Mr. Speaker, it is a pleasure to address this important bill and also to talk a bit about the inconsistencies we tend to see in the government's approach in the many different ways it deals with legislation. I plan to highlight some of that in the process of my discourse this afternoon, especially when I address the issue of the implementation strategy as it pertains now to the ratification of these tax treaties.
There is a growing concern, especially on this side of the House, that when it comes to dealing with international agreements there is really no rhyme nor reason as to how the government goes about implementing certain plans. During the debate on Kyoto, we on this side of the House demonstrated that the government has gone about the process of ratifying an agreement without presenting to Canadians a plan of how that whole strategy of reducing greenhouse gases is going to affect them. It is actually moving ahead to ratify an international agreement without a plan.
In this case, as we discuss Bill S-2 today, we see that the government is taking a completely different approach. It has actually taken the time to work out and implement strategies with a number of countries that the tax treaties will pertain to. It has gone through the process of doing all the background work, how it is going to affect our country and the people paying taxes in the countries that we are signing these agreements with. Now the government is bringing it to the House to finalize and ratify it. That is a huge inconsistency when it comes to the approach it has had on Kyoto.
I am going to address those particular areas, which will cover the countries, how we have gone about the process of implementing a strategy and how we are dealing with the tax changes with those countries. Then I will talk about how we are in the process of ratifying it here in the House. It is going to be a little long and drawn out, but it is an important part of the process. Important details need to be addressed and I hope to do that this afternoon.
I will start by addressing what the bill in its entirety is attempting to do. Bill S-2 is an act to implement tax treaties with Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
As was heard from the parliamentary secretary, clearly it is an advantage for Canadians to have tax treaties in place with many of these countries to avoid double taxation. It also avoids complications for Canadians who live abroad and collect some form of income in their home country or other countries, but are often faced with two tax bills, one from Canada and one from foreign countries as well. That can be quite a burden on many Canadians who are forced for whatever reason either to do business in other countries or to work outside Canada.
The bill is an act to ratify tax conventions agreed upon with the countries I mentioned, to avoid the double taxation between Canada and the respective nations and to establish a cooperative framework to prevent fiscal evasion. The Canadian Alliance has traditionally encouraged all measures to further equalize and liberalize foreign trade and investment. In this regard, Bill S-2 is a positive measure. Nonetheless, it was introduced in the Senate instead of the House of Commons. This was one of the big concerns we had with the bill.
As everyone knows, we have always had a concern with the other place in that it is unelected and unaccountable. We feel that any legislation introduced in the other place and then sent here does not have the authority of Canadians when it goes through Parliament. That is why on many occasions when bills have been introduced in the other place and are sent to the House, we have often questioned the motives of the government. We also question the legitimacy of that type of legislation. We wish the government would stop introducing legislation through the Senate.
In relation to Canadian Alliance policy, I want to address how we feel overall when it comes to limiting barriers to trade and economic growth with foreign countries.
We support securing access to international markets through the negotiation of trade agreements. Our trade agenda will focus on diversifying the products we sell abroad and the markets into which we sell those products. We will vigorously pursue the reduction of international trade barriers, tariffs and subsidies.
We will work with international organizations that have relevant expertise to ensure that Canadians' concerns about labour practices, environmental protection and human rights are also reflected.
The parliamentary secretary went into great detail on the implementation of Bill S-2. Tax conventions, such as the ones to be implemented with Bill S-2, seek an arrangement under which each government agrees to limit or modify the application of its domestic taxes in order to attempt to avoid double taxation. The tax treaties implemented by the bill reflect efforts to update and expand Canada's network of tax treaties so as to obtain results in conformity with current Canadian tax policy. These treaties are generally patterned on the model of double taxation convention prepared by the OECD. They are not to be double taxed on income coming from these countries.
I would like to expand on and highlight different parts during this afternoon's discussion. Parts 1 to 4 of this enactment implement tax treaties with Kuwait, Mongolia, the United Arab Emirates and Moldova. Parts 5 to 7 of the enactment implement the most recent tax treaties with Norway, Belgium and Italy. Parts 8 to 10 of the enactment correct the English versions of tax treaties with Vietnam, Portugal and Senegal, which have already been enacted.
