Bryon Wilfert

[Parliamentary Employment and Staff Relations Act, May 28th, 2003]

First, Mr. Speaker, I am somewhat disappointed in the hon. member's comments and some of his tone, because he is alluding to some comments here with regard to a fine, outstanding parliamentarian, the former minister of finance.

I think the issue he wants to talk about, which he really did not get to, is the issue of taxes and that I think is a legitimate question. I would like to focus on that rather than on what I would consider to be gossip, rumour-mongering and things that really have no place in this House.

Canada taxes not only the income of our Canadian resident corporations, whether they earn it in this country or abroad, but also in other situations the income of foreign subsidies, which is what I would like to talk about.

Canada's rules must therefore take into account the fact that those companies' incomes could be subject to foreign tax as well. There are two basic ways that countries around the world deal with foreign taxes in these circumstances. One way is to have the taxpayer claim a foreign tax credit, which reduces their home country tax by the foreign amount. The second way, as I am sure the hon. member knows, is simply to exempt the foreign source income from the home country tax.

Our Canadian tax system combines these two methods. A Canadian corporation's direct foreign source income and certain of the income of its foreign subsidies is eligible for foreign tax credits to reduce the Canadian tax on that income.

At the same time, Canada exempts certain kinds of foreign income of foreign subsidiaries from Canadian tax. The rules are complex, but essentially the exemption we are speaking of is given for the active business income of a foreign subsidiary that is resident in the country with which Canada has a tax treaty, provided the income is earned in such a country.

I believe the hon. member's question boils down to this. Why, when the government revised certain aspects of these rules several years ago, was the exemption left in place for a particular kind of subsidiary resident in Barbados that does not pay a substantial tax rate? The answer has several elements.

First, it is not clear that abruptly curtailing that exemption would have benefited Canada. In a world of tax planning opportunities, there is no assurance that corporate groups would not simply move the functions performed by, in this case, a Barbados subsidiary to another jurisdiction where similar results could be obtained. In fact, the corporations would not pay any more Canadian tax.

Indeed, forcing businesses out of Barbados could actually be counterproductive. As a tax treaty partner, Barbados gives Canada's tax authorities far more information and assistance than many other jurisdictions do.

Second, Canadian business is understandably interested in maintaining its international competitiveness. In this case, decisions that disrupt the operations of Canadian corporations abroad can have repercussions on their competitiveness. I am sure I will be able to expand a little more on that after the hon. member has a chance to comment.

[Parliamentary Employment and Staff Relations Act, May 28th, 2003]

Mr. Speaker, I will elaborate a little bit here. As announced in the 2002 Speech from the Throne, the external advisory committee on smart regulation, the EACSR, will provide expert advice. Over the next 12 to 15 months the EACSR will develop recommendations on modern regulatory strategy to support Canada's objectives as a trading nation that is committed to offering a high quality of life for its citizens.

Smart regulation is about preparing Canada for the future and ensuring that we have a modern regulatory framework designed for the 21st century to maintain a Canadian advantage.

In the next 12 to 15 months we will see movement on that. Working with the hon. member, with his interest in this, will be very important. Again, together I think we can advance an agenda on which we both very much agree.

[Parliamentary Employment and Staff Relations Act, May 28th, 2003]

Mr. Speaker, I am pleased to have the opportunity to discuss Canada's capacity to produce high quality regulation. There have been some comments and I appreciate the member raising this issue.

The regulatory regime in Canada is very competitive with other jurisdictions and regulatory activity has contributed positively to Canada's quality of life and business environment.

The hon. member has referred to a number of statistics, essentially from the Fraser Institute publication, on the cost of regulation in Canada that covers all levels of government. This is one view of Canada's regulatory environment and it is based on some questionable methodology.

Another view comes from the OECD, which has recognized the Government of Canada as not just a worldwide “regulatory reform pioneer” but a “consistent leader and a vigorous innovator”.

Recent independent publications can attest to Canada's record of regulatory excellence. For example, the 2002 OECD report, entitled “Canada: Maintaining Leadership Through Innovation”, praised the Government of Canada's regulatory performance in providing businesses the freedom to prosper, which I know is a very legitimate concern of the member across the way.

In particular, the OECD report acknowledged that Canada appears to have been:

--unusually successful...in pursuing one of the major objectives of successful regulatory policies, being [able] to control overall regulatory burdens, or the trend of 'regulatory inflation' as experienced in most OECD countries.

