Debates of May 14th, 2019

Canada–Madagascar Tax Convention Implementation Act, 2018

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Madam Speaker, the member for South Okanagan—West Kootenay has been a very strong advocate for fair taxation in this House over the last few years, which is why he is much beloved by his constituents. He is also one of the hardest-working members of Parliament I have ever seen in the House of Commons. He does a tremendous job.

The member points out what we all know to be true. What did the Liberals do about the Isle of Man scam? Millionaires can take their money overseas, get a little receipt for a charity and then get all the money back without having paid a cent in taxes. The Liberals have said that these people have lawyers and are too big to prosecute so they can do it. Under the Liberal government, people can do any scam they want on taxes if they are wealthy enough. The example my colleague cites is endemic now in the tax system.

The Liberals' response is that they have put a bit of money into CRA. What they do not tell the public, of course, is that the money they put into it is just replacing the positions of people who have left CRA. Why? The low morale in that institution is because under the Liberals the CRA is going after small business people. People with disabilities are having their disability tax credits denied. No wonder there is a problem in the tax system, when people with disabilities and seniors are being attacked for the least indiscretion but millionaires and billionaires get off scot-free.

That is unfair, and we will change that on October 21.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Madam Speaker, I am encouraged today that the NDP colleagues said that they would be supporting this legislation. Most parties in this House will be supporting it. We are getting quite used to seeing the New Democratic Party, in this Parliament and the last, oppose trade agreements. It is good to see that it understands the importance of tax treaties.

In the Conservative Party, we believe that if we are going to have a strong economy, we need to have good trade relationships around the world, fair trade relationships. We need to have tax treaties that provide confidence to investors in whichever country they may be investing, foreign investors here and our investors there. That is important.

Also, on the training side, Conservatives believe that for a strong economy we need to have innovation and trade here. Does the member have any suggestions? The tax treaty we are signing is very similar to a tax model put out by the OECD. What are the important parts of a treaty that would make him agree with me that these types of tax treaties that encourage investment are vital to our local national economy?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Madam Speaker, we are supporting Bill S-6 because we have read the bill and we know that the Madagascar taxation rate is roughly similar to Canada's. Other taxation agreements that the government has signed, or tax arrangements with overseas tax havens, we do not support. When the tax level is 0%, it is a tax haven. It is a way of legalizing tax evasion.

In the same way, it is why we often did not support Conservative trade agreements under the last Parliament. Conservative fair trade is an oxymoron. The Conservatives have never signed a fair trade agreement, ever.

What we would do is actually look at the trade agreement. We would do our due diligence. We would ask officials what kind of impact analysis was done on a trade agreement. Time after time, under the Harper government, they would say that no analysis was done. They wanted to do the ribbon-cutting but they had done no analysis.

That is why, systematically under the Harper government, trade agreement after trade agreement, our exports to those markets fell and the imports from those markets rose. That is why we had a record trade deficit under the Harper government. Conservatives did not read the fine print. They simply sold the farm every single time. Not once did they do an economic impact analysis. Not once did they have an understanding of how many jobs they would lose. On trade, Conservatives were absolutely irresponsible, and that is one of the reasons they are sitting in the opposition side of the House.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, I have listened to the debate on Bill S-6 this morning and I must say there are plenty of things that one can draw upon in order to shed more light and to be a bit more forthright with respect to the bill.

The Government of Canada and the Liberal Party of Canada recognize the important role that trade plays in the development of our nation. Having observed the NDP for many years now, it is my experience that as a general rule that party does not support trade agreements.

There have been dozens of trade agreements. On one occasion, the vote was not a recorded vote, so NDP members claimed not to have voted against the bill. They might have voted in favour of one other bill. A couple of MPs have indicated they have voted in favour of trade, but as a general rule the NDP does not support trade agreements between Canada and other countries, and that is somewhat unfortunate.

Bill S-6 is about a tax treaty with Madagascar. Madagascar has wonderful opportunities for Canadians, and individuals from that country have opportunities here in Canada. We have many tax treaties with countries around the world, and tax treaties provide significant benefits to both countries.

That is why it is with pleasure that I rise today to address this legislation and to add my comments on a wide variety of issues, all stemming from our economy, social justice and the tax laws that we currently have. I have a fairly wide spectrum to work from based on the debate I have heard so far today. Let me attempt to do it in the best way I can.

The number that comes to my mind, which ultimately demonstrates what this government has been able to accomplish by working with Canadians, is one million, and that is a fairly recent number that has come out relating to employment.

It is worth mentioning that since we took office in October 2015, we have seen the generation of over one million new jobs. That is historic, in the sense of the last 40 or 50 years. It is an incredible number of jobs, and it is due in good part to the policies that this government has put in place, budgetary measures and legislative measures, all with the idea of supporting Canada's middle class and those aspiring to be a part of it.

Day after day, for weeks, months and years, our government has taken Canada's middle class seriously. We have developed progressive measures to assist middle-class Canadians, bringing forward policies that will support them, policies such as the Canada child benefit program and the guaranteed income supplement for our seniors, which have added great value to our economy.

We hear a lot about taxation. People expect to pay their fair share. From day one, our government has taken this very seriously.

Members will recall that during the last election, today's Prime Minister made a commitment to Canadians that there would be a tax cut for the middle class. If members look at Bill C-2, which was our first piece of legislation, they will see that we delivered on that tax cut, which put hundreds of millions of dollars into the pockets of Canadians. I would argue that the money going into the pockets of Canadians enabled them to increase their disposable income, allowing them to spend more into the economy, and it is one of the reasons for the one million-plus jobs that have been generated. Working with Canadians, investing in Canadians, allowing Canadians to have more disposable income has allowed Canada's economy to perform that much better.