Many Canadians are often confused when it comes to tax policy. We see over and over again the government tends to modify its tax bills, to introduce different forms of user fees and regulations that tend to affect the tax code and complicate our system over and over again.
We on this side of the House have constantly argued that whenever we go through the process of looking at how we can simplify our tax treaties with other countries, we should be doing the same thing here at home. We should be reviewing how burdensome our tax system is on Canadians. We should be doing things to improve our tax system first, by an overall reduction of taxes for Canadians. That would leave more money in the hands of Canadians at the end of the day to invest in the economy or to spend in any way they see fit, whether it is to save for their retirement or to spend on their families.
That is something the government normally fails to do. It fails to continue to review its own complications in the tax policy and its own effect of the burden of high taxes on Canadians. This is the chance, when we are looking at other jurisdictions and trying to harmonize our tax systems to some extent with other jurisdictions. We should be critical of the tax regime here at home and seeing if it is competitive with other jurisdictions around the world, especially with some of the countries that we are setting up agreements with.
The parliamentary secretary talked about promoting certainty, stability and cooperation. There is no doubt that in entering into these tax agreements they are things we hope to achieve in the final goal. As I mentioned, if we want to have a stable tax environment, if we want to have a competitive environment with foreign countries we need to give Canadians the tools they need to compete in those other jurisdictions.
We are still one of the highest taxed nations in the G-8. Coupled with our debt and a number of other factors that are a drain on our economy, it is no surprise that we have challenges with a lower dollar in this country. We still have the brain drain factor; people are moving down to the U.S. There are continuous takeovers by American companies here in Canada. Overall, the economic situation has been on the decline when it comes to the way the government has been handling finances.
It is ironic that the parliamentary secretary talked about promoting certainty and stability. The government has not done anything to address how we could strengthen our own economy by reducing overall taxes, paying down debt and creating a more competitive environment here at home to improve our productivity in light of some of the jurisdictions that we signed the tax treaties with and with whom we compete.
That is something we must continue to encourage the government to do on a regular basis. We must encourage the government to think about how Canadians are affected here at home by the negative fiscal policy the government implements.
In light of Bill S-2, I want talk a little today about its relation to a big problem with the way the government has approached the whole Kyoto accord.
When I addressed Kyoto, I said clearly that there was no plan. Almost five years after signing the Kyoto protocol, in 1997, there is still no federal plan and no cost analysis. The provinces have made it clear that federal-provincial consultation has been inadequate and they are still not onside. The Liberals have failed to gain cooperation of all provinces and territories to develop a national emissions reduction plan.
In light of Kyoto, we have identified a lot of effects that could come from that. I know my colleague from Red Deer so eloquently spoke on so many different facets of the Kyoto accord. He especially talked about the concerns that we had at home on the effects of Kyoto on the economy. By signing an international agreement that binds Canadians to certain reductions, obviously this will affect industry, incomes and the economic stability of Canadians. There is no certainty as to the negative effect it will have on the economy, the environment and on a number of other factors, such as people's salaries and job security.
The point I was trying to make initially is that the dichotomy of the government, especially in its approach to this bill, is astounding because with the Kyoto accord there is a complete double standard. Look at Bill S-2 and the particular countries that it pertains to, like Kuwait, Mongolia, the UAE, Moldova, Norway, Belgium and Italy. Look at the background which has been worked out with these countries before coming to the point of ratification of these tax treaties in the House. A lot of work has been done and a lot of thought has been given to how these international tax treaties will affect Canada and those countries and whether those effects will be positive or negative. We have the figures, the facts and the effects they would have on Canadians if the strategy of these tax changes is implemented, and we can debate that.
However on the flip side we have Kyoto. We are talking about the ratification of a plan. We have not seen any details from the government. We have no impact study. We have no idea what the costs will be. Yet the government wants us to go ahead and ratify an accord on which we clearly do not have enough background information.
Why has the government approached the Kyoto accord in such a backward way with regard to the implementation and then ratification? It is not following the consistency that we have with a bill like Bill S-2.
