Mr. Speaker, I rise on behalf of the official opposition to address Bill C-10, an act to implement a convention between Canada and various conventions between the countries of Sweden, Lithuania, Kazakhstan, Iceland and Denmark for the avoidance of double taxation and the prevention of fiscal evasion and also to amend the 1986 Canada-Netherlands Income Tax Act and the 1984 Canada-U.S. Tax Convention Act.
At the outset I would like to make clear that the official opposition supports the proposed conventions with Sweden, Lithuania, Kazakhstan, Iceland and Denmark. We have no objection to the essentially housekeeping amendments made to the Canada-Netherlands Income Tax Act.
However, the government did try to seek our consent and that of the other opposition parties to rush this bill through the House, which is often the case in technical bills involving housekeeping amendments of this nature.
It is a good thing that we as opposition MPs sometimes look a little below the surface to find something very suspicious and nefarious lurking beneath the surface of such technical bills.
Indeed such a nefarious section exists in this bill with respect to the tax treatment of social security payments to Canadian residents from the U.S. social security fund. Schedule section of part VII of Bill C-10 deals with those payments which the hon. minister just addressed.
However, in reviewing the government's rationale for amending the treatment of taxation of social security payments received by Canadian residents, the minister left out a few very pertinent facts.
He implied that somehow these change being made from the third protocol agreed on by this government in 1995 to the protocol that was signed in April by representatives of the American and Canadian governments would somehow increase tax fairness and provide tax relief for lower income resident Canadian seniors.
That really is not the full picture. What the minister forgot to mention was that tax treaty, the 1985 third protocol which imposed a 25% flat withholding tax for social security payments coming to Canadian residents, was negotiated and agreed on by this government, the very government whose members are saying that it was an unfair agreement. Indeed it was.
Let us back up a couple of steps and give the government a bit of a history lesson when it comes to how it has treated these 80,000-some seniors who have received U.S. social security payments in Canada.
Originally since the 1984 U.S.-Canada Income Tax Convention Act, 50% of social security payments to Canadian residents could be included for purposes of Canadian taxation. That made a lot of sense because it was the same treatment that U.S. recipients of social security have. That is to say, 50% of their social security payments were included for the purposes of taxation.
In 1992 the U.S. government under one of the Liberals' ideological allies, Bill Clinton, decided it was going to raise taxes on seniors. It did that by raising the total maximum inclusion rate for U.S. social security benefits from 50 to 85% so that theoretically wealthier seniors were paying more tax on their social security benefits.
Following that, this government entered into negotiations with the Americans to produce the third protocol, which did not create a parallel system with the American treatment of the taxation social security benefits. Instead what they did was impose this 25.5% flat withholding tax on those payments being made to Canadian seniors and American residents of Canada. That was devastating. It had an absolutely devastating impact, particularly on low income seniors.
I think the members from the government who come from the Windsor area in particular where many of these taxpayers are concentrated know of what I speak. It put many of the lowest income seniors there into terribly dire straits.
Many of the lowest income seniors saw their tax bills rise by $1,000 to $2,000, people on fixed incomes, people who do not have the resources to hire tax accountants or lawyers or specialists to advise them on this kind of change. Suddenly it appeared, even after the government made commitments that no one would pay more taxes.
The hon. deputy prime minister, a member from the Windsor area, indicated in several public statements on the record that the 1985 protocol would not result in a tax increase for any Canadian resident. He was wrong. He was completely wrong because every Canadian receiving U.S. social security payments saw a significant increase in their tax bill. The government was wrong then and it is wrong again today.
Those seniors lost trust in this government's ability to protect their interests in negotiating the 1985 treaty. As a result there was a lot of political heat felt by this government. They went back to the table and they renegotiated it, and today we are analysing the result of that negotiation.
What happened? Once again this government sold Canadian seniors down the river by raising the inclusion rate of U.S. social security payments from 50%, as it was before 1985, to 85%. That is a 70% increase in the inclusion rate. That is a 70% increase in the taxes that seniors who receive U.S. payments will have to pay the Canadian government.
The Liberals call this fairness. They say this is revenue neutral. It is not. If more seniors pay more taxes than they used to, that is a tax grab.
I know this government has a problem when it comes to accounting. By adding $100 billion to the federal debt it claims to have somehow balanced the budget. It thinks adding debt means fiscal responsibility, that increasing taxes equals tax fairness. It is more of the same old Liberal tax, spend and borrow game that we see in section 7 of part VII of Bill C-10.