Taxation policy matters. The NDP and the most recent speaker talked about tax fairness and said that the rich need to pay more. That was an important part of the very first budget we brought forward, in which Canada's wealthiest 1% had to pay more. The millions raised through that one initiative supported giving Canada's middle class a tax break. The issue of tax fairness, much like the tax break, has been of the utmost importance to this government. It was one of the very first actions taken when we assumed office in 2015, recognizing some of the comments made today, whether it was the NDP talking about tax fairness or the Conservatives talking about the tax on Canada's middle class.

When the member for Calgary Shepard asked who benefits from the tax break that we gave to the middle class and then said it is members of Parliament who benefit, I think of the tens of thousands of teachers, the tens of thousands of nurses, the tens of thousands of factory workers or the tens of thousands of people who work for our financial institutions. Those individuals also benefited from that tax break.

I indicated that when I had the opportunity, I would put some facts on the record, and there is no disputing what I have said, because it is all factually correct. The government has consistently gone out of its way to develop policy through legislation and budgetary measures that has had a positive impact on Canada's middle class.

The tax treaty that we are debating today is all about international relationships and ways for these treaties to further advance Canadian interests. This is not the only tax treaty legislation that we have put forward in the last three years. Bill S-4 also dealt with tax treaties. It is not the first time we have had to deal with tax treaties, because we understand and appreciate the true value of having these types of treaties with countries. It allows us to have a better sense of taxes flowing, both here in Canada and in the country in question. It provides additional security, if I can put it that way, for investments flowing to countries with which we have tax treaties.

We recognize, as we do on the broader picture, trade and international relations. No government in recent history has done more with respect to trade agreements than this government. The previous government likes to say that it had 30-plus trade agreements, but that is just not true. Through this administration, we have been able to sign more trade agreements than any other government in the last 40 to 50 years. Since trade agreements have been tied into tax agreements or tax treaties, I would challenge any member in the House to list a government that has been able to accomplish so much in such a short period of time on that file.

[An hon. member]

Oh, oh!

[The Assistant Deputy Speaker, Carol Hughes]

Order, please. I would remind the member for Selkirk—Interlake—Eastman that he will have an opportunity to ask questions or make comments at the proper time. I would ask him to be quiet until such time as the parliamentary secretary is finished his speech, which will be in about eight minutes.

The hon. parliamentary secretary.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, with respect to treaties and trade, the approach this government has taken in regard to international relations has supported our economy. By supporting our economy in many different ways, it has had a profoundly positive impact on the generation of jobs.

We can look at the province of Manitoba and at an industry I have cited in the past, which is the pork industry. It provides thousands of jobs in the province. In any given year, we have more pigs than people in Manitoba. Plants out toward Neepawa export 95%-plus of their production to Asia. However, the industry provides hundreds of direct jobs on the factory floor and hundreds of additional jobs outside the factory.

Those jobs would not exist if we did not have the international relations we have today. Whether it is cattle or pork, members will see significant increases in the last few years. I like to believe it is because of the approach, in part, and working with Canadians and other stakeholders, encouraging the development of those industries and taking advantage of the agreements on which we have signed off.

At times, the Conservatives will say that they brought it close to the goal line. As we know, it is not bringing it to the post that matters as much as it is getting it over the post. We have been very successful at doing that.

The CETA agreement is a great example. It involved a couple of dozen countries. It was completely off the rails and had it not been for our current Minister of Foreign Affairs, that deal never would have gotten over the goal line. We are still hopeful the European Union will get behind it 100%, as its respective legislative bodies continue to deal with the issue.

Whether it is recognizing the value of our tax treaties or the benefits of getting engaged with the countries, and we are talking about dozens of countries, Canada has been successful in negotiating these treaties, which provide assurances in progressing on the trade file. In a relatively short period of time, the government has been able to accomplish a great deal on both accounts.

We hear a lot from the opposition benches about tax avoidance. Again, we have seen the government not only talk about it but invest in it. For two consecutive years, the government invested additional monies, almost $1 billion, hundreds of millions in each of two separate budgets, in the Canada Revenue Agency to go after individuals who try to avoid paying taxes.

We have taken this very seriously, along with tax evasion. In three years, the government has done more to go after individuals for tax evasion than the previous government did in 10 years. The same applies to tax avoidance. We have recognized the importance of doing the follow up, of looking at ways to ensure that those who are supposed to be paying their fair share are doing so.

We do not need to take lessons from the opposition, in particular the Conservative opposition, on this because it has virtually ignored the problem by not investing. If anything, it divested. It took money away from the CRA. Cuts were brought by the Conservative administration.

When I put forward a question for the member for New Westminster—Burnaby, he talked about taxation policy. He implied that we needed to go after corporations and make them pay more. I give the NDP an A-plus for consistency on it while it is in opposition, but that is it. I underline words, “while in opposition”.

I have witnessed first-hand an NDP government in my home province of Manitoba. What I hear from the NDP in opposition is in contrast to what I hear from the NDP in government. It is like night and day. When the NDP was in government in Manitoba, it cut corporate taxes seven times, as I pointed out in my question.

