to protect our shores, banks, beaches and aquatic peripheries.
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Mr. Speaker, I appreciate the opportunity to present this petition on behalf of constituents from across Ontario.
The petitioners call on the Prime Minister to defend the freedoms of conscience, thought and belief and withdraw the attestation requirement for applicants to the Canada summer jobs program.
Cathay Wagantall Conservative Yorkton—Melville, SK
Mr. Speaker, I am presenting a petition this morning on behalf of cottage owners and homeowners, whose cottages and homes are located at Crooked Lake, Saskatchewan, on land leased from the Government of Canada.
The petitioners wish to draw attention to the 650% to 700% lease increase being imposed on Crooked Lake leaseholders for the years 2015 to 2019. Being that this increase was imposed without jointly agreed to negotiations between the Government of Canada and/or its appointed authority and the leaseholders and representatives and with the threat of lease cancellation being imposed, they call upon Minister of Crown-Indigenous Relations and the Government of Canada to negotiate a fair lease agreement with the cottage owners who lease land from the Government of Canada.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I ask that all questions be allowed to stand.
The House resumed consideration of the motion that Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, be read the second time and referred to a committee.
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, I thank my almost neighbour from Longueuil—Saint-Hubert for his warm welcome.
Today, we are debating Bill C-82, which does not exactly have the most exciting title in the world but does address an extremely important issue. I am referring to the Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. There may be complicated bills that come before the House, but it is rare to have one with a title that takes up a significant amount of the time we have to debate it.
All joking aside, tax avoidance and tax evasion are key issues. The urgency of dealing with these issues is becoming increasingly evident, not just to us as legislators, but also to Canadians. This may seem like a subject that is not necessarily of interest to the average person. When we go door to door in our ridings, when we have an opportunity to speak with constituents at various events held in our ridings, the income tax act and the tax agreements signed with other countries may seem like issues that are not top of mind. Our constituents are focused on daily life, sending their children to school, looking after their health and managing their own budgets.
The thing that stands out to people is the fundamental inequity of this situation. People pay their taxes and the Canada Revenue Agency chooses to relentlessly go after single mothers who may have simply misunderstood a form or whose situation may have changed—maybe they separated from their child's father for example. I personally know individuals who have gone through shameful situations. I am not sure if my colleagues have had the chance to read the letters that the CRA sends those people. Even as members of the Standing Committee on Finance, I wonder if we would be able to understand the pages and pages of text and wording that is so complicated it has no meaning. We should not have to hire an accountant or, in some cases, a lawyer, because of the actions of an agency that is supposed to be a sound manager of taxpayers' money.
This situation is bad enough, but it is even worse when we consider that CEOs, the wealthiest individuals and unfortunately quite often friends of those in power, benefit from all these exemptions, all these poorly drafted laws, all these agreements that do not go far enough. Unlike the single mother, to continue with that example, they are able to take vacations in Barbados. Then they leave their money there while they are at it. It is unacceptable.
As a society, we cannot accept that. Our collective wealth, the social contract in which we are engaged as citizens of a society by paying taxes, and the work we call on the government to do on our behalf with our money, is one of the most fundamental aspects of our society. When we consider that some people do not want to fulfill this contract, do not want to meet this commitment, then we realize that we have failed somehow. Somewhere the government has failed in one of its basic duties.
These policies, these failures, are opening up a deep, dark gap of inequality between the rich and the not-so-rich. It is odd, because the Prime Minister loves talking about the middle class and those working hard to join it. In reality, when I am in my riding, I do not see a middle class and people working hard to join it. What I see is that certain citizens are honest and hard-working, and others do not need to lift a finger because they know full well that they will always enjoy the favour of the people in power. That is what is deplorable.
In my riding, there are some people who are relatively well off. They are the kind of people the Prime Minister loves to go after and brand as cheats. They are business owners running small and medium-sized companies, and to some people, they may appear to belong to a more privileged class. They have earned a good living and worked very hard on their businesses, but they are not the ones who should be targeted.
