Bryon Wilfert

[Kyoto Protocol, December 2nd, 2002]

Mr. Speaker, first, I would point out to the hon. member that 1990 in fact is where the reduction comes from and we have that included in the plan. The government, since 1997, having been a part of this process, has felt it very important that we work in consultation with the provinces. We know that the provinces have different views and some have been much more supportive initially than others but this is an ongoing process.

We have received a list of 12 issues from the provinces. We have already agreed to nine and the process is ongoing with the other three. I believe the government took a strenuous approach and, from the evidence I have heard, an approach that is achievable and realistic.

As the member knows, the province of Quebec has been supportive for various reasons, as have other provinces, although sometimes, and I know it is unbelievable in this House, politics plays a bit of a role. However what is important is that inaction by the government or by any of the provinces would spell very dangerous consequences. I do not think that is the approach Canadians want us to take.

[Kyoto Protocol, December 2nd, 2002]

Mr. Speaker, my friend raises a good point. I would like to point out to him that over the last five years, as I have said, there have been ongoing consultations with the provinces and territories and, as we know, the provinces unveiled 12 key points that they wanted dealt with. The federal government has agreed to nine and there is an ongoing process right now on the other three. The door has not been closed. There are still discussions on the other three.

However again I would point out to my hon. colleague that Kyoto is the what and the plan is the how. That is what we are dealing with.

Even though the provinces and territories are not signatories to international treaties, the government has felt it important, not only in dealing with the provinces and territories on a continual basis, but also in setting up round tables, and I will use the municipal round tables as an example. I talked about the FCM. We want to set up these round tables to get the kind of input that we need to make sure we get the plan right.

[Kyoto Protocol, December 2nd, 2002]

Mr. Speaker, I will be splitting my time with the hon. member for Beauharnois—Salaberry.

First I would like to congratulate the Parliamentary Secretary to the Minister of the Environment. She has been working on this file for quite a long time. In fact the parliamentary secretary has been here throughout all of the debate.

I want to thank her personally because in October I held a Kyoto round table for four hours in my riding. Representatives from Stelco, TransCanada Pipelines, climatologists from the University of Toronto, the parliamentary secretary, a director general from Environment Canada and an environmental firm from my riding talked about these issues. I brought everyone out to look at the impact of Kyoto and to get real input on the issue.

The first question was why did Canada support Kyoto. Canada has always believed in a multilateral approach and through the United Nations process we believe this is the most effective means of ensuring global action. Kyoto is not the end in itself. It is but a first step in a process that will deal with climate change over a period of time. The process will continue to evolve. Therefore there is no definitive answer today as there was no definitive answer on other issues, but we know there is enough information to say that action must be taken and it must be taken now. We have to have a plan and fortunately, we have a made in Canada plan.

Kyoto points toward greater energy efficiency, which is important for Canadians; sustainable growth, an area which I will be talking more on; innovative technologies, and Canada has become a leading environmental country in terms of exporting technologies around the world; cleaner air; and of course lower greenhouse gas emissions.

The Kyoto round table that I held was important because it gave constituents in my riding, the business community, industry, academics and young people an opportunity to hear from the experts. Clearly not everyone was there to say the same thing, although they all did agree on one thing, that action needs to be taken. On the question of pace, there were some differences, but everyone agreed that inaction was not and could not be an option.

Since 1997 the government has been in consultation with stakeholders from the provinces and territories, with key industry sectors, with the public, and others. I thought it was incumbent on me as a member of Parliament to host a round table and not just in that forum but also to send out information and to continually get input from my constituents. I believe that it was useful in providing information, receiving information and helping me in my comments today.

There has been much talk about the costs of ratifying the Kyoto protocol. It seems that the skeptics have forgotten to look, with due respect, at the financial benefits of reducing greenhouse gas emissions. Yes, there will be costs in meeting the targets of the Kyoto protocol and no one on this side of the House has suggested otherwise. However the government believes that they are manageable and small compared to the impacts of not taking action.

It is important to point out that the government is committed to work, and has continued to show that it is prepared to work, with the provincial and territorial governments, business and industry to refine the plan and to develop implementation strategies.

Under the plan we are developing, it is important to emphasize that no particular province or region will be asked to bear an unreasonable share of the burden. Canadian business will remain competitive in the North American and importantly, the global marketplace. We will regularly assess progress and make adjustments to changing circumstances.

One thing I have heard is that the United States is not signing the accord. It is true that the United States is not signing it, and the United States did not sign the small arms treaty nor did it sign the landmines treaty.

The United States, for whatever reason, has not taken a multilateral approach, yet 42 out of 50 U.S. states have established regulatory regimes to deal with the issue of CO

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emission reductions. Therefore, to suggest somehow that the United States is not signing means that we do not have to worry, is a falsehood. To suggest somehow that the United States is doing nothing is, of course, untrue because 42 states out of 50 are taking action.