We can look at the record and the many comments today by my colleague and friend from the NDP. He has tried to shape the debate as if the NDP is the strong advocate for tax fairness. In the last three years, we have seen a national government not only come up with tax treaties to ensure there is a stronger sense of tax fairness at the international level, but also it has invested hundreds of millions of dollars in Revenue Canada to go after individuals who avoid or evade paying their taxes. Those are significant sums of money.

All of this together is what we have been able to do in the last three and a half years. I look forward to the next six months. There is a lot more we want to do to continue to support Canada's middle class, those aspiring to be a part of it and those who need to be ensured that there is a sense of social justice.

[Anne Minh-Thu Quach, NDP, Salaberry—Suroît, QC]

Madam Speaker, I listened very carefully to the member opposite who just spoke. He said that it is very important to him and his party to fight tax evasion. However, after signing 90 tax conventions with other countries, Canada still does not have legislation to fight tax evasion.

For several years, the NDP has been calling for legislation that will require the automatic disclosure and exchange of banking information. The Liberals have always refused to pass such laws, and we are losing billions of dollars every year. As we have said many times, this money could be invested in education and health. It could help us protect the environment.

A report released today called “The KidsRights Index 2019” ranks Canada 49th on protecting children's rights, even though Canada is a G7 country. The index is based on the following five criteria: right to life, right to health, right to education, right to protection, and enabling environment for child rights.

Young people across the country are taking to the streets to denounce the fact that Canada is not doing enough to protect the environment. Young people with ENvironnement JEUnesse have even taken legal action against Canada for violating their environmental rights. The government likes to pat itself on the back for investing $1 billion in the Canada Revenue Agency, but that investment has not led to any prosecutions. There is a shortage—

[The Assistant Deputy Speaker, Carol Hughes]

Order. I would ask hon. members to ask shorter questions. The last one was nearly two minutes long.

The hon. Parliamentary Secretary to the Leader of the Government in the House of Commons.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, there are many aspects to the question that I would love to be able to address, but due to time constraints I will have to pick and choose.

The New Democrats want to believe that if we pass a law here in the House of Commons, there would not be a thing known as tax evasion. Businesses would just set up a bank account and deposit the monies into it and we would not have to worry about it. All we have to do is click our heels and pass the law and there would not be such a thing as tax evasion.

It does not work that way.

The member opposite made reference to the need to go after them and see prosecutions. Holding individuals accountable for attempting to avoid paying taxes and investing hundreds of millions of dollars into CRA does not necessarily mean that everything has to go to court. By having these discussions and bringing more people to the table, we are getting money back that is owed to Canada.

Is it enough? It is absolutely not. We can always do more. In my concluding remarks I indicated that we have accomplished a great deal in the last three and a half years, and I hope Canadians will see fit to return us so we can continue working for Canadians and continue to support our middle class and others.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, we have heard from my colleague from Burnaby and my friend from Quebec. I appreciate their bringing forward concerns around corporations using tax havens and tax loopholes to shovel buckets of money out of our country. We know that tens of billions of dollars have been moved offshore, where they are not paying their fair share of taxes. Small business people and middle-class working people are paying their fair share, building the roads and hospitals and all of the infrastructure across our country, while big corporations and the elite and the friends of the Liberals and Conservatives are able to shovel their money through these tax agreements.

The government had an opportunity to close loopholes for those tax agreements that are not working for Canadians, to keep that money in our country so that those who are not paying their fair share would pay their fair share. The member talked about governments and NDP governments provincially across this country. It is the solicitor general in the B.C. NDP government who is going after those tax evaders. In fact, it is through his investigative work that we learned that over $5 billion was washed in British Columbia in the real estate market. The B.C. Liberals, the previous provincial government, sat idle and did nothing about it.

What about the priorities? Why is the government not fixing these loopholes that are protecting the Liberals' friends, the elite, the rich and the big corporations that are not paying their share?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the New Democrats have super-fantastic lines to try to generate this public appeal and be seen as the great defenders of the taxpayer, saying that if we have a billion dollars, we could give it to the children or to the poor seniors.

However, when the tire hits the road, how do the New Democrats actually behave in the House? When we increased the Canada child benefit, they voted against it. That Canada child benefit took 300,000 children out of poverty here in Canada, yet the New Democrats voted against it. When we increased the guaranteed income supplement, the NDP voted against that too. That lifted tens of thousands of seniors out of poverty situations. Both initiatives had a profoundly positive impact in the riding of Winnipeg North, throughout Canada and in all regions of our country, yet the NDP voted against them. When we gave the tax break to Canada's middle class, the New Democrats voted against that too. At the same time, we put in place a special tax increase for Canada's wealthiest 1% of people, and they voted against that too.

The New Democrats are not consistent. They have spin lines that they use while they are in opposition, but when they hit government at the provincial level, those lines seem to go out the window. I say that because I have had far too many years of first-hand experience sitting in opposition and watching NDP governments. All I am asking from the NDP is to be consistent.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, we know that the B.C. premier and cabinet are meeting tomorrow to consider whether they are going to do an inquiry into money laundering. When the federal Liberal meets tomorrow, will they also agree to have an inquiry into the money laundering that has been happening in our country federally? That is a question Canadians want answered. They want to know that the government is going to take the situation seriously.

The government has not arrested anyone in the Panama papers, while other countries have taken action. The government announced a billion dollars to fight tax evasion in this country and is chasing small business, because clearly it is not getting action when it comes to the Panama papers.