An assessment of regulatory impact should not rely solely on statistics, but should focus on the fundamentals of regulatory reform. In particular, the Government of Canada's regulatory regime is designed to support our high quality of life and bolster our international competitive economy, both things I know the member across the way is very concerned about.

Evidence of this positive impact of regulatory reform on standard of living and economic performance can be seen in several international comparative studies which assess the business climate in this country, and we score well in these studies.

A study by The Economist magazine's intelligence unit ranked Canada as the fourth best country in the world in which to do business for 2001 to 2005. Recent research by OECD also concluded that Canada has one of the lowest levels of administrative burden among the OECD countries, after the United Kingdom and the United States.

Clearly, Canada has a strong system of regulatory governance but the world is changing. Markets are increasingly integrated, more companies are becoming global, knowledge increases and science advances at a faster pace than ever, and citizens have access to better and more information and are more demanding of government.

In response, Canada is redesigning its regulatory approach to create and maintain a Canadian advantage. The member referred to the 2002 Speech from the Throne, which I will hopefully elaborate on afterward, but it basically says “to accelerate reforms in key areas to promote health and sustainability, to contribute to innovation and economic growth, and to reduce the administrative burden on businesses“, on which both of us I know can agree.

I want to speak a little about smart regulation. Smart regulation will ensure Canada has a regulatory framework that contributes to the innovation environment for the social and economic benefits of Canada at the same time it protects our health and safety, preserves the environment and reduces the administrative burden on business.

[Income Tax Act, May 27th, 2003]

Mr. Speaker, on the first part I think I was very clear. The government hopes to ratify it before the end of 2003.

The hon. member may be referring to the fact that we would like to do the ratification in advance of the first meeting of the parties which is expected in 2004. It is the intent of the government to ratify it by the end of 2003, hopefully in advance of the meeting of the parties expected in early 2004. There is no reference to ratification in 2004. It deals with 2003.

On the second part of the hon. member's question, I am not in a position to expand on it much further. I could talk a little with regard to one of the key elements of the plan, on the issue of bilateral arrangements and in particular with importers who are likely to become a part of the process. As we know the Canadian grain industry supports these bilateral arrangements. Again, I would point out that we are in negotiation with a number of countries that are very important in this regard.

[Income Tax Act, May 27th, 2003]

Mr. Speaker, as the Minister of the Environment reported to the House on February 27, the government supports the Cartagena protocol on biosafety, its objective which is the protection of biodiversity, and its value to the global community. The protocol focuses on transboundary movement of living modified organisms, LMOs.

Canada signed the biosafety protocol in April 2001 and as the hon. member pointed out it, it is not yet in force. As of today, May 27, 110 countries have signed it and 49 have ratified it. It will come into force 90 days after 50 countries have ratified it, presumably sometime later this year. As the House was advised on March 18, the Government of Canada is on a path to ratification once some uncertainties in the agreement are resolved.

The government held extensive consultations with the agriculture and agri-food industries across Canada. During that time industry correctly identified that the protocol is not a finished piece, that there is need for certainty on some of the key issues that could affect what they have to do once it comes into force.

In order to address these outstanding issues the Government of Canada has drafted an action plan, the key elements of which I am pleased to share with members of the House.

The action plan calls for the government to continue to engage actively in the protocol through participating in all protocol meetings, be they formal or informal, and working groups. The government will use all possible means, including démarches to foreign governments by Canadian missions abroad and through working in other international fora to build support for Canadian positions on outstanding issues of concern, for example, on documentation, transit, trade with non-parties and decision making.

In addition, Canada will continue to act as a model by providing all information called for under the protocol through the biosafety clearing house. In fact, Canadian agricultural exporters are prepared to provide on a voluntary basis all documentation currently called for under the protocol.

Finally, the Government of Canada is seeking to negotiate bilateral agreements with key LMO importing countries that are, or are likely to become, parties to the protocol. Our objective for these bilateral arrangements is to create reasonable market access conditions for our exporters and to address the elements of documentation and transit with respect to interpretation and implementation of the provisions of the protocol.

It is hoped that these measures will provide the Government of Canada with the information necessary for taking a decision on ratifying the protocol in advance of the first meeting of the parties expected early in 2004. I am very supportive of this action plan and the clear mandate it gives officials to go forward internationally.