Clearly we want to get all people onside. That is really to what it comes down. If we want to have successful legislation, if we want to have all Canadians on board to achieve our environmental goals, whether they be reducing emissions or cleaning up air quality, whatever the strategy might be, and if we want to have the most success with any form of a strategy, all stakeholders should be brought together. It is not at all a proper to go about using a divide and conquer type of strategy, especially when dealing with important legislation, legislation that will affect generations to come.
The government refuses to take the prudent steps to bring stakeholders together to rally around the environment. It refuses to engage Canadians with the proper facts, figures and effects the Kyoto accord will have on them. It refuses to bring Canadians to the floor to work and to get them behind the accord.
Instead huge concerns have been raised across the country. The opinions of Canadian on the accord have plummetted because the government has not come clean with the effects of the ratification on them and how it will be implemented. None of this has happened, and the government has not been straightforward with them.
I think of my own province of Alberta and of some concerns many Albertans have brought to my attention. Much of the industry voluntarily has been moving in the direction of trying to implement certain strategies to reduce emissions, if that is how it affects their production, to improve their production methods and to go green, as many of them say when it comes to natural resource production.
They have done that on their own because they know Canadians expect that from them. They expect investments in a greener way. They expect better air quality. They expect certain production methods to improve with technological investments. Many of them are making those efforts regardless of the Kyoto accord. They are putting together their own implementation plan in achieving those goals within their own industries.
After I looked at the summary in Bill S-2, I looked at some of the tax conventions signed in the past between Canada and Norway. Let us look at clause 10, which addresses the whole issue of royalties and how royalties may be effective in each of the host countries and if we need to be aware of any negative effects. They are worked out so that Canadians know that, in signing this tax treaty, there will be no negative effects on their income or any tax royalties that may collected in home countries like Norway and here in Canada.
Proposed paragraph (1)3 of article 12 of the Income Tax Conventions Implementation Act, 1998, states:
The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including payments of any kind in respect of motion picture films and works on film, tape or other means of reproduction for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process or other intangible property, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.
That gives us an idea of the amount of thought that went into that proposed paragraph of the income tax convention which was signed initially in 1967. It considers the effects when it comes to copyright use of literary, artistic or scientific work and how it may be affected by a tax treaty signed between these two countries. The government and bureaucrats have gone as far as to identify these areas in the bill and how they could affect us negatively. Obviously we would take that into consideration before we entered into any sort of tax treaty with another country.
On the flip side I have to continue to use Kyoto as an example of the process the government has chosen. I do not know why it has not followed the consistency as identified with Bill S-2. It is asking us to ratify the accord. We still do not know the effects of that accord on any part of the economy.
Bill S-2 talks about the effects of literary, artistic and scientific work on tax treaties. At least we have the information before we engage in any sort of tax treaty with another country. We know the implementation strategy and the effects of it if we sign onto the tax treaty. We can now go ahead, deal with it and ratify it.
We do not have to go into it blindly and ratify it, like the Kyoto accord. We are being asked to ratify this without any form of implementation strategy whatsoever.
I want to cite another part of Bill S-2 just to make the point about knowing ahead of time the effects that any sort of tax treaty will have on Canada.
One country that Bill S-2 deals with is Kuwait. The Canada-Kuwait Tax Agreement Act was enacted initially in 2002. Ultimately in harmonizing some of our tax treaties now under Bill S-2, we deal specifically with different parts of tax treaties as they pertain to Kuwait. I will read a couple of sections so we can understand the type of thought that has gone into this tax agreement.
Section 4(1) states:
Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Conventions and the provisions of any other law, the provisions of this Act and the Convention prevail to the extent of inconsistency.
(2) In the event of any inconsistency between the provisions of the Convention and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.
There is constantly reference to any potential problems that may come up with any sort of tax agreement, ensuring that we know exactly how they will be dealt with if there is any conflict or any misinterpretation.
It is clear, within this document through the implementation plan of Bill S-2, that any sort of conflict which may come up will have a resolution method. We will know how to deal with that one on one. We will know that there is a process that we can go through to ensure that tax income of Canadians is protected from double taxation and other forms of problems when it comes to conflicts that could arise with many of these countries.