This is a very serious matter and I hope the government listens closely. We have received representations from an organization representing thousands of Canadian resident seniors, the Canadians asking for social security equality. They point out to us the kind of very serious dire straits that older Canadians fell into as a result of the 25% flat withholding tax, unfair tax grab, imposed by this government in the 1985 treaty.
They made representations to the government to make changes so they could get back to revenue neutrality with the pre-1985 tax rules. Instead they get a 70% tax increase.
The government will say these changes are fair because Canadian taxpayers who receive Canada pension plan and OAS, now seniors benefits, have an inclusion rate of 100%. They are right. Liberals must be happy that seniors have to get shaken down.
What they are doing under the proposed seniors benefit changes is to deeply penalize middle income seniors in particular who have acted responsibly to save for their retirement by imposing massive taxes on their income from private savings. That is what they are doing under the seniors benefit. They are doing very much the same thing under this bill.
The government will argue, as have several of the members from the Windsor area, that the 100% inclusion rate for CPP payments to Canadian residents is somehow a precedent for these Canadian residents receiving U.S. social security payments. On the face of it, it seems like a reasonable enough argument. We want fairness. Everybody should be treated the same.
There is a difference here. Canadians are not taxed on the payments they make to the Canada pension plan. The so-called premiums, premiums which the government will be raising by 73% between now and the year 2003, are deductible from the taxes we pay. They are not included as taxable income.
The U.S. government treats its taxpayers differently. They do not get to deduct the cost of their social security premiums paid to the U.S. treasury. They are taxed at source on those payments. That is why Americans do not have a 100% inclusion rate for social security benefits. They have decided for policy reasons to tax that pension system at the front end when the taxpayer earns the money and pays into the system rather than when he retires and collects from it.
Imagine the case of a hard working Canadian taxpayer who goes across the border to find gainful employment in the United States because there are not enough jobs in Canada. Under American law a portion of their paycheque is taken off at source and sent to the U.S. federal treasury to fund their social security benefits. They do not get to write the cost of that off against the taxes they pay. They are paying taxes on those premiums and they make their retirement plans based on that income. Of course most of these people are seniors on modest fixed incomes. Then finally along comes their retirement and what happens?
If they were residents of the United States they would be faced with a very small tax on the social security benefits they receive. In fact anyone in the United States who earns up to the equivalent amount of $40,800 Canadian as a senior would pay no taxes on their social security benefits, none, zero, zip. There are no taxes for low income seniors on their social security benefits. If they earned a little bit more, if their income was a little higher, then for middle or higher income seniors somewhere between 50% and 85% of their social security benefits would be taxable.
The Americans have built a progressive scale into their tax system for social security benefits. There is progressivity and fairness. The wealthy would pay more, 85% of their social security benefits are what they would pay taxes on. But the poor would pay nothing.
This government has created a double standard for Canadian residents earning the same social security benefits. Not only did they have to pay taxes on their social security premiums when they were working, now they will have to pay taxes on 85% of the social security benefits regardless of whether they bring in $10,000 a year or a million dollars a year.
This government loves to lambaste our American friends for unfair taxes. This government prides itself on being the paragon of fairness when it comes to taxation, but it has created this gross double standard. It is going to double tax Canadian residents who happen to have worked in the United States, who have been taxed once by the U.S. government on their payments into the social security plan. They will now be taxed again regardless of their income level and 85% of their social security benefits will be included for purposes of Canadian taxation. That is not fair. That is what is called a tax grab and it is something the government is going to pay a serious political price for.
Let us look at the so-called fairness of these changes if you were a recipient of social security benefits in the United States earning $30,000. What would have happened under the 1985 tax treaty this government brought in, if you were a Canadian living in Canada collecting U.S. social security benefits, the 1985 tax treaty which it is trying to change added $1,300 to the tax bill. If you were a senior earning $30,000 the changes brought in in 1985 would have added $2,000 to your tax bill.
I spoke to some seniors from the Windsor area on the telephone today who indicated that the flat 25% tax imposed by the government in the past tax treaty added $2,000 to their tax bill. This is not just a number, not just a figure. It is real money out of the pockets of real people, affecting their lives, making them poor, putting many of them in distress.
