Mr. Speaker, I am pleased to speak today to Bill S-3, which originates in the Senate. Interestingly enough, there are a considerable number of bills that are coming to us from the Senate this year. This is An Act to implement conventions and protocols concluded between Canada and Colombia, Greece and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
The bill relates to Canada's continuing efforts to update and modernize its income tax treaties with other countries. At present, Canada has tax treaties in place with 87 countries, a figure that was mentioned by one of the speakers earlier today. The bill would implement three new treaties that Canada has signed with Colombia, Greece and Turkey.
It has been pointed out by several speakers today that we are in a reactive position in this House. We are not in a position to amend these agreements. These agreements have been negotiated like a trade agreement would be negotiated between the two countries. The agreements are signed, and then put into legislation and brought before the House.
At this point I would like to make the observation that I believe the government, had it been smart in this situation, would have split these treaties into three separate bills rather than putting all three treaties into one bill. Bill S-3 should really have been written as relating to only one of the treaties. We then would have had three bills to deal with and that would have made matters easier for all of the members here in the House, but that is not the case so we will have some difficulties with the bill once we send it to committee.
I would also like to mention that the bill, as well as many others, is going around the block for the second time. It had already made it through the Senate last year, before the Prime Minister prorogued the House, and we are back doing it again only a year later.
Another point is that the bill does not represent any new or significant change in policy. The tax treaties covered by the bill are patterned on the OECD Model Tax Convention, which is accepted by most countries around the world. As a matter of fact, I believe I read that there are several hundred of these treaties in existence. Because it is an OECD model, other countries adopt the model and simply negotiate with their group of partners.
What the agreement does is avoid double taxation, which we can all agree is an admirable goal. It also is designed to prevent international tax avoidance and evasion, and that is another extremely important area, although I have to question just how effective these agreements are in terms of dealing with tax avoidance and evasion.
For example, given that we have had 87 of these treaties going back now for a good number of years, since I believe the 1970s, one would think that someone would have done an audit of the treaties and could at least present us with some facts and figures as to how effective they are. It does not make any sense to me that we would have signed 87 treaties, and we are proposing another dozen to be signed and more to be negotiated, when we cannot quantify and qualify how effective the previous 87 have been.
Clearly, the government must have some sort of information as to how effective these treaties are because it keeps signing them. That is why I asked the parliamentary secretary, when he introduced and spoke to the bill in the House earlier today, if he could present information as to how much tax has been recovered through Revenue Canada based on evasion and avoidance in other countries covered by these agreements.
He admitted that he did not have that information. I believe that he has undertaken to try to get the information, but once again I cannot guarantee that that will ever happen.
A lot of this could have been avoided if the government had set up briefings, as the ministers of the Manitoba government did, under Conservative governments and under the NDP government. To be fair not all ministers were good at it. I should not say good at it, but not all ministers actually did it. I can recall several Conservative ministers, as well as NDP ministers, who were just excellent at calling together the opposition members, or any members who wanted to attend a briefing, to explain the bill to them.
It has worked. I think that almost every minister who has done this will claim that it is money in the bank and is a very smart way to proceed. If the adversarial process is cut out and any interested members of Parliament are brought into a briefing so that they can find out about a bill, it would save a lot of time in debate. At least the information we are dealing with would be consistent and everyone would have accurate information.
I would really like to ask those questions. I would also like to ask, how many people take advantage of these treaties? How many people are affected by the treaties? Are we negotiating an international treaty for one or two cases a year, or are we negotiating an international treaty for hundreds and hundreds of cases in a year? Unless we can do an audit of the process to prove that we are actually gaining something, then why would we be negotiating these treaties?
Another question I would have is, are these treaties consistent? The argument is that they are based on the OECD wording, but they are negotiated between two countries. I have checked two of the treaties, and I do not believe they are entirely consistent with one another. Yes, they follow an OECD model and pattern, but it seems to me that there may be differences between the treaties.
We are being given this bill and are expected to deal with it as summarily as possible, but we are missing information. We do not have the government putting up any speakers, as with quite a number of bills right now, so we do not get to ask the government members any questions about the issues.
It is little wonder that we end up being very reluctant to send these bills forward. We end up being very suspicious about the intent of the bills, even though there may not be any sinister movement or ideas behind the bills. We have to question them, and it slows up getting them to committee in the first place. Then it slows them up in committee once they get there.
I think the government could streamline its processes better and would get more results by having briefings in advance of bills like this, especially bills that may, in fact, have a number of serious questions attached to them.
In 1971 the federal government undertook a review and overhaul of Canada's taxation system. That would be during the first Liberal government of Pierre Trudeau, I believe. The Liberals reviewed and overhauled Canada's tax system. Among other initiatives the review involved the expansion of the network of tax treaties with other countries.