As I said, because I know we will be debating Kyoto very shortly in the House, none of that can be said for the Kyoto accord. None of that can be said in the sense of the sorts of effects that international agreements, which are currently signed, can have when they come into contact with the Kyoto accord.
We are talking about international tax treaties. However one of the interesting points and one of the biggest inconsistencies with the Kyoto accord is that we are being asked to ratify that accord but we do not have any background information.
We still do not have any information from the government on one of our questions. If we sign onto the Kyoto accord, how will that affect some of our other international agreements, including NAFTA. Ultimately there will be some huge legal ramifications under the obligations of Kyoto. Outside of having any sort of cost analysis, we still do not have any sort of analysis from the various legal departments of the government as to whether there will be conflicts within, say, the environment department, industry or international trade if we sign the Kyoto accord. There could prove to be a huge violations under agreements we currently have with other countries, whether it be trade issues, defence issues or in the case of Bill S-2, tax issues. It begs the question, how are we going about this?
Just before we revert to the Kyoto debate, we are debating a bill that has gone through serious scrutiny and a process of working out an implementation strategy. How it will affect Canadians in an important issue like revenue and their incomes has been worked out. Then we can moved to the point, once everything is clear, to ratify it. Canadians have had a chance to see how it will affect them. We have worked out mechanisms in the event of conflict to ensure there are certain procedures that can take place. Basically we are presenting all the items on the floor of the House. We are able to debate them, whether they are positive or negative, Canadians can say if they support it or not and we can go ahead and ratify in this place.
As we will see, when we revert to the debate on Kyoto, that none of that sort of thought has gone in to the accord. None of the information has been presented to the House or Canadians in a way which they deserve to be presented. Unfortunately we will be faced with a vote in the House on the accord without the proper information that Canadians deserve to make the proper decisions on whether to engage in that sort of an agreement.
I would also like to address another country, like the United Arab Emirates, in which I think many people have an interest in the growing investment. If we look at part 3 of the bill, specifically the sections to be dealt with under Bill S-2 as it pertains to the UAE, we see the different provisions again.
There is a lot of effort being made to ensure that there is no the duplication and conflict within tax policy to ensure that Canadians are having the highest level of protection from double taxation. If we look at the different schedules outlined here they all deal with those particular issues to ensure that there would not be any effects of double taxation and that there is consistency. That is something I continue to raise, the lack of consistency when it comes to the government dealing with legislation. However, when we look at the implementation plan of Bill S-2 there is consideration given to consistency. Unfortunately, we are not seeing that across the way.
Part 1, subclause 4(1) states:
Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Agreement and provisions of any other law, the provisions of this Act and the Agreement prevail to the extent of the inconsistency.
Part 1, subclause 4(2) states:
In the event of any inconsistency between the provisions of the Agreement and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.
Part 1, clause 5 states:
The Minister of National Revenue may make any regulations that are necessary for carrying out the Agreement or for giving effect to any of its provisions.
This is similar to the tax treaty that was signed with Kuwait and now with the United Arab Emirates. It is clearly spelled out that if there are any violations within our tax code, if there are any violations between other countries and Canada, that there is a proper recourse available to Canadians and to the government to ensure that the protection of income would be there and there would not be any double taxation issue to deal with. On that issue there is no mention at all in Kyoto about any of these issues and it is a big concern.
The last two countries that I will mention are Norway and Belgium. There are important changes being made in light of all the investment going into these countries or Canadians working in these countries. We can see some of the tax freebies that were implemented in the past, and that many of these international agreements that we enter into with other countries affect other agreements that are already in place. I will give an example from the Canada-Belgium tax convention. Part 6, subclause 8(1) states:
Schedule II to An Act to implement conventions for the avoidance of double taxation with respect to income tax between Canada and France, Canada and Belgium and Canada and Israel is replaced by the Schedule II set out in Schedule 6 to this act.
There is always mention of certainty and the ability for us to ensure there is no conflict. There are a number of other areas which list the protection of intangible property and the use of equipment. All the details are outlined. That is why, on this side of the House, we have given in the past our support to Bill S-2. We have said that, even though the bill was introduced in the Senate and that we have had some concerns with that, we support the effort to reduce the overall barriers to trade and to protect Canadians from double taxation, and to continue to work in a more global economy.