We have heard stories of seniors receiving social security benefits in Canada who had to leave their apartments, who had to sell their cars and could not drive to the grocery store and who could not afford cabs. I understand there is a member of the government from Windsor who actually should be commended for volunteering to drive some of these seniors to the grocery store because they cannot afford a cab because of the $2,000 tax grab agreed to by the government in the last tax treaty. It was not fair, not right. It was a tax grab so the government tried to change the rules.
What happens now? The government grabs more. Under the new treaty, under the fourth protocol that we are debating in Bill C-10 today, the same seniors will again see an increase in the taxes payable on their U.S. social security payments. In fact somebody earning $30,000 a year will pay over $3,000 more than they did in 1985.
We are talking about seniors on a fixed income of $30,000 a year who will see 10% of their gross income disappear because of the 70% increase in the inclusion rate proposed by Bill C-10. That is fairness? They call that fairness? I call it a rip-off, a rip-off on top of 36 tax increases imposed by this government since it came to power.
Let us look at the example of a Canadian resident with a gross income of just over $40,000. What happens to him? In the United States he would only pay an inclusion rate of 50%, not 85% as in Canada. The marginal tax rate would only be 32% but as a resident of Canada he would pay $2,600 more than he would if he were a resident of the United States. That is how we are treating our seniors and I think it is shameful.
The government will claim again and the finance minister has said in correspondence with me that these changes are necessary, that the 50% exemption was in the tax treaty because when the treaty was signed that was how the U.S. taxed its own residents' social security income. True enough. If that is how the U.S. government treats its residents, why are we treating people who paid into that system differently? Why do they have to pay 85% of their income into this system?
As people from Canadians Asking for Social Security Equality have said, this is a massive tax grab. They just want an amendment so they will get the same treatment they had under the pre-1985 rules. That seems reasonable enough to us. So that they do pay their fair share but not a penny more.
This government's idea of tax fairness is that everybody pays more. My idea of tax fairness and tax efficiency and a growing economy is a system where Canadians get a bit of a tax break. It is a system that acknowledges that Canadians have worked all their lives and it will not penalize them for saving. They have saved all their lives and they will not get penalized for trying to live out a reasonable retirement.
I repeat that this is from a government that has imposed 36 tax increases on Canadians, tax increases that have amounted to $24 billion in additional revenues as of last year. It is from a government that now imposes a tax burden of 46% on the average Canadian family. This is a government that has presided over four straight years of shrinking after-tax family income. The government calls that a record of economic growth. I call it a record to be ashamed of. This is a government that has presided because of those tax increases, because of that shrinking family income over 9% unemployment, over 17% youth unemployment.
Now in Bill C-10 which we are considering today the government is attacking Canadian residents who are receiving U.S. social security payments. Under the proposed amendments to the Canada pension plan the government is attacking younger Canadians by imposing on all working Canadians a 73% increase in their CPP premiums. This will give self-employed Canadians a $3,600 tax bill for their CPP premiums, money that people of my generation know we are likely never to receive.
This is a government that is proposing, in its amendments to the seniors benefit, tax increases which would severely penalize middle income seniors for having acted responsibly and for having saved for their retirement. And today again it proposes yet another tax increase.
My message to the government is to listen to Canadians who are speaking out about this and who are asking for fairness. Even the finance minister made an admission in a letter to me dated September 22 by saying “I can understand some recipients are not in favour of the new agreement”. Why is that? It means that after 1997 they may have to pay more tax than they did in the past. The finance minister admits it.
In 1985 the deputy prime minister said that the proposed tax treaty would be revenue neutral. He was wrong. I will not say that he lied because that would be unparliamentary. He just did not tell the whole truth. Whether he knew it or not, he did not tell the whole truth.
We just heard the hon. minister say that this would not increase anybody's taxes, that it would bring taxes down for lower income Canadians but I have here in my hand a letter from the finance minister contradicting that statement. The Minister of Finance has admitted that Canadians are opposed to it because it will mean a tax increase for them.
Which is it? Is it fairness or is it an increase? Is it a tax cut or is it a tax grab? I guess we will have to trust the word of the hon. Minister of Finance when he says that it is a tax grab.
I have a question. I am sorry I did not have a chance to ask the minister this question, but there was no question and comment period. Somewhere in the labyrinthine hallways of the Ministry of Finance surely somebody sitting at a computer terminal has crunched the numbers as to how many more millions of tax dollars the government will squeeze out of low and middle income seniors to satisfy its insatiable demand for tax dollars through Bill C-10. Surely they know what the dollar figure is. Why have they not disclosed that?