There are also people in my riding who struggle to put food on the table and can barely scrape together their rent or mortgage payments. In terms of means and lifestyle, these people could not be further apart. However, they have one thing in common, and it is what motivates me as an MP. They are all honest, and they all believe this:
“A rising tide raises all ships.”
The idea is that we live in a society where the wealth we share should benefit us all. They agree on that. The issue is the wealthiest 1%, which sometimes means literally 1% of the population but sometimes means Liberal Party donors who are friends with the Minister of Finance. They are the ones benefiting from a system that is totally broken.
Let us dig into the substance of the bill. Kudos to the member for Sherbrooke, who has been doing excellent work as our national revenue critic. He is doing amazing work on this extremely complex issue. Some people find this hard to believe, but he is Canada's youngest ever federal MP. His hard work got him re-elected, and he is so up on his issues that he can handle this extremely complicated file.
I also want to give a shout-out to the member for New Westminster—Burnaby, who is doing great work as the NDP's finance critic. That is our job, after all.
We moved a motion in the House in this regard and so did our colleague from Joliette. We are calling on the government to do more and to solve the various problems and failures related the system that I just talked about a few moments ago in my speech.
The bill before us seeks to implement multilateral instruments and to address the fact that some of our agreements with other countries are expiring. These instruments are an important step that will enable to make changes to our multilateral and bilateral agreements more easily.
People need to understand that agreements, accords and conventions that Canada has signed with other countries often exacerbate the problem. We are being told that all of these agreements are being signed to prevent double taxation. For example, a business or individual would have to pay taxes in Canada or another country. However, the legislation and other aspects of the legal framework need to be updated because they facilitate tax evasion and tax avoidance, even though ideally they should not.
We will support the bill because we think it contains good measures that are a step in the right direction. However, let us be clear. Our support for this bill at second reading is not a blank cheque. We are far from supporting the Liberal government's approach, which has failed to date. The fact that we are supporting this bill also does not excuse the fact that the government has not taken action on any of the other issues related to tax evasion and tax avoidance that are of concern to us.
Let us look at subsection 95(1) of the Income Tax Act and section 5907 of the Income Tax Regulations. Dividends from a foreign subsidiary are exempt from taxes in Canada. That means that there are companies that are making a lot of money and they are even doing business with Quebec and Canadian consumers. They are making their money here but inflating their profits because they are exempt from paying taxes in Canada.
Closing loopholes is just a matter of common sense. We are not talking here about companies that do 95% of their business in other countries and 5% in Canada. We are talking about companies that do the opposite. We are basically talking about companies that conduct most of their business in Canada or the United States but that have opened a bank account in another country where they do almost no business at all. That is a major shortcoming, and the government has still not updated the legislation, even though it would have been quite easy to do. The bill that we are debating contains elements related to tax evasion and tax avoidance, but it does nothing to address the relevant aspects of the law.
It is funny, because earlier today, I heard a Liberal member say this has been one of the government's priorities since its first day in office. The Liberals have been in power for three years now, and nothing has been done despite pressure from civil society, prominent members of society, and even some former Liberal Party candidates. So many Quebeckers have called for action on this. We and our colleagues from other parties have been proud to speak on their behalf. Échec aux paradis fiscaux and the non-partisan Réseau pour la justice fiscale Québec are just two great examples of groups that are standing up and speaking out.
Just as an aside, not to be mean, but that is what happens when the 41 Liberal members from Quebec remain silent. When so many groups and individuals in Quebec are speaking up, those MPs come off as being not only silent, but also deaf because they are not getting their constituents' message.
I find it deeply troubling that no party that has ever been in power is blameless in this matter. I have only to come back to the example I mentioned earlier in my question to a Conservative MP. In the last Parliament, during debate on the bill on the free trade agreement with Panama, which was negotiated and signed by the Conservatives, I raised an extremely important point demonstrating that the issue of tax evasion and tax avoidance is nothing new. For years we have been talking about it, and for years the federal government has failed to take the necessary steps that Canadians expect.