The government is confident that we can make considerable progress toward resolving the outstanding issues in the coming months so that we can address the ratification question in light of the progress before the end of the year and before this protocol comes into force.

[Income Tax Act, May 27th, 2003]

Mr. Speaker, I would like to congratulate my colleague, the member for Lethbridge, for his initiative. The bill proposes a $3,000 tax deduction for emergency service volunteers and this proposed deduction could be claimed against income from all sources. More specifically, it would apply to those who have given more than 200 hours of volunteer service over the year.

Certainly, having been the past chair of a volunteer organization in my community and on the board of directors for 19 years, I can appreciate the valuable contributions that volunteer make. As a former municipal councillor, I appreciate the tremendous work that volunteers do, whether it is the annual Canada Day events or the Santa Claus parade, et cetera. It is very important and no one should underestimate the work that volunteers give to their communities.

I believe all members of the House appreciate that valuable role and we admire the dedication of volunteers who sometimes risk their lives to help their fellow citizens in emergency situations. Emergency service volunteers play a number of different roles. For example, as the member knows, they fight fires, conduct search and rescue operations, and provide first aid. Indeed, these volunteers respond to thousands of calls each year and in doing so expose themselves to danger, such as going into a home engulfed in flames and filled with toxic smoke in order to rescue a fellow citizen or responding to a traffic accident where there may be a risk of explosion.

It is clear that these volunteers contribute substantially to the security and safety of our country and its citizenry. They accept risks and dangers for the sake of protecting others. Their role is of particular importance in many rural communities, as the hon. member has pointed out, that are not in a position to have full time emergency personnel to handle extreme circumstances such as the Manitoba or Saguenay floods. Each Canadian who has been aided by an emergency service volunteer knows the valuable role of those services. Every Canadian should appreciate that one day they may be the ones who need that help. Knowing that these volunteers are there gives us great comfort and for that we should all be thankful.

The government knows that the safety and security of Canadians is a very important issue. To illustrate that, I would like to remind members of the House that the government in 2001 included in the budget a $6.5 billion investment to enhance the economic and personal security of Canadians. Among those investments was $1.6 billion to enhance emergency preparedness. As a result, Canada will be in a better position to respond to its emergencies, such as natural disasters, emergencies that are often responded to by emergency service volunteers.

The priority that the government gives to security is clear and it is also clear that the government readily agrees with the hon. member for Lethbridge on the important role of emergency services. The issue that I want to explore is what is fair and reasonable, as outlined by the hon. member.

The Income Tax Act already recognizes the important role of emergency service volunteers. These individuals can receive up to $1,000 in financial recognition from a public authority without having to pay any tax. Before 1998, this exemption was targeted at volunteer firefighters and was limited to $500 annually. This special provision is fair and reasonable. If a public authority finds reason to provide a small amount to compensate the emergency service volunteers, for instance, because of the costs they incur in providing their services, the rules essentially say that the government will not diminish the value of the compensation by taxing it.

The rules also relieve public authorities of the burden of having to prepare tax information slips for modest amounts they pay to emergency service volunteers. The measure that is now in place is reasonable and, as I mentioned before, has been enhanced in recent years, but the hon. member's proposal is generous to the point of being unfair. It would impose a significant administrative burden on the organizations that engage emergency service volunteers.

When it comes to fairness there are two points that we should examine. First, if adopted, the hon. member's proposal would significantly compromise the fundamental principle of the tax system, the principle that people with comparable incomes should pay comparable amounts of tax.

The proposed $3,000 deduction is a very significant amount of money, and I would like to take a second to put it in context. The proposal before us would permit emergency service volunteers to receive the equivalent of three months pay at Ontario's minimum wage, tax free. This would hardly be fair or reasonable from the perspective of other persons who also contribute to society.

For instance, consider the plight of a single parent of young children working at a fast food restaurant. This person probably has little time to devote to volunteer activities and thus could not gain access to the deduction because he or she is raising young children, and yet the worker's income is fully subject to taxation.

Not only that, but I point out that the bill proposes a deduction. Tax relief provided by a deduction always depends on the person's highest tax rate. As a result, a deduction would provide more relief to those volunteers with high incomes and it would provide no relief for volunteers with little or no taxable income.