My challenge to any government member speaking on this bill today is to tell us how much money they are squeezing out of the poor seniors with this bill. How many millions of dollars will there be on top of the billions of dollars they have already squeezed out of Canadians, on top of the billions they plan to squeeze out of seniors benefits, on top of the $10 billion they plan to squeeze out of the Canada pension plan?
It may not mean a lot to the millionaires who populate the front benches of the government and it may not mean a lot to ordinary members who get $5 out of every dollar they put into their gold plated MP pension plan. However a $2,000 tax increase for a Canadian resident senior earning only $30,000 a year means a lot. It can make the difference between living a reasonable retirement and a retirement stuck in poverty.
I am sick and tired of the government prattling on about tax fairness when again and again it means higher taxes for the people least able to defend themselves, least able to hire tax lawyers and accountants who populate the Liberal Party, least able to handle this kind of cut to their income.
I call on my colleagues opposite to look at this bill.
There is no doubt that when government members walked into the government lobby this morning, government hacks were there handing them their speaking notes. They will dutifully stand up today and read word for word, verbatim, about how this bill is about fairness and how it is just an innocuous housekeeping amendment. That is what we will hear from those members today. They do it time and again.
The finance ministry, as always, will frame the amendments and the legislation working behind closed doors with the minister while the backbenchers are left in the dark not knowing what is really in the bill. When they show up in the House they are presented with 138 pages of technical legislation. They are given their speaking notes. They have not read the bill. They have not looked beneath the surface of those speaking notes to ask the minister questions.
But seniors are asking us questions, not just members of the opposition but members of the government. They are pleading for the sake of their retirement for the MPs opposite to take this seriously and not to bluff it off as just another government bill, another technical housekeeping amendment because it is not that. Over 80,000 Canadian seniors are going to see their taxes go up over what they paid in 1985. That is not fair.
Why will members opposite not look beneath the surface? Why will they not throw away the scripted notes they have been given by bureaucrats in the finance department, which some of them are reviewing at this very moment? Why will they not speak for themselves and their constituents rather than for the bureaucrats in the finance department?
That is the challenge of democracy. That is the challenge of representation. That is the challenge this government again and again has failed to meet with its massive tax increases which have reduced hope for older Canadians and younger Canadians and which have given us a 9% stagnant unemployment rate for 86 straight months. That is the economic record of the government.
They are very sly. The Mulroney government used to get heat all the time for any little change like this one because the Liberals were very good opposition members. Mr. Speaker, I think you know that from experience. They pointed out tiny tax increases hidden in complicated bills like this one and the Mulroney government paid a price for it.
The Liberal government is very slick. It has lots of high priced PR hacks telling it how to hide these sorts of things from Canadians.
I put the government on notice today. On behalf of all Canadian taxpayers the official opposition party—and I think the other ones—will not let these kinds of things slide through any more.
The government approached us and asked us to fast track the bill, to consider it in committee of the whole and to let it go in one day, hoping that the 85,000 Canadians who will face a tax increase would not notice it. That is what it tried to do, but it will not get away with it.
We will take it to committee. We will draw out debate. We will bring witnesses before the finance committee, the same seniors who will be so deeply affected in their lives by the bill. Those Canadians will not tolerate this kind of completely irresponsible approach to democratic deliberation.
I say again that my hon. colleagues opposite should take a look at the facts. I would be happy to get unanimous consent of the House to table a chart prepared by Mr. Bruck Easton, a tax and commercial lawyer from Ontario, in which he compares the relative taxation of U.S. social security payments to Canadians using comparable U.S. rates. It demonstrates conclusively the tax changes proposed under the protocol included in Bill C-10 will levy a massive tax grab on a small number of Canadians.
A small number of Canadians, no more than 85,000, are affected by the bill. They do not have, as I mentioned earlier, high priced tax lawyers. They do not have high priced lobbyists like former Liberal cabinet ministers working for them to get access to decision makers in the government. They do not have anybody at their beck and call on a $5,000 a day retainer who can call up Mr. Goldenberg or other officials in the prime minister's office.