Interestingly enough, we were looking at tax avoidance way back in the 1970s. I believe one of the earlier speakers talked about $6 billion, and that is probably a conservative figure, in tax havens around the world. Clearly, there is a lot of work that has to be done, cracking open these tax havens.
I know the Bloc members are extremely interested in the tax haven issue and they have talked about it, certainly in relation to the throne speech and other pieces of information. My time is not unlimited and I have a lot to talk about.
We have all these governments over many years making declarations that they will cut down on tax havens and close the loopholes. How many times have we heard governments say they will do this? They have the entire power of the state behind them to do it, and they are spectacularly unsuccessful. Just to show how important a single person can be in this world, in the last year an employee of a bank in Switzerland, a little guy, took a backup tape containing the names of thousands of people, German citizens, Canadian citizens, citizens from other countries, who were avoiding taxes on undeclared income in these banks. I do not know what his motives were exactly, but whatever they were, he sold the tape, and the German government bought the records that dealt with their own citizens. He may have sold it to other countries too. The ripple effect was that Canadian taxpayers were rushing for the exits to take advantage of the tax amnesty offered by this government to voluntarily declare their undeclared income.
The moral of the story is that Canadian citizens are free to seek out and invest in tax havens in other parts of the world, not pay taxes on their capital gains, on the interest they get on this money, and the worst that happens to them is that they can simply walk into the nearest Canada Revenue Agency office and make a voluntary declaration. It is called an amnesty. If they do that, they do not even get a slap on the wrist. They simply pay the taxes and I suppose they are told to behave themselves in the future. If they do not voluntarily declare, they would be in trouble if they get caught, which is why so many of them have been voluntarily declaring.
This is an example of one little guy, one worker in a bank, stealing a tape for whatever reason and selling it to the government and essentially setting off a firestorm of activity. I believe there are also movements afoot now under the Obama administration, predicated more on the terrorism issue than the whole idea of trying to collect taxes from tax evaders. The reason the Americans are putting pressure on the Swiss banking system and other banks that hide information and keep it private is that they want to uncover moneys that are being stored in these facilities by terrorists. That is the motivation.
However, the Americans were happy to avoid doing that all these years. The Swiss system got rich over the years by taking money from drug cartels, arms dealers and all sorts of unsavoury organizations and people. In fact, drugs dealers and arms dealers who put millions and probably billions of dollars into Swiss banks over the years in many cases were actually getting zero interest on their money. That is the explanation why Swiss banks are able to lend out the money. Back in 1987 when Canada's interest rates were in the 18% range and we could buy GICs at the Royal Bank, or treasury bills, at 18% or 20% for a month, we could get money from Switzerland for 6% from Swiss banks.
I am told that many of the people involved in dirty money essentially put that money there and expect nothing. They are just happy to have the money protected and to have the veil of secrecy and privacy at their disposal.
They will put millions and millions of dollars in a Swiss bank with no interest, none whatsoever. Of course that is why the bank can turn around and lend it out at low rates.
This system lasted for many years but it is about time we, as a group of countries, started to crack down on people who try to avoid paying taxes.
I turned on CPAC last night and saw Mr. Snowdy talking about Rahim Jaffer, former MP, and how he was alleged to be setting up accounts in a bank in Belize. Belize is not on our list of countries that have treaties like this, but the question I would have is this. Are people like that, who are trying to plan out their careers in tax evasion, looking at our list? Are they looking at the list of countries where we have these tax treaties and trying to avoid the tax treaties?
Of the 80-plus countries we have on the list, where we have tax treaties, we have Algeria, Argentina, Armenia, Australia, Austria and then we have Barbados. I looked through the list of countries and I do not see any that come across as tax shelters until I get to Barbados under the Bs.
There we have a case where we have one of these tax treaties in place. We had the Bloc critic speaking this morning, and by the way he apologized for Lichtenstein. He and I checked it because it was not on my list. He admitted that it in fact is not on the list.
He explained in very good detail about the tax haven situation with regard to Barbados, I believe. He was explaining that the OECD has a tool to detect tax havens. He said there are four criteria that it uses to be able to tell whether a country is a tax haven: the taxes of a country were either low or zero, there was no transparency, there were no filings to be made, there was no due diligence and there was no economic activity. I believe he was describing a situation where we had an increase in Canadian investment in Bermuda, Barbados and the Cayman Islands from $30 billion up to $90 billion, and these are countries where we do not have these tax agreements.
There is a grey list and I believe Belize is on the grey list.
I have no idea why Mr. Jaffer