To come back to the agreement with Panama, that country is known to be complicit in tax evasion and tax avoidance. The United States can hardly be called progressive, especially in light of recent events, but even they realized that when making free trade deals and opening up their markets to countries like Panama, it was vital to include a formal requirement demanding the return of any government or taxpayer money that had been stashed away by individuals who refuse to meet their obligations to our society. Through that agreement and other measures, the United States managed to recover some of the money, although there is still a lot of work to be done.
However, what has Canada done about this? We only raised the issue without even discussing the problems associated with environmental protection or labour conditions in Panama. We ignored these crucial issues. Even if we focus on just this one element, the government did nothing when we raised the issue.
This is very worrisome because the government keeps telling us that its negotiations will be based on progressive values and that it will discuss reconciliation with indigenous peoples, gender equality and environmental protection. Naturally, I agree with that. After all, the NDP are proud to raise these issues every day in the House of Commons.
However, when we have a progressive agenda, we must also promote fairness. We must take action to eliminate the gap between the friends of those in power, the people who can afford to vacation in Barbados and take their wallets with them, and the honest people working hard in our communities, the rich and the not so rich, business people, single mothers and everyone else who is harassed by the Canada Revenue Agency. That has to stop. I am repeating myself, but I have to.
I can only hope that when the government negotiates these agreements, it will recognize that we must continue on this path and demand better conduct from certain rogue international stakeholders. I may be suffering from misplaced optimism because this government has a bad track record on this.
When the Liberals came to power, they boasted that Canada is back, but what is Canada doing? It is allowing Netflix, Facebook, Google, and American multinational corporations to get away with not paying their fair share of taxes. Then it allows Liberal Party billionaire donors and friends of the Minister of Finance to do the same thing and shirk their obligations to our country. Then it allows environmental delinquents to evade their obligations. We do not even respect our own obligations. In addition, Canada keeps exporting arms to countries like Saudi Arabia. On that, we might say that the Liberals are trying to redeem themselves, according to media reports.
All of this is relevant to the debate on Bill C-82 because the bill talks about a multilateral instrument. If Canada really is back, then it should be showing some leadership in helping countries that want to combat tax evasion, tax avoidance and all the other problems I just listed. Instead, Canada is sheltering delinquent players and prolonging a situation that has existed for far too long.
I would like to explain why all of this is so important in a way that the people at home can understand. I do not mean to be condescending—far from it. When I myself get letters from the Canada Revenue Agency, my first reaction is often to wonder what it is all about. When people get these letters, they sometimes ask their friends if they are going to jail, because they cannot understand them. That is how single mothers, sick people and people with disabilities are treated when they try to claim benefits they are entitled to.
The member for Sarnia—Lambton said that this is criminal. She herself rose in the House of Commons to talk about diabetic people being targeted by the Canada Revenue Agency, which is totally unacceptable. However, the Minister of National Revenue keeps bringing up this $1-billion figure. She keeps talking about money, but unless the law and agreements are changed, we are just throwing money out the window. That is a very apt phrase in this case, because, after all, that is what the rich in our society are doing, and it is all the more laughable because this money is landing well outside the federal government's coffers. That is unacceptable.
I would now like to say a few words to all of my constituents. It is all well and good to debate the fiscal code of conduct and the Income Tax Act, but it is important to recognize that the government has consistently failed when it comes to closing the gap between the rich and the poor. To accomplish that, the government must start with simple, practical measures.
By supporting Bill C-82 at second reading today, I am once again imploring the government to take action to put an end to tax evasion and tax avoidance, which it could have done by supporting the NDP's motion. The government needs to put an end to this injustice, which weighs heavily on the minds of honest Canadians who are trying to live their lives and benefit from a community and from an important social contract under which everyone must contribute their fair share.
Marilyn Gladu Conservative Sarnia—Lambton, ON
Mr. Speaker, we listen often to the Liberal government talking about how it is looking for all of these tax evaders and the $25 billion of tax it claims it is going to find. However, the Liberals have been very silent about the Panama papers and I have not heard any progress on that $25 billion.