I believe that we have a responsibility as parliamentarians to take the necessary steps. Over the last five years, evidence, in my view, has been insurmountable. There are those who would suggest otherwise, and of course they are entitled to those opinions, but I believe, as one parliamentarian in the House, that not to go ahead with Kyoto would be the wrong thing to do.

The best evidence tells us that while there is still some costs with Kyoto, they will be modest. They will be balanced across the country and across the economy. These costs are not actual losses compared to today but are in terms of slightly less growth than otherwise would be the case.

I point out, for example, that Canada's gross domestic product will grow by about 17.5% as we take action on climate change over the next eight years. That is about 0.4% less growth than we might have otherwise expected.

While it is impossible to forecast over a 8 to 10 year period the estimated economic impact, the most likely scenario is about .4% of the GDP. This a modest impact relative to the strong economic growth over the same period.

Probably the single most important point to make is that this work of preparing estimates has been a cooperative effort between the Government of Canada and the provinces over the years. The federal government has worked closely with the provinces because the goal is an approach that enables all of Canada to be part of meeting our Kyoto target.

Every time the policy option has become clearer, the modeling has been updated to reflect the most likely situation. The best case forecast has been regularly revised to reflect the most up to date reviews and comments about Canada's economic prospects.

This is important because the context in which Canada will be taking climate change action has changed over time and so too have the estimates of the potential impacts of Kyoto on Canadian jobs and Canada's economy.

It is important to bear in mind that climate change is expected to lead to droughts, of which we have already seen clear evidence, and to severe weather events such as floods and intense storms. The scientists who study these issues, certainly the climatologist who I had at my round table, indicated that more of these episodes were likely to happen in the coming years. One only has to remember the drought of 2001 which cost the Canadian economy $5 billion, or the 1998 ice storm which cost Ontario, Quebec and New Brunswick more than $6 billion.

It is important to understand that the scenario modeled is not the plan. Some have been interchanging that. It is an analytical exercise that enables us to develop and fine tune the plan in a way to even better moderate and balance impacts across the different regions of the country and the different sectors of the economy.

However if we were to take the approach that Kyoto is the final end, then maybe we could accept some of the arguments that I have heard in the House in the past while. The reality is that it is an evolving process. We will be able to meet these targets because of the consultations and the work. I would say that one of the most important areas on which we have been working has been with the cities of Canada and the work we have done through the Federation of Canadian Municipalities, the 20% club, to reduce CO

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emissions by 20% over 10 years. In the end the implementation will be done by the people of Canada in the cities of Canada.

As a credit, many of the key cities in Canada and some smaller communities have signed on in conjunction with the Department of the Environment. I lay that out again for members and would entertain any questions.

[Airline Security, December 2nd, 2002]

Mr. Speaker, first of all, the minister was very clear. The minister has indicated that by December 31 we will be seeking input on a review of the air security charge. As the hon. member knows, this review will take place and when it does, we will then be in a position to respond.

I point out to the hon. member that in the United States up to $1 billion of the cost of air security is on the backs of the airlines. That is being reviewed. The price will probably have to go up because it is not making the necessary amount of dollars needed in order to cover security costs. The member should think about that as well.

[Tax Conventions Implementation Act, 2002, November 28th, 2002]

Mr. Speaker, I rise today to speak to the third reading of Bill S-2, the Tax Conventions Implementation Act, 2002. The legislation would enact tax treaties that Canada has recently concluded with seven countries.

As hon. members know, Canada's economy relies significantly on international trade. In fact, Canada's exports account for more than 40% of our annual GDP. What is more, Canada's economic wealth depends on direct foreign investment to Canada as well as inflows of information, capital and technology.

Tax treaties impact on the Canadian economy, particularly because they help facilitate international trade and investment by improving the tax landscape as it related to cross-border dealings.

This is significant because Canada's economy is likely to become more intertwined in the world economy. Fortunately, Canada is well positioned in that it currently has over 75 tax treaties in force with other countries. Passage of the bill will of course see the number increase.

Canada benefits substantially from having tax treaties in force with other countries. Our tax treaties, for example, assure us of how Canadians will be taxed abroad. At the same time, they assure our treaty partners of how their residents will be treated here in Canada.

On the flip side, tax treaties do not impose tax, nor do they generally restrict countries from taxing their own residents as they see fit under their domestic laws. Rather, tax treaties pay attention to setting out the rules under which one country can tax the income of a resident of another country.

When considering the treaties contained in this bill, it is important to know that the absence of a tax treaty makes unrelieved double taxation a real possibility. Unrelieved double taxation occurs when a taxpayer who is a resident of one country earns income in another and both countries exercise their right to tax the income without offering any form of relief in respect of the foreign tax paid.

Taxation of the same item of income twice without relief is understandably a situation that produces unfair results and which can give rise to adverse economic impacts.

The bill legislates seven tax treaties. The new treaties with Kuwait, Moldova, Mongolia and the United Arab Emirates are the first comprehensive tax treaties Canada has ever signed with these four countries.