Maybe the hon. parliamentary secretary can address that. Will the federal government follow the Province of British Columbia with a national inquiry into tax evasion if B.C. decides to move forward tomorrow?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, this government has recognized the importance of ensuring that individuals who are attempting to avoid paying taxes are being held to more account. That is the reason we invested literally hundreds of millions of dollars. As I pointed out, it was close to a billion dollars over the last couple of budgets. By the way, the NDP voted against that also. Those are real, tangible dollars that are flowing to prevent people from avoiding paying their fair share of taxes.

This is the government that in the last two years has entered into other tax treaties. By entering into tax treaties, hopefully we will be that much more successful at preventing other companies from doing some of the nasty things that we know they are doing

This government does recognize the seriousness of the issue. I suspect that if one were to look into the details, one would find virtually on all fronts that we have seen significant progress on these types of files in the last three and a half years, especially in comparison to the 10 years of the former Harper government, when we saw virtually nothing on all three of those fronts.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, it is always good to rise in the House, and as I have announced I will not be running in the next election, every time I rise in the House, I am still overwhelmed with not just the beauty of the chamber, but also the great responsibility I have had from the people of Battle River—Crowfoot in being entrusted with bringing their voices to Ottawa.

Today we rise to support Bill S-6, an act to implement a convention between Canada and the Republic of Madagascar that has the objective of eliminating double taxation and preventing tax evasion. Tax treaties of this nature meet this objective through the sharing of information between signatory countries.

We know that for governments to build strong economies at home, it is important that they look at a number of very important subjects. All three or four of the points that I want to make today deal with having a strong economy at home. They deal with making sure that jobs stay here at home, making sure that our young people are not travelling overseas necessarily to work but can find jobs here so that we can prosper here at home, and making sure that Canadians who invest abroad or find work abroad will have a better opportunity to prosper there.

There are some very important conditions that have to be laid out in order to find that prosperity and allow those jobs to be created. We know in the Conservative Party know that one of the vitally important aspects of securing a strong economy and creating jobs is trade. We are an exporting country. Canada, whether it is resources or agriculture, exports more than what we use at home. We are a vast country. Our geography and land mass make us a country of amazing opportunity. It is one of the largest countries in land mass in the world.

However, compared to many other countries, our population base is fairly small. We have only 35 or 36 million people. How do we guarantee that we will be able to prosper in spite of having a small population base? One way is through trade, through making sure that our resources and our agriculture can be sold and marketed around the world.

I live in a fairly rural riding in Alberta, a province whose economy has been hurt over the last four or five or six years in a remarkable way. In my riding, we have many different industries and many different sectors of the economy: gas and oil, resources, coal. We are rich in resources in Alberta, and my riding is also very strong in agriculture.

With all of these, we have a high level of exportation of our products. In order to have a free trade agreement in South America, we realized that people there had a desire to secure a safe food supply and were looking to Canada to provide grains, oilseeds, pulse crops, and other agricultural products, including beef and pork. Much of the food stock for the world is created in Canada, and much of it in Alberta.

We realized that we want to have free trade agreements with many countries, and if we do not have a free trade agreement with a country, we still want to have some kind of opportunity to trade with that country.

We do not have a free trade agreement with China, but we still carry on a great amount of trade with China. However, always, agreements enhance our trade. Likewise, agreements on taxes will enhance it as well.

Regarding our agricultural products, right now we are really feeling the pinch with canola. We are feeling the pinch, with one of our largest markets, China, basically stopping our canola from coming into that country. We believe that this is unfair and ungrounded. We have no doubt that this is not about food safety. It is not about the product. As I have said, we have the safest, best product in the world. However, we do not have a free trade agreement with China. Maybe when we see what is happening, we understand why we do not have a free trade agreement with China.

Right now, our canola farmers are really feeling the pinch. Indeed, at this time of year, in the spring, when our crops are being planted, I am getting calls to my office asking me if I am expecting the market to open up. They are asking whether they should be planting canola or cutting way back, although their rotation does not allow them to do that. We are hearing all the concerns coming from agriculture with regard to trade.

The Conservative government had a free trade agreement with Europe. We were pretty well ready to sign onto the TPP. It was not ratified, but everything was laid out. We wanted to get our product into these countries so that we could prosper at home.

However, it is not all about trade. If we want a strong economy, we also have to recognize that we have to have training. We have to have a skilled workforce. We have to be able to invest so that when times get tough, if we cannot compete with Mexico on wages to manufacture, we can compete with the skill sets we have here in Canada. Therefore, we invested greatly in training young people and enhancing the skill sets our workforce had already. This was a driving force in our Conservative government in the last 10 years we governed. We put money into innovation and training.

It was trade, training and red tape. How are we going to have job creation? How are we going to enhance it? How are we going to attract businesses to start up in Alberta, or wherever in Canada, if the red tape to get that business going is a mile long?

We brought forward a red tape reduction strategy to make it easier for businesses, investors and job creators to create those jobs right here at home. That job is unending. With more government and more bureaucracy, the tendency is to see red tape grow. One of the strong things we brought forward was making sure that we were able to cut red tape, and we still need to do it. Therefore, I am pleased that Premier Kenney is committed to the reduction of red tape. There is a level of optimism we have not seen in Alberta for many years. I would also say that our government has always and would continue to look at ways to enhance job creation through the cutting of the red tape burden.

The fourth and final aspect, besides trade, training and red tape, is taxes. If we are not a country that can attract manufacturing and investment because our tax regime is so out of whack, then we cannot expect to see our economy grow. We cannot expect that people will have confidence in investing their capital here in Canada. In Alberta, because of regulation, red tape and high taxes, including the carbon tax, we saw between $80 billion and $100 billion in foreign investment capital flee, and with that went jobs and hope for a lot of young Canadians and Albertans.