Has the member heard anything about the Liberals' actual progress on closing these loopholes and getting the tax money back?
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, I thank my colleague for her question.
When I hear the Liberals talking about tax evasion and tax avoidance, it is never because they have made progress. Rather, it is because someone who is close to their party was named in the documents in question, which were leaked. Fortunately, those leaks do occur. Fortunately, watchdogs have brought this to our attention. This is a shameful situation that needs to be remedied.
I want to say this. I think it is unacceptable, and even sexist in some cases, that women who are divorced or separated are targeted by the Canada Revenue Agency more often than the friends of the Liberals who are named in the Panama papers and other similar documents.
Perhaps I am an eternal optimist or possibly just naive, but I hope that the next time I see the words “Liberal Party” or the name of the Prime Minister in a news article about tax evasion and tax avoidance, it is because they have finally proposed concrete measures to put an end to this problem.
Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I listened to my colleague across the way. He commented about many of my Quebec colleagues, the 41 members of Parliament in the Liberal benches from Quebec. What I would like to emphasize to my friend across the way is that when he implies that they are not effective, when it comes down to fighting tax evasion and fair taxation of policies, the Quebec members of Parliament on this side of the House not only have been strong advocates for it, but they have also voted in favour of initiatives.
I would go to the 1%, for example, where we apply the tax on Canada's 1% wealthiest. Those Quebec MPs voted in favour of it. The Quebec MPs on the other side, and particularly in his party, voted against it. We also voted in favour of hundreds of millions of dollars in our budgets to go after tax evaders. The NDP voted against that.
My question to the member is this. Here we have yet another progressive piece of legislation. The Liberal members of this House, particularly the ones from Quebec, will be voting in favour of this legislation. Will the member be voting in favour of this legislation? If so, can he tell the House why it is he voted against those measures in two previous budgets to fight tax evaders, where hundreds of millions of dollars were allocated?
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, perhaps my colleague did not listen as closely as he claims because I stated very clearly in my speech that we are going to vote in favour of this bill at second reading.
With respect to the Liberal Party members from Quebec, I would like to point out that if the government were really listening to Quebeckers, it would not have used taxpayer money, which belongs in part to Quebeckers, to buy a 60-year-old pipeline for $4.5 billion. We would have wanted our voices heard. We would not be supporting an NDP motion or a motion by the member for Joliette to put an end to this situation because we never bothered to do anything about it.
I gave some very concrete examples of parts of the act that need to change, but none of that was done.
I have something to add before wrapping up. Saying that one guy voted against this and another voted against that is as misleading as it gets.
Personally, I will always be very proud to vote against budgets that do not do enough, that go no farther than consultations, or that set up programs the government will not be spending much money on until after the next election. We can go back and forth about nitpicky details, but what really interests me is the government's budget policy. When we believe it is destined to fail, we speak out against it.
Gord Johns NDP Courtenay—Alberni, BC
Mr. Speaker, first, I want to thank my colleague for Beloeil—Chambly for always fighting for tax fairness for working Canadians.
As a former business owner and executive director of a chamber of commerce, and as the critic for the NDP on small business and tourism, I have had a chance to work with entrepreneurs, as well as be one. Entrepreneurs are often struggling just to make ends meet, just to make payroll or pay their suppliers or leases. They are under a tremendous amount of pressure.
When they are late paying their taxes, CRA does not take any time at all and is on top of the small business person. There is a collector assigned to them. CRA is aggressive in getting the taxes back. Despite the Prime Minister calling small business people tax cheats, I would say that most small business people are honest, hard-working people. They are the job creators and people who donate to our community organizations and build our communities. However, at the same time, as we saw with the KPMG scandal, if one has a good lawyer and a lot of money, the CRA will back off and make a deal, unlike its treatment of small business people.
I would like to ask my colleague about making sure that when we go ahead and make tax changes to fix these loopholes and gaps in these tax agreements, that CRA gets direction and prioritizes going after the heavy-hitters, the 1% who are trying to avoid paying taxes. Maybe it could shift those resources away from chasing the small person who is grinding it out day in, day out.