I was talking to a representatives of the organization today. I asked him to urgently fax me some critical information for this debate. He had to drive three miles just to get to a fax machine to fax something here. These people are not equipped like the special interest group, the big business lobby friends of the government opposite, to object to bills like this one. All they have is a bit left over which the government lets them keep, a bit to contribute to this kind of fight.
Many of the seniors are of an age and in a condition of health where they do not know what will happen to them. What happens is that they get their cheques and the cheques have shrunk; they are smaller. They look at their tax return and wonder what has happened because their income is $2,500 less than it was four years ago. That is a good question members opposite will have to answer.
There may be only 85,000 Canadian resident taxpayers affected by the bill but each and every one of them as a taxpayer has a right to object to do so. The government will be hearing from people like them.
I plead with government members not to listen to backroom boys in the ministry of finance. They should listen to their constituents, listen to Canadians asking for social security equality, and listen to taxpayers who asking to keep a bit more of their money.
The attitude of the government as with all Liberal governments is that it is the government's money. Somehow it is the property of the Government of Canada, if not the Liberal Party of Canada. This money belongs to Canadians. When the government raises taxes on particularly hard pressed seniors, as it is proposing to do in the bill, it suggests that those people do not need the money and that the government needs it more.
To do what? To lavish billions upon billions of dollars on special interest group handouts and subsidies to its big business friends.
I ask members opposite to reveal to the House and to taxpayers exactly how much they expect to squeeze out of Canadian recipients of U.S. social security payments through the bill.
I suspect the amount is probably less than the $100 million the government decided to give earlier this year to its billionaire friends at Bombardier, a company that has donated hundreds of thousands of dollars to the already overflowing coffers of the Liberal Party of Canada.
How many other hundreds of millions of dollars have been handed out to big business, corporate friends of the government? Who is forced to pay for it? Not those very same corporations but retired seniors trying to get by on $12,000 or $20,000 or $30,000 a year. That is where the money is going. I say shame on the government for having its priorities so desperately wrong.
Is the government really in favour of fairness and equality which it prattles on about ceaselessly? The hacks in the various government departments who write their scripted speeches have, I think, a very limited vocabulary because the word fairness appears about 18 times in every scripted speech.
If they really had an understanding of the concept of fairness in a modern liberal democracy, they would exercise it in the way they act and not in just what they say in political speeches. They would exercise the concept of fairness by saying to the same seniors they are persecuting in the bill today that they would be willing to give up, or at least retroactively reform their gold plated, taxpayer subsidized MP pension plan.
We know they will not do that. We know their concept of fairness starts with taxing Canadians more and taking more out of the public trough for themselves and their big business friends. That is not fairness. I call that unfairness.
I want to close by asking the party opposite to consider seriously the effect this bill will have. We will be proposing a minor amendment to the bill at committee stage to clarify article 2, paragraph 5 of article XVIII of the 1984 Canada-U.S. Income Tax Convention Act. It is a very simple amendment that would make clear the inclusion rate for U.S. social security payments to Canadians could not exceed the same level imposed on American recipients of the same benefit. There would not be double taxation or unfairness. Those seniors would be treated the same way, as if they were paying taxes in the country where they earned the benefits.
If the government agrees to the amendment, many tens of thousands of Canadian seniors will be very grateful and will be better off for it. Their lives will be better. They will be less hard pressed. They will be able to do more for themselves, for their families and for their grandchildren.
I appeal to the genuine humane instincts of members opposite to look beneath the surface of the bill and to ask the Minister of Finance about it in caucus on Wednesday. They will get a chance to do so because we did not agree to fast track the bill and are pushing for debate. They should ask him, as he confirms in his letter to me, whether it increases taxes on poor seniors, to what extent it does so, and how many more millions of dollars will come into the public treasury as a result. When he says yes, why not ask the minister to agree to the amendment we will be proposing to establish tax fairness for these hard pressed Canadian seniors?
Mr. Michel Bellehumeur: Mr. Speaker, I am pleased to speak on Bill C-10. It makes a bit of a change from being official Bloc Quebecois critic for justice.
Bill C-10 is extremely important. It affects a number of my constituents in Berthier-Montcalm, and particularly in the Rawdon area. That municipality is home to a number of retired persons from nearly all parts of Quebec. In particular, there is a concentration of anglophones who—while remaining Canadians' worked in the United States when they were younger, and have now come to the Berthier—Montcalm area to retire and have made Rawdon their home.