We know that tax treaties are a positive thing. The official opposition has continuously supported the government in its endeavour to sign those international tax agreements. It makes it difficult for Canadians to get behind a government that shows such a lack of consistency as it approaches other areas of international agreements, and the Kyoto accord is a perfect example.
In the ruling that was recently given before we entered into debate on Bill S-2 the Speaker ruled on a point of order raised by the Leader of the opposition as it pertained to the validity of introducing the Kyoto accord in the House, given the fact that maybe it had not gone through the proper procedure. The Speaker ruled that the executive had a right to enter into any international agreement and could ratify any international agreement without bringing it to the House. We are fortunate that we have the opportunity to have a vote on Kyoto, because the government could have gone ahead and ratified it without getting the consent of Canadians through this place.
The point being raised is that we must have the opportunity to have and open and honest debate. I have demonstrated with Bill S-2 the fact that there must be many considerations taken before signing any form of international tax treaty. We must do a lot of ground work. We must have a strategy for implementing those particular tax agreements. We must know how those agreements would affect Canadians. We would have to take into consideration a lot of the negative and positive effects that could come from signing international agreements.
We have not been able to do any of the things that we end up doing in this particular place when it comes to the Kyoto accord. Other than discussing some of the effects on the environment, the effects on Canadians in a general way, and how we can try to improve the environment through Kyoto, there is no real cost structure being presented by the government as to the negative effects on the economy, on the jobs of Canadians and their families.
That is something that makes it difficult for us. We do not have an implementation plan that we could discuss, as we are doing with Bill S-2, and to look at all the different aspects. It makes it difficult with the Kyoto accord for this side of the House to say that we will sign on with the government and that we will say yes to the accord when there is no implementation plan to ratify this particular accord.
That is something that Canadians have said over and over again. They would like to do more for the environment. I know we in the opposition would too, but we need to know what we are getting into before we give our consent.
It is important that I put on the record that we will be supporting Bill S-2. Notwithstanding the fact that the bill was introduced in the Senate, which is unelected and lacks legitimacy to address legislation prior to the House of Commons, the Canadian Alliance will be supporting Bill S-2 as an initiative to expedite tax procedures for Canadians abroad, reduce tax evasion, and focus CCRA resources on collecting taxes from Canadians living in Canada.
It is something that we generally tend to support. We would have liked to have seen a little more thought being presented by the government when it comes to how we could make our tax jurisdiction here at home even more competitive in light of some of the countries that we are signing this tax treaty with.
We could always do more in this country to evaluate how we can be more competitive to improve our productivity. Canadians expect the government to review that on a constant basis and look at the many aspects of regulations. They expect to know how the regulations would affect the ability of Canadians to produce here at home, and how the government is addressing the concerns that many Canadians have about tax levels and debt.
This is something that I wish would have been addressed more seriously by the government, especially in light of how some of these tax treaties would affect our competitiveness among some of these countries who may be more competitive than us. We may in fact need to make some changes to those rights and reductions in overall taxes. A simplification of the tax system is also something most Canadians would like to see. Unfortunately, despite the fact that there has not been any real thought put into that process, we will be supporting the bill.
Finally, why is it that the government follows that form of inconsistency? Why could it not have brought all stakeholders together, especially on an accord as important as Kyoto? Why could it not have followed the same sort of procedure that it does with other forms of international treaties, like Bill S-2 which we are debating today? Why could it not have done the same sort of background work, the checks, the cost analysis, and the effects on the economy, which are all important parts of Bill S-2, with Kyoto so as to bring all those facts and figures to the House?
Canadians could then see what they are getting into by signing on to Kyoto before ratification is forced through the House, as it is being done now. It would give us a chance to debate the implementation plan and see in fact that there is an implementation strategy in place, and then promptly and properly go through the process of ratification as is being followed with Bill S-2?
It is a shame the government does not show that form of consistency. If it had maybe we would have had a consensus in the House. Maybe all sides of the House could have come together to support the Kyoto accord as an important international agreement as is Bill S-2. We would have had a long term goal with Canadians working toward meeting the targets that would have been outlined under an implementation strategy that is far too absent under Kyoto.