I would like to hear from my colleague if he thinks that CRA should be giving priority to those who are not paying their fair share off the backs of everyday working Canadians, shifting their money out of the country to avoid paying their fair share of taxes.
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, I thank my colleague for the question and for the excellent work he does as the small business critic and as a former business owner.
I think that is an important distinction to make. The Prime Minister did indeed take aim at small and medium-sized businesses both through his comments during the election campaign and in some of the policies that have been brought in. As I said, when I go back to my riding, I talk to people who are having a very hard time paying their rent or paying for groceries. I also talk to chambers of commerce, business owners, and small and medium-sized enterprises who, compared to some who are struggling, seem to be better off because they have enjoyed some success. As my colleague knows, it is not always as black and white as all that.
The Canada Revenue Agency makes it their priority to go after people like that. If this were being handled fairly we would not be talking about it. That is the problem. The problem is that these policies have totally missed the mark.
As I said in response to another colleague, every time we hear the government talk about this issue in the media, more often than not it is talking about its association with bad players instead of what it is doing to tackle the issue. There are such simple things the government could do, things that it has had plenty of time to do since coming to power. I find it all so terribly disappointing.
I will come back to the last point my colleague raised. It is clear that the directives given to the CRA need to be reviewed, not just to avoid targeting businesses, but, as my colleague said earlier, to stop primarily targeting the sick or single mothers. The minister has the power to do that. This should be a priority.
Gabriel Ste-Marie Bloc Joliette, QC
Mr. Speaker, I would like to first commend my colleague from Beloeil—Chambly on his speech, which clearly supported progressive values. We definitely felt that.
In his speech, he reminded us that the Minister of National Revenue told the House that the government had spent $1 billion to recoup $25 billion lost to tax evasion and tax avoidance. However, according to the report signed by the minister, the government recovered hundreds of times less money than that.
Does my colleague believe that Bill C-82 will enable the minister to recoup the $25 billion she mentioned so many times in the House?
Matthew Dubé NDP Beloeil—Chambly, QC
Mr. Speaker, I thank my colleague for his question and for all the work that he has done on this file.
The minister keeps repeating that, but the problem is that she did not actually recoup that money. She simply discovered it existed. The government needs to do a lot more. Obviously, Bill C-82 is a step in the right direction, but it just one step.
To come back to my colleague's question, I do not think that this bill is enough. The government needs to do more. By supporting this bill today, we are also making a plea to the government to make significant amendments to the act, and in doing so, finally implement our motion, which it supported a few short months ago, and actually collect that money.
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Mr. Speaker, it is always an honour to stand on behalf of the citizens of Central Okanagan—Similkameen—Nicola. I will be sharing my time with the very capable member for Calgary Rocky Ridge, who in addition to his duties as member of Parliament, also stands as the shadow minister for national revenue. Even though this is a finance bill, ultimately it is the CRA and the Minister of National Revenue that will become accountable for this. I know he will have many things to say on that end of it.
The two are very important, because, for example, in 2013-14 and particularly in the 2014 budget, the former minister of finance, the hon. Jim Flaherty, had opened consultations on the subject of base erosion and profit sharing. He did this specifically so he could go to the G20 and be able to make proposals and participate fully in those discussions on base erosion and profit sharing, which we are the beneficiaries of today.
I must give the government a little credit for taking its ideological blinders off. It does not seem to say that this is a Harper initiative. It has not blamed the former prime minister yet. I certainly hope that as we go through my speech today it will recognize sometimes there is much need for a new government to carry on the very good work of a previous government. We should not always judge something simply because of who had started an initiative.
During my time as the parliamentary secretary to the president of the Treasury Board in the previous Parliament, we worked on some pretty technical legislation from time to time. I will admit to having a certain affection for regulatory related bills that could provide benefits to Canadians and Canadian industry, particularly if they are done in such a way that is harmonized to reduce red tape. We recognize that Canada is increasingly becoming a competitor on the world stage, and we are likely to see more international trade, not less.