To have a strong economy, we have to make sure that we have a strong tax system that has integrity but is also not overly burdensome. When the Conservatives came to power, and when the world fell into a global recession, we moved our corporate rate from 22% to 15%, because we knew that business and manufacturing would flee to the United States or Mexico, predominantly, and other places if we did not compete with a tax structure or a tax rate that would attract investors to Canada.

A lot is about taxes. A lot of what we want to do in building a strong economy is in regard to the tax structure. Tax levels make a large impact on investment, and we have seen that.

Canada not only mines and extracts resources around the world, it invests around the world. We have people who prosper and earn an income from foreign investment. We want to be sure that if we are allowing that, we avoid double taxation. If taxation is important, who, as an investor, would want double taxation, where a country, Madagascar, in this case, would tax us, and then Canada would when we came back home? How much investment do members think would take place in those countries, and here, if we allowed double taxation?

Predominantly where we have massive investment, we have double taxation treaties. A tax treaty contains rules regarding the circumstances under which a signatory country may collect certain taxes on income so that when investors invest, they are aware. They look at the treaty and say that this is what we have to pay, this is what we do not have to pay and this is what we will pay back home. It is a single tax base. In the absence of a tax treaty, the income of a Canadian citizen abroad would be hit on both sides, and investors would flee.

For that reason, we come to this today. This debate, I would say, is the meat and potatoes of what is going on here in Parliament. This is not a day when we are talking about the issues that are really important to Canadians. I do not know if I have had a call to my office in Camrose about Madagascar. My constituents expect that we are taking care of business so that they can prosper, whether on the farm, in investing or in the oil patch.

Most of the tax treaties to which Canada is partnered follow the Model Tax Convention. This is a tax treaty or convention that is given as a model by the OECD, the Organisation for Economic Co-operation and Development. This was done in 1963, and subsequent to that, there have been a number of occasions when it has been revised. Currently, Canada is signatory to 93 agreements. This is not something new. We are not stepping out into uncharted territory. This is common.

As I said at the outset, I fully support the intent of Bill S-6, but I am particularly concerned about the tax evasion side. We have heard much from all parties today about tax evasion and the ability of the Canada Revenue Agency to consistently enforce compliance rules and collect taxes.

I do not like high taxes. I look for ways to cut taxes. I formerly served as the minister of state for finance. We looked at every opportunity we could to drive this economy by lowering taxes and keeping more money in the pockets of Canadians. However, tax evasion is different. I think every Canadian expects that there is a certain level of taxes that they are required and willing to pay, not just by law but in order to have the services we have here in Canada.

From report 7 of the 2018 fall reports of the Auditor General of Canada, on compliance activities of the Canada Revenue Agency, the public accounts committee, which I have had the privilege of chairing, learned the following: “Most taxpayers are individuals with Canadian employment income. We found that the Agency requested information from these taxpayers more quickly,” and this is the important part, “and gave less time to respond, than it did with other taxpayers, such as international and large businesses, and taxpayers with offshore transactions.”

The Auditor General went on:

For example, if the Agency asked an individual to provide a receipt to support a claimed expense and the taxpayer did not provide the receipt within 90 days, the Agency would automatically disallow the expense as an eligible income tax deduction. The Agency would assess the taxpayer’s income tax return on the basis of the information it had available and would notify the taxpayer of the taxes due.

In other words, average middle-income Canadians are not cut much slack when it comes to their domestic income here in Canada.

Comparatively, the Auditor General's report states:

For other taxpayers, such as those with offshore transactions, we found that the time frame to provide information was sometimes extended for months or even years. For example, banks and foreign countries could take months to provide information on the taxpayer’s offshore transactions to the Agency or the taxpayer.

It continues, and this is important:

Sometimes the Agency did not obtain information at all, and the file was closed without any taxes assessed.

We can see that these agreements are vital. These agreements enhance what the CRA is given. If people understand the treaty, they know what to claim, they know what to put forward and they know what to show CRA. They feel less vulnerable to the Canada Revenue Agency and can also invest with greater confidence.

The Auditor General's office said that “over the past five years...the Agency took, on average, more than a year and a half to complete audits of offshore transactions.”

These agreements speed that up. The fall 2018 report was not the first time the Auditor General noted how long it took the agency to enforce compliance. The Auditor General further stated:

As we noted in the 2013 Spring Report of the Auditor General of Canada, Chapter 3, Status Report on Collecting Tax Debts—Canada Revenue Agency, the longer it took the Agency to enforce compliance, the less likely it could collect the taxes due. This was especially true for taxpayers with offshore assets, who may have been inclined to liquidate assets or transfer funds to make it more difficult for the Agency to obtain information and collect taxes due. On the other hand, for individuals and domestic businesses, the Agency had a better likelihood of collection by garnishing wages and seizing assets.

To add insult to injury, the Auditor General found that the Canada Revenue Agency did not proactively consider waiving penalties and interest consistently for all taxpayers. Again, the Auditor General stated:

We found that the Agency offered to waive interest and penalties for taxpayers in some compliance activities but not others—even when the Agency had caused the delays.

The inconsistent application of relief for taxpayers contradicts the Taxpayer Bill of Rights, according to the Auditor General. The report states:

[the] Taxpayer Bill of Rights gives all taxpayers the right to have the law applied consistently. It also gives all taxpayers the right to receive entitlements, such as benefits, credits, and refunds, and to pay no more and no less than what is required by law.