The deduction proposed in this private member's bill may also entitle the taxpayer to more income tested tax benefits like the Canada child tax benefit or the GST credit.

On the grounds of fairness, the bill falls short.

I also want to note the compliance burden that the bill would place on volunteer organizations and volunteers themselves.

In order to fairly administer this proposal it would require public authorities to count the hours of service provided by each volunteer. The volunteer, the public authority, and the Canada Customs and Revenue Agency all know when the eligibility criteria, the 200 hours of service, has been surpassed. This may prove difficult to monitor in many situations. That is a lot of accounting. There are more than 400,000 emergency service volunteers in Canada.

Perhaps while being well intentioned, Bill C-325 is unfair on a number of levels. It would impose an undue administrative burden on the organizations that engage volunteers in providing emergency services to Canadians. The intent of the proposal is one which we can appreciate but the difficulty is in terms of administration and in terms of fairness.

I have pointed out to members of the House the fact that in this particular case the government has already made progress in terms of this. I must point out as well that we increased the $500 that individuals can receive up to $1,000 of financial recognition from a public authority without paying any tax.

The issue here is the degree which the member proposes which would be up to $3,000, and the difficulty of administering it. The government cannot support the private member's bill that is before the House today.

[Budget Implementation Act, 2003, May 16th, 2003]

Shotgun. Oh yes, he is the expert on guns. I forgot.

The fact is that when it comes to this budget the major increase is in health care because that is what Canadians said they wanted to see.

I am badly disappointed that he does not recognize that the OECD and the IMF said that in terms of economic output we are leading again. We are the leaders in the G-7 this year and we are going to be the leaders next year. He does not mention the significant reduction in the national debt, down to 44.5% from just six years ago at 71.5%. In real terms economic growth is at 3.2% this year and will be at 3.5% next year.

These are things that of course Conservatives would not recognize because they have always been dealing with deficits. I am not going to mention the big deficit they left, because of course that is the kind of thing they are more used to.

Of course our Alliance friends here are no better. In fact what I get tired about with the Alliance, particularly some members over there, is that they talk the line. One day they say to spend $3 billion and the next day they say to save $3 billion. If we had that approach we would really be in a deficit and we would have a massive debt.

I would like the member to deal with the real figures, the real issues, with health care, investing in families and the hundred billion dollar tax cut. I would like him to say when the last time was we saw those kinds of investments. I will not go into infrastructure because he knows that is a dangerous thing for him to talk about.

Those are the kinds of things Canadians asked for and we have delivered. Are there any comments from my hon. friend in the corner?

[Budget Implementation Act, 2003, May 16th, 2003]

Madam Speaker, I guess we are replaying the movie The Invasion of the Body Snatchers in here today, because I remember the days when my friend there and I worked together, when we were complaining about the government of the day, the Tory government, because it did not make the crucial investments that this member is now seeing happening across the country.

However, I would point out to the hon. member that spending in 2000-01 was 11% of GDP. This year it was 12.2%, the lowest since 1950. Why? Because of good fiscal management.

We have an increase of $5.1 billion this year because of health care. He talks about gutting the health care system. It is run by the provinces and 75% of the health care this year for the Province of Ontario comes from federal transfers, not from the province. I can repeat that across with other provinces. The fact is that it has been the mismanagement of some of the provinces on health care; they are more interested in tax cuts than dealing with the sick. They would rather deal with tax cuts. He knows that and we know that.

Also, I would point out that as far as this budget is concerned, he says it is a machine gun approach, all over the place, but the reality is--

[Taxation, May 16th, 2003]

Mr. Speaker, again the budget implementation bill is before the House today. If the member is really that serious about this issue, he will get behind us and get the bill passed. Very needed moneys are in there for the province of Quebec and other provinces, but this member would rather stall than deal with the issue. Do not talk the line, act it.

Again, the Minister of Finance is prepared to work cooperatively with all ministers of finance in the provinces and territories, and we look forward to future discussions.

[Taxation, May 16th, 2003]

Mr. Speaker, the Minister of Finance had a very productive and very useful meeting with his Quebec counterpart yesterday. It is nice to see that we can do that with the new government of Quebec.

I would point out that one of the ways the member across the way could help is to pass Bill C-28 so that needed funds to go to health care in Quebec could be passed. That member unfortunately talks on one side but does not act on the other. Let us get on with Bill C-28 to get that money to Quebec and other provinces.