We must also recognize that with that come challenges. As one example, we have a situation where over this past summer the Liberal government was forced to modify its national carbon policy. Basically, it provided more carbon tax relief to some of Canada's biggest polluters. This is not unlike what happened in my home province of British Columbia, where greenhouse growers and cement manufacturers, to name a few, have been given so much in subsidies, exemptions or other kinds of carbon tax relief there is actually a word for it. It is called “carbon leakage”. It is defined in the 2018 B.C. NDP provincial budget as “...industries that compete with industry in countries that may have low or no carbon price. If BC loses market share to more polluting competitors, known as carbon leakage, it affects our economy and does not reduce global greenhouse gas emissions.” This is the same reason this Liberal government provided increased carbon tax relief to big polluters, because, ultimately, they compete with industry in the United States and elsewhere that do not have a nationally imposed carbon tax.
We are not here to debate the carbon tax. I am using it as an example because it illustrates the importance of being competitive. As we all know, being competitive in the corporate world often comes down to the bottom line, and we know how much the bottom line bears on our businesses, at least on this side of the House, as the Conservative Party has a very strong understanding. This creates a situation where, ultimately through creative, and some would argue dubious accounting practices, some companies can find creative ways to transfer wealth created in one country into another country with a much lower tax regime. Some countries even make a point of creating a regulatory and financial environment that actively encourages this sort of behaviour.
How do we fix that? Obviously, one approach would be an attempt to lower taxes to a level on par with some of these countries to stop the outflow of revenue. Many refer to this as the “race to the bottom” approach.
There is possibly another solution, which brings us to Bill C-82, which we are debating here today. What if we could get as many countries as possible to sign on to a common regulatory fiscal taxation approach that would better protect countries from this problem? Having similar fiscal language with respect to taxation would help reduce the regulatory red tape burden more than if we went at it piecemeal.
Not to mention there are greater efficiencies in adopting the kind of universal standard with OECD countries which sign on as opposed to having the same individual countries try to collect and negotiate separate tax treaty agreements among themselves.
To be fair, this multilateral instrument allows for Canada to quickly and efficiently update its agreements so that both the CRA and the tax authority in the adjoining country will immediately start to proceed, as the multilateral instrument has said, through the existing tax treaty. It is a very efficient way.
This is called, obviously, the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. Because that is a mouthful, we will simply refer to it as the MLI agreement. This work was started with the former Conservative government and I am pleased that the current government is continuing to work on this to the point we are here today debating the ratification agreement. Again, the agreement covers 75 jurisdictions worldwide and it is expected in the near future it will be over 100. That is a good thing.
While there are many benefits to the agreement, I should say it is not without some criticism. Some have suggested adopting the OECD MLI would result in the loss of tax autonomy for the country in question; however, I would point out there are provisions in the MLI agreement that allow countries to opt out of certain parts of the MLI at their discretion. This, by extension, can allow countries to still enable a specific tax structure but ultimately might provide unique tax benefits in certain areas. While some may consider that to be a bad thing, I also believe having a framework that allows some competitive incentive that keeps overall taxation levels in check is an important tool for countries to have.
Ultimately, this agreement is more targeted toward those who transfer money between countries for the sole purpose of avoiding taxation. Some people might say that some of this might be borderline tax evasion and in certain cases there may be, but let us be clear that Canada already has existing laws on tax evasion. That is not legal and the CRA should pursue those people who push the envelope much too far and know they are past the envelope.
I believe this agreement is more targeted toward specially transferred money between countries for the sole purpose of evading. In balance, I believe that is positive. Some have said that these types of agreements have not been successfully implemented in Canada before, but I would disagree with that. In the previous Parliament, we passed Bill S-12, An Act to amend the Statutory Instruments Act and to make consequential amendments to the Statutory Instruments Regulations. That bill proposed the ability to import standardized regulations from other jurisdictions so we have parity here in Canada. That makes it much more convenient for Canadian manufacturers as it can be extremely costly in addition to meeting a plethora of different standards in other jurisdictions.