Although it may not quite be unanimous, I am pleased that most in this House, as far as I can see, see the importance of these kinds of meat and potatoes regulations and bills. Coming into compliance and making sure that Canadian investors are not vulnerable or put on an uneven playing field is imperative if we are going to increase foreign investment coming to our country and our investment in those countries, all of which will help build the economy, help Canada prosper and help us create jobs.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Mr. Speaker, I enjoyed listening to the speech from the member opposite on a double taxation convention, and there are some things I agree with. One is the investment. I think all of us in the House agree on the importance of investing in infrastructure, in a skilled workforce and in innovation. Certainly we agree on the importance of reducing red tape.

One thing I do not agree with is the member's reference to this issue as a “meat and potatoes” issue. I represent New Brunswick Southwest, so I would say double taxation is a “fish and chips” issue.

I would like the member to speak about double taxation in my province, where people who have two homes or who have a camp or a cottage are being charged double the taxes regardless. Since the member opposite talked about the domestic aspect of taxation, I would like him to speak to this issue in the context of New Brunswick, noting the disadvantage placed on real estate investment when there is a double taxation charge for owning a second home.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, for sure the Madagascar tax treaty is a “fish and chips” kind of issue. I thank my colleague for her encouraging words and her compliment.

With respect to how we want to encourage investment in this country, we want all levels of government to recognize that we can tax anything to the extent that people will refuse to invest in it.

This is something the parliamentary secretary pointed out with regard to the New Democratic Party, and he was right. I do not agree with him all the time, but on some things I do. We can literally tax the corporate and business sectors so that they move across the border, and that does not suit us well.

The member brought up homes and real estate. Some people have a cottage and others buy a secondary home because their child is going to university and they want a home in the same city. Taxing them creates a disincentive, and it affects the markets. The member is right.

This is an issue that causes people to say no. They cannot and will not do it, because they do not want to give up everything they saved to get a house so that their child can live near their university, as they will perhaps get walloped by two levels of government. It is unfair.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Mr. Speaker, I too enjoyed the member's speech. There was lots of good information in it.

Interestingly, in my riding of Kootenay—Columbia, I do not hear a lot of concern from my constituents regarding their taxation levels, but I hear a lot of concern about the tax evasion and tax avoidance committed largely by large corporations. There is a feeling that the system really is not fair.

Does the member think Canada should propose legislative changes to the Canadian tax code to prevent tax evaders from using our overly flexible laws to avoid paying their fair share to the Government of Canada? Would this not make things a lot more equal for taxpayers in general?

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, I want to reiterate what I said earlier. The Conservative government did all it could to lower taxes at a very difficult time globally. The world fell into a recession, and we immediately evaluated where we were as a country. Were we going to attract investment or were we not? We lowered taxes. That being said, we also very much understood that we needed to have a fair rate of taxation, and we expected people to abide by and honour the law and pay taxes that were due.

Speaking of the CRA, the Auditor General's report said:

In addition, we found that even though the Agency’s own policies allowed it, the Agency waived $17 million in interest and penalties, despite the fact that the taxpayers were identified as at risk for non-compliance and were undergoing an audit at the time they asked for relief.

Let us think about this. CRA knew that money should have been paid and decided to waive it. It would just blot it out and give tax relief. As with all the audits, the Auditor General made a series of recommendations to CRA that would prevent that.

Most Canadians have just finished filing their tax returns, and we are dependent on that revenue coming in for our social programs, such as health care, education and others. However, it is an issue, as the parliamentary secretary said earlier. If there was an easy way to do it, a magic wand that would bring back all the money that was owed, we would love to have it. There is not, but tax treaties like this give a bit of certainty or confidence to those who are investing abroad.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I was so pleased to hear my colleague from Battle River—Crowfoot citing the very last report from our late and much-missed Auditor General, Mr. Ferguson, which took aim at the preferential treatment CRA gives. On a basis of empirical data, studying everything the CRA does, the Auditor General audited and found that when an average Canadian owes CRA a little money, CRA goes after that person and goes after that person for interest. However, CRA gives fat cats with offshore tax accounts extra time, saying it is a complicated, offshore situation.

In fact, as the hon. member pointed out, only for the wealthiest do CRA officials voluntarily offer to have interest charges waived on money owed. My daughter, who is a university student, was audited last year on her income tax to verify the textbooks she bought and to provide receipts again. It is a very disturbing reality that CRA officials would prefer to go after people who cannot afford to hire lawyers than to tackle the tax avoidance displayed in the Panama papers. We are the only country that has not gone after the offshore accounts revealed by the Panama papers.

My dear friend from Battle River—Crowfoot and I do not always agree on things. We do love each other, but we do not always agree on things. On this occasion, I celebrate his speech.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, I am going to look back on that statement in my retirement and say that the leader of the Green Party appreciated my speech. I had better look at the script again to make sure I did not veer off from what I believe. I appreciate it, and I thank her. As she knows, we have a very good working relationship, which is what I try to have with all members of all political parties here in the House. It is vital.

She mentioned our late, much-loved Auditor General, Michael Ferguson, and his report. This goes back to 2013 as well, but in his last report he laid out recommendations to help increase the amounts of money the CRA would be able to collect.

I remain skeptical about whether the CRA will in fact implement the recommendations of the late Auditor General, but I can tell members that we have a public accounts committee that will hold the CRA and every department to account. It is an all-party, non-partisan committee. I chair it. We work very hard to be non-partisan, because it is in the best interests of Canadians, Parliament and all parties that the departments deliver what is expected and required in an accountable and transparent way, without wasting a lot of money. Therefore, we will hold the CRA to account.