I was made aware of the problem as far back as 1995. It is a rather significant one, because retired people do not have the same income as they did while working. These people were heavily penalized because of the conventions betwen Canada and the United States, which did not work very well. Taxes had to be paid to both sides and they ended up being penalized.
Our interventions on this date back to 1995. The problem was raised here in this House. The government was challenged on it. François Langlois, the Bloc member for Bellechasse at the time, did an extraordinary job with this question. He got it debated on several occasions, both in committee and in this House. Speaking for both the Bloc Quebecois and myself, François Mercier is owed a vote of thanks for the work he has done on this matter. He is back home now, not having been re-elected in 1997.
Another Bloc Quebecois member, the hon. Member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, has been involved with this matter since 1995 and is still responsible for it. He defends constituents faced with this problem anywhere in Quebec in an exemplary manner.
I should say first of all that the Bloc Quebecois supports Bill C-10 before us. It resolves the questions we have had since 1995 and also the concerns of our constituents faced with this problem.
However, there are a number of parts to this bill. I have some constructive criticism, given the importance of the subject. Part VII of the bill contains the rules for American pensions. Given our geographic position, the history of the two countries, which have long been friends, our close relations with the United States, there are many economic relations between the United States and Canada, much more than, say, between Lithuania and Canada or Iceland and Canada, to mention just those two countries also included in Bill C-10.
To speed up the entire process, given the importance of relations between Quebeckers or Canadians and Americans, I think the government should have drafted the treaty for American pensions specifically, dealing with the problem of taxable income between the taxable incomes in Canada and the United States, to acclerate the adoption process and prevent ambiguity with other parties to settle the issue once and for all. But Bill C-10 also includes other conventions. Parts I to V refer to Sweden, Lithuania, Kazakhstan, Iceland, Denmark, the Netherlands and, of course, the United States. It is like trying to hide the most pressing problem in a bill that is more complex than it needs to be to solve the most urgent problem.
This will not prevent the Bloc Quebecois from supporting the bill, but had the government listened to us in 1995 and 1996, if the government had drafted a specific bill to resolve the most important problem, that is, a convention between Canada and United States, the problem would now be solved. People who should get refunds would have them, and we would be in a very different situation where we could be talking about conventions with other countries, not less important, but with whom our dealings are less important in terms of the objective of pensions for people having worked abroad who retire in Canada.
As I was saying earlier, the purpose of parts I to V is to implement tax conventions with all the countries I listed earlier, except the Netherlands and the United States. Part VI concerns the Netherlands, and part VII concerns the United States, our neighbours to the South.
These conventions are basically the same, and are largely patterned on the OECD model. They are standard conventions with which Canada is familiar because it often enacts similar conventions.
What surprised me when I looked into this matter, because I had this problem pointed out to me in my riding and we discussed it in the Bloc Quebecois caucus, is that in April 1997—and this was confirmed in the joint committee on banking, trade and commerce—there were 57 tax conventions in effect between Canada and various countries and 34 pending or under negotiation. Of the 57 treaties in effect, many are quite old, do not necessarily meet OECD standards or were not concluded in the way Canada now concludes such treaties. In other words, Canada has a great many tax treaties like this.
It is good to have these treaties between countries when the goal is to ensure fair and equitable tax treatment of residents and non-residents. It is also good to have treaties when the goal is to encourage trade and investment between countries. But we must prevent these treaties from becoming smoke screens for abusive tax avoidance. I will not mention shipping companies under flags of convenience to avoid paying taxes in Canada and Quebec. Not will I talk about the scandal we saw in the House, involving both Liberals and Conservatives, because both of them were equally involved in the family trust affair. We heard a lot about that during the 35th Parliament. Shall I talk about that? The member opposite is looking at me and might be interested in these things. I will talk about them after all, as I have the time.
It is said that tax conventions—the member opposite is smiling, he wants me to get into this, I found him a bit deadpan today, but his smile is a sign that it is important that I speak about this—encourage trade and commerce, but care must be taken not to abuse such treaties. Companies making hundreds of millions of dollars in profits can hire good lawyers, good tax experts knowledgeable in Canadian taxation. They pay then with what they get through existing legislation. It's quite legal, nothing is illegal. But there has been abuse.