Getting back to the MLI, time will tell the overall effect of this. The challenge right now is that some of these tax avoidance schemes are entirely legal, so this agreement creates a taxation environment that would provide common tax measures that will help to eliminate abusive taxation policy.
Before I close, I would like to take a moment and relay one concern I do have. As we know, the United States is not a signatory partner to this agreement. Given the close relationship in industry between our two countries, with many companies having U.S.A. and Canadian ties, there could be long-term impacts down the road. Obviously we also see concern over NAFTA where we will need to be vigilant in monitoring our competitiveness with our neighbours to the south.
Overall, I believe the bill is an important one and moves Canada in the right direction in parity with the majority of our G20 partners. I will be voting for the bill and believe that added scrutiny at committee stage, particularly on some of these thorny points, will be beneficial. I appreciate the House hearing my thoughts on the bill today.
Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders
Jennifer O'Connell Parliamentary Secretary to the Minister of Finance (Youth Economic Opportunity), Lib.
Mr. Speaker, I thank my hon. colleague for his support of this legislation.
Would the member opposite agree that this legislation is a piece of the puzzle to the larger issue of tax evasion and tax avoidance, and that it actually works in conjunction with other policies, treaties or legislation that the government will bring forward? The government is not only doing the minimum standards, but is opting into enhancement of the MLI. Would the member agree that this is good for Canadians on the issue of tax fairness?
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Mr. Speaker, I would say more generally that this is a multilateral instrument and that this is actually good for developed countries, particularly the OECD countries, which do have a problem of, basically, jurisdiction shopping for the best tax-related policies. Again, there is some shifting of profits to areas that we do not have tax agreements with. Again, this is part of the developed world's attempt to modernize language in an efficient way and to also counter where some companies will simply shift profits outside the developed world and take them to places that have very low or no tax areas. Particularly if those monies were made in the developed world and consumed in the developed world, there should be taxes paid on them.
However, there are only a few multinational companies that probably have the sophistication to be able to do this kind of forum shopping. Whether that happens completely in Canada, I would argue probably, considering we hear so many concerns in the United States that multinationals are seeing their monies shifted outside the United States.
I also would simply suggest for the member that if we look at the tax reform proposals put forward by the American administration, that is lighting the U.S. economy on fire. It is not BEPS that is bringing the money home; it is the fact that they are competing and they have changed their laws to reflect the fact that they must remain competitive. That is the most important thing, and I hope the member and the government keep that in mind.
Linda Duncan NDP Edmonton Strathcona, AB
Mr. Speaker, it is always a pleasure to work with my colleague. I have previously worked with him on committees.
It is important that, as a member of the OECD , we take seriously the work that is done in that forum. For example, the OECD recently did a report on all the countries living up to their commitment to deliver 0.7% of their GNI on international assistance, and chastised Canada for delivering just a third of that. Also, there have been calls for Canada to make sure that our standards for controlling toxins are on par with other OECD nations.
Clearly, the work of the OECD is important, but I wonder if the member could speak to this issue. A number of concerns have been raised that, yes, it is good that we will be modernizing the mechanism whereby we enter into these agreements, but will it not also be important to be revisiting some of the tax treaties we have with some nations, which simply could end up with corporations in Canada not paying their fair share of taxes in Canada?
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Mr. Speaker, I would say that if the member has information about companies that are doing that, she should deliver that to the CRA personally. It is simply just saying that tax evasion happens. Yes, it does probably in many cases happen, but without specifics, it is very difficult for the CRA to track down. Therefore, if the member has information, that would be important to have.
I would just point out that it is easier for Canada as a country to renegotiate certain agreements with countries where there are concerns, but to do that, we need to have a partner that is willing and we also need to have the capacity and resources available to do that. By supporting this BEPS multilateral instrument, we will actually free up a lot of resources because we are dealing with like-minded economies, like-minded areas where we can quickly and efficiently modernize those agreements. That is a big part of this. This is just a faster way for us to keep our agreements up to do date to be able to keep up with the newest base erosion and profit shifting activities.