With respect to the CRA's action plan, we will make sure it enforces or implements the recommendations that the late Auditor General and we as a committee made, and that it abides by the timelines and responsibilities it has agreed to. If it does not, although we may be non-partisan and collegial, we will not be quite so collegial when we invite CRA representatives back the next time. It is never a good time when departments get called back because they have not lived up to their action plans.

I am skeptical, but I expect the CRA will try. Every deputy I have met wants to deliver on the late Auditor General's recommendations. Therefore, I am hopeful the CRA will implement those recommendations, as well as the recommendations from the public accounts committee.

[Greg Fergus, Liberal, Parliamentary Secretary to the President of the Treasury Board and Minister of Digital Government]

Mr. Speaker, I am pleased to be participating in this debate on Senate Bill S-6 in my new role.

I would like to start by saluting my colleague opposite for his fine speech on this bill. I will continue in the same vein and express my support for this bill.

Until just recently, I was a member of the Standing Committee on Finance. I sat on the committee for nearly three years, and I absolutely loved it. We got to examine all the issues that fall to the federal government, including all bills related to taxation authority, and review our government's finances. One of the last studies I took part in was about Bill S-6, an act to implement the convention between Canada and the Republic of Madagascar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. It is part of our government's agenda for ensuring tax fairness and a fair tax system.

Before I get into the details of the legislation, I would first like to underscore the fact that this is not only part of this government's tax fairness agenda, but this also places itself within a whole framework of what we are trying to achieve to help Canadians who are trying to keep their taxes low, including small businesses as well as for middle-class families.

When our government took office three and a half years ago, we made a commitment to invest in growth and we made it while upholding the principle of fairness for all taxpayers. This proposed legislation goes a long way toward that end.

A fair tax system is key to ensuring that the benefits of a growing economy accrue to all and are felt by more and more people, especially people with good, well-paying jobs for the middle class and for everyone who works hard to join it.

I would like to remind hon. members that one of the first things our government did was lower taxes on the middle class and raise them for the wealthiest 1%. Over nine million Canadians benefited from that measure. That really fills me with pride. All members can take pleasure in knowing that nine million Canadian families enjoy a much lighter tax burden today.

After the middle-class tax cut, we took steps to replace the old system of child benefits with the Canada child benefit. I take pride in that measure because it fulfilled an election promise. The leader of the Liberal Party of Canada made that promise in my riding, Hull—Aylmer, surrounded by middle-class families and families hoping to join them. These people work hard to build a stable family life.

It is one of the biggest promises we have ever made, and the result is that 300,000 children were lifted out of poverty in Canada. That is remarkable.

I have been involved in federal politics for a long time now. I started here, in 1988, as a page in the House of Commons. I remember there was a debate that year called “campaign 2000”. The idea was to eliminate child poverty by the year 2000.

We made that commitment in 1988. Every single government since has made it too. However, it was not until 2015, when the current Liberal government was elected, that we were able to accomplish great things in that area. We cut the child poverty rate by a third, which is remarkable, and we did it in one fell swoop. It was one of the most important social programs—if not the most important—to have ever been implemented in Canadian history.

I would now like to return to the bill on the convention between Canada and the Republic of Madagascar. As I said earlier, I am on the Standing Committee on Finance; we examined the provisions of the bill and we unanimously voted to support this bill without amendment. I am very proud that we have now reached the stage where it is up to the House of Commons to approve it.

I know that this is not something that we generally do when we introduce a bill, but as a former member of the Standing Committee on Finance, it is very important for me to review and explain the five major clauses of the bill without getting into too much detail.

First, this bill sets the maximum withholding tax rate on dividends at 5%. That is important, particularly if the beneficial owner is a company that controls at least 25% of the voting power in the company paying the dividends. It sets the maximum withholding tax rate at 15% in all other cases. The first provision is consistent with other double taxation treaties that Canada has with a number of other countries in the world.

Second, the bill sets the maximum withholding tax rate on interest at 10% and eliminates withholding taxes when interest is paid in respect of a loan made, guaranteed or insured by a public agency or the central bank of one of the states or when the beneficial owner of the interest operates exclusively to administer or provide benefits under one or more pension, retirement or employee benefits plans, subject to certain other conditions. As I said, that is completely normal. That is something we do in the 93 other double taxation treaties that Canada has with other countries.

The third element of this double taxation treaty sets the minimum withholding rate of 10% of the gross amount of royalties and further provides for the withholding tax on certain royalties. This is particularly important, especially for people who might be involved in companies such as in the mining sector.

As members know, Canada is a worldwide leader with respect to investment in mining companies and in doing these investments around the world. It is very important for Canadians who are working for these companies in these countries to have this opportunity to participate and be protected by these taxation agreements.

The fourth element includes a provision to avoid potential double taxation that can arise in respect of the capital gains that an individual realizes on the deemed disposition of property upon immigration between two states, in this case between Canada and Madagascar.

This proposed bill will benefit Canadians by boosting our exports abroad, making it easier for Canadians to take part in these activities. In doing so, Canadians will know they are protected by these measures on double taxation.

Tax fairness is as important to Canadians as it is to our government's plan for economic growth. It is very important that Canadians know their hard work will be rewarded with greater opportunities and a fair chance of success. They need to know that their fair chance of success and opportunities are being protected and that their efforts will not end up being for not when they are caught in between differential taxation treaties between two different countries.