The first example I gave—I did not want to get into this, but I am being encouraged to speak—is Canada Steamship Lines. As for tax conventions being used as a means to reduce one's tax liability in Canada, the example comes from high above. I am referring, unfortunately, to the current Minister of Finance. A newspaper article—this is not a figment of my imagination—indicates an in-depth study of the company was done, and the finance minister is taking advantage of tax conventions with countries considered as tax havens, such as Bermuda, Liberia, Barbados, and in 1981, when the finance minister became the owner of Canada Steamship Lines, this shipping company was conducting the same sort of business, but under the Canadian flag.
However, the study released in Le Soleil revealed, and this was later confirmed by many, that between 1981 and 1994 the company set up three subsidiaries in Bermuda and three more in Liberia.
We also learned that since 1994 the GST group established seven more subsidiaries in Barbados. According to tax experts, Liberia, Barbados and Bermuda are among the countries where the tax man is most complacent toward companies.
All this to say that when we make abusive use of legal tax conventions, as the finance minister did, such treaties serve essentially the same purpose and allow the awarding of the same contracts as before 1981, before the finance minister took over the company, but now the ships fly the flags of countries experts consider as tax havens. Why? Simply to avoid paying taxes, or to pay as little as possible. It is rather clear. Existing tax treaties are used in such a way as to benefit the wealthy.
The other example mentioned by the Bloc Quebecois during the 35th Parliament is the whole issue of family trusts. One day, in May 1996, we learned from the auditor general that there were serious concerns as to how the Income Tax Act had been applied to transfers abroad of at least $2 billion in assets held in trust funds in Canada. With the complicity of the Department, with the complicity of both the Liberals and the Conservatives, because both parties had a hand in this, $2 billion were transferred to the U.S. without a cent being paid in taxes, all this perfectly legally, again because of the tax treaties.
This is the kind of tax treaties on which we must focus to try to plug loopholes as much as possible, so that each and every citizen of this country, in Quebec as well as in Canada, pay their fair share of taxes.
These are two very important examples. Given the extensive number of tax treaties between Canada and various countries, one might expect that in signing such treaties a responsible government would assign appropriate resources to evaluating, adjusting and renegotiating tax conventions that present problems, especially with countries representing the greatest risk of tax losses for Canada.
I have a riddle for you this morning. Guess how many employees are assigned to tax treaties in the finance department. How many employees work on these treaties? There are 57 treaties that have been signed so far and, as of April 1997, there were another 34 pending. Probably several of these have already been signed.
All in all, there must be approximately 100 treaties. So, in the federal administration, this big machine, how many employees are monitoring these treaties, ensuring that they are reviewed and that amendments are made if mistakes are found, if the loopholes are too great for tax fairness? How many? A hundred, twenty-five, twelve? We have learned that there is only one in charge of seeing to these conventions. Fortunately, this is a full time job. However, he is alone, and billions of dollars are at stake.
I am not questioning the skills of this employee, whom I actually find very courageous to tackle this task on his own, without asking for any help. On the other hand, I wonder how serious the government is about seeing that these treaties are properly implemented. I think that in a case such as this one, it is not a matter of saying that the government is just ignoring the implementation of such treaties. I think that, by having one public servant for a hundred or so treaties, the government is deliberately turning a blind eye and a deaf ear to what is going on with all these international treaties.
Are you aware that Canada spent more on the visit by the Queen of England than on auditing tax treaties à an example I have chosen because it is in today's news. Speaking of royal visits, I am sure the Queen of England must now be recovering from the visit to India, which seens to have been a trial for her. This is just to show that the government is not necessarily investing in the right place. Perhaps more public servants need to be assigned to keeping a serious eye on all these international treaties, which are essentially good things.
I believe there must be international treaties. There must be legislation to protect the most disadvantaged, as Part VII of this bill does. The Bloc Quebecois initiated it in 1995. It is right for there to be tax conventions to solve the problems of Canadians residents and non-residents having once worked in the United States, but these havens and tax conventions should not be abused. To avoid this, there must be a minimum follow-up, and that is provided by civil servants, investigations, people responsible for these conventions' application.
To conclude, the Bloc Quebecois supports Bill C-10. We do, however, call upon the government to take subsequent follow-up far more seriously. We are calling upon the government, in light of what is at stake, the billions of dollars involved—big bucks here—and in light of the fact that most often it is companies who make use of tax conventions, and they can afford top notch lawyers and tax experts, to have enough resources, civil servants to do a good job, a very good one, of following up on the application of these international treaties.