In addition, our tax treaties with Belgium, Italy and Norway are updated to ensure that our bilateral tax arrangements are consistent with current Canadian tax policy.

Enacting these seven treaties will provide taxpayers and businesses in Canada and these countries with more predictable and equitable tax results in their cross-border dealings.

Canada's domestic law, like that of most countries, contains provisions that provide relief from double taxation. Our tax treaties give taxpayers the added comfort that Canada and its treaty partners will not depart from providing the relief from double taxation that they have, quite frankly, come to expect.

To alleviate the potential for double taxation, the treaties resort to one of two general methods. They either grant the exclusive right to tax certain income to the country where the taxpayer resides, or the taxing right is shared, but the country of residence is required to eliminate double taxation by providing relief for the tax paid in the other country.

For example, Canada will have the exclusive right to tax the employment income of a Canadian resident employed by a Canadian company who is sent on a short term assignment, say for three months, to any one of the seven treaty countries in the bill.

If, on the other hand, the same person is employed abroad for a longer period of time, such as a year, then the source country can also tax the employment income, and Canada must credit the tax paid in the other country against the tax otherwise payable here on the income.

Beyond the basic commitment to relieve double taxation, the treaties in the bill foster cooperation and establish other important mutual understandings as to how each tax regime would interface with Canada's system and vice versa.

In this vein, a short discussion of how the treaties in the bill affect the rates of withholding tax is warranted. Each treaty establishes limits on the amount of withholding tax that could be levied in respect of certain payments. In all cases where maximum rates of withholding tax are set out in Canadian tax treaties, they are always established at a rate lower than the 25% rate provided under our domestic law.

Withholding taxes apply to interest, dividend, royalty and other types of payments that Canadian residents make to non-residents. For example, a maximum withholding tax rate of 15% would be levied on portfolio dividends paid to non-residents under each treaty in the bill. There would also be a maximum withholding tax rate as low as 5% on dividends paid by subsidiaries to their parent companies.

With respect to interest and royalty payments, each treaty would cap the maximum withholding tax at 10%.

As for periodic pension payments, the maximum rate would be set at 15% for all countries, except that, in the case of Belgium and the United Arab Emirates, no cap has been established. Without tax treaties in place, Canada could tax these particular payments at the general 25% rate, as set out under the Income Tax Act.

Like those that have come before them, the tax treaties contained in the bill are also designed to encourage cooperation between tax authorities in Canada and the treaty countries to prevent fiscal evasion. These treaties would prove to be an important tool in protecting Canada's tax base as they would allow for consultations and exchange of information between our revenue authorities and their counterparts in the seven countries. The tax authorities would be able to deal directly with each other to solve international transfer pricing issues, to reach satisfactory solutions to concerns raised by taxpayers, to complete audits, and to engage in other discussions aimed at improving tax administration.

I would also point out that the new treaty with Norway contains an assistance in collection article that would provide for the mutual assistance in the collection of taxes. Canada has similar arrangements already in place with the United States, the Netherlands and Germany.

In closing, let me summarize some of the benefits for taxpayers and businesses alike that would ensue with the passage of this bill.

Canada would be assured as to how Canadians would be taxed in the seven countries included in the bill. At the same time, these countries would be assured as to how their residents would be treated here.

In addition, the bill provides measures that would facilitate trade and investment, promote certainty and stability, and produce a better business climate between Canada and these countries.

I encourage all hon. members to pass the bill without delay.

[Canada Pension Plan Investment Board, November 27th, 2002]

Mr. Speaker, as the member knows from yesterday's discussions, the fact is that there is a restricted list for the government in terms of countries and companies in which it can invest. However it invests in a broad range of things approved by this Parliament, and is able to do so. I think the answer was very clear yesterday and it is very clear again today.

[Persons with Disabilities, November 27th, 2002]

Mr. Speaker, can the hon. member not take yes for an answer? The issue is very clear. The proposals have been withdrawn. The minister is engaged both with the department and with stakeholders and at an appropriate time will come back to the House. The answer is yes, they have been withdrawn.

[Persons with Disabilities, November 27th, 2002]

Mr. Speaker, in response to the hon. member's question, the Minister of Finance has heard and respects the will of Parliament. The proposal of August 30 is off the table. He has advised his department to respond with alternate proposals and they will be brought back in a timely fashion.

[Government Response to Petitions, November 22nd, 2002]

Mr. Speaker, pursuant to Standing Order 36(8) I have the honour to table, in both official languages, the government's responses to 20 petitions.

[Securities, November 22nd, 2002]

Again, Mr. Speaker, the only confusion seems to be in the mind of the individual across the way.

Again, the stakeholders have made their comments. MacKay has made a report. We invite the provinces, if they would like, to look at a national system. Again, we only invite them. They are not required to do so. If the province of Quebec or any other province does not want to join, they are free to do so.