The legislation before us today will build on Canada's extensive network of income tax treaties. As I mentioned earlier, we have 93 comprehensive tax treaties that are currently in force with countries around the world. Canada's tax treaties are a part of a larger global network of approximately 3,000 tax treaties between nations worldwide. Therefore, we have 93 of 3,000 treaties. We have been doing quite well in ensuring we are protecting Canadians, their investments and efforts abroad.

This network of tax treaties is really fundamental to economic growth, not only for Canada but for many countries. It is fundamental to our trade and investment. At the end of the day, we can talk about companies but we really are talking about people. We are talking about how people are putting their creative efforts into creating economic opportunities through entrepreneurial opportunities that present themselves. This gives them that opportunity to ensure they are fairly taxed and their efforts are protected.

By eliminating double taxation, these treaties provide the certainty which Canadians need to support open and advanced economic opportunities and encourage our friends in our countries, in this case Madagascar, to support open and advanced economies as well. They permit the exchange of information needed to prevent international tax fraud and tax evasion.

From what I have gathered in listening to the speeches presented in the House today and with the support of all major political parties for this treaty and others like it, we are really creating a whole network of opportunity for Canadians to ensure they can take their economic activities abroad. Yes, we want investment here and yes, it is important, but we also have to ensure that we have equipped Canadians with the opportunity to go abroad, to find and create opportunities. This is not only be good for them individually, but also good for Canada in creating more international trade opportunities. I dare say if it is done in the right conditions, there are certainly great economic opportunities for the countries in which we decide to put our entrepreneurial know-how to work.

Bilateral double tax conventions are also fundamental to eliminating tax barriers to trade and investment between two countries. They achieve this purpose in a number of ways.

First, tax treaties provide greater certainty to taxpayers regarding their potential liability to tax in the other country.

Second, they allocate taxing rights between the two jurisdictions, thus eliminating double taxation.

Third, treaties like this one reduce the risk of burdensome taxation that may arise because of excessive withholding taxes.

Fourth, they ensure that taxpayers will not be subject to discriminatory taxation in the other country.

Fifth, tax treaties authorize the Canada Revenue Agency and its foreign counterpart to exchange tax information for the purpose of preventing tax evasion and tax fraud.

Last, tax treaties give jurisdictions a dispute resolution mechanism.

All of these objectives are important, and this bill will enable us to achieve them.

By updating our tax relationship with Madagascar, we can strengthen trade and investment between our two countries. By doing so, we are showing the world that Canada is an outstanding place to invest and to do business in and, more important, we are creating stability for Canadians to invest and do business outside of our country. We do this because we know that Canada's economic success rests on the hard of Canadians but also on the strong relationships that inform direct investment.

I would like to draw the attention of the House to the importance of signing such tax treaties.

Canada has 93 tax treaties with 93 countries around the world. These treaties are part of our government's efforts to ensure Canada's economic well-being. Since budget 2016, our government increased the Canada Revenue Agency's resources and funding in order to strengthen its ability to crack down on tax evasion and tax avoidance. The CRA's compliance programs now help them to better target those posing the highest risk of tax avoidance.

These efforts are producing tangible results for Canadians. Through the new system in place, our government can monitor international electronic funds transfers of $10,000 or more that enter or leave the country. This represents over one million transactions per month. Monitoring these transfers helps us better assess the risk of individuals and companies committing unfair tax avoidance.

In closing, by increasing the number of tax treaties we have with our partners, the Government of Canada is helping to create favourable conditions for long-term economic growth that will help strengthen Canada's middle class and support those working hard to join it. The bill we are introducing today is an important step towards achieving that goal.

I encourage all my hon. colleagues to support this bill. That concludes my speech. I thank my colleagues for their attention and hope to have the unanimous support of the House to pass this legislation.

[Karine Trudel, NDP, Jonquière, QC]

Mr. Speaker, I listened carefully to my colleague's speech. The NDP will support Bill S-6. Sadly, however, it includes no provision to combat tax evasion. Its title is misleading. This treaty seeks to avoid double taxation between states; it does not directly address tax evasion.

I have a straightforward question for my colleague. Why do he and his government keep misleading Canadians with a bill like this, which clearly includes no provision to deal with tax evasion?

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Mr. Speaker, I thank my colleague for her question, but I would like to set the record straight. The title of Bill S-6 being discussed today is very clear. It is an act to implement the convention between Canada and the Republic of Madagascar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. It is not unlike the bills we adopted to implement the 93 other agreements we concluded with other countries. It features the same measures.

There are indeed measures for avoiding double taxation, but there are also measures meant to reassure the public and to make transactions more transparent. The bill connects the Canada Revenue Agency and Madagascar's agency to ensure that there is no tax evasion by Canadians working in Madagascar or vice versa, by the people of Madagascar working here in Canada.

[Michel Picard, Liberal, Montarville, QC]

Mr. Speaker, I would like to tell my colleague a bit about transfer pricing. A bilateral treaty like the one my colleague just mentioned requires the parties involved to agree on the fiscal parameters of commercial transfers. This treaty leads to agreements between the two parties and also to information sharing aimed at reducing this type of tax evasion problem.

Besides increasing tax fairness, a bilateral treaty also allows access to more money that can be used quickly, for example, to make necessary investments rather than to be remitted to the public treasury. Furthermore, it creates a bond of trust between two nations. With this agreement, Canada is showing Madagascar that it intends to build relations based on trust and economic growth.

Perhaps my colleague could say a bit more about Canada's intention of contributing in good faith to the economic growth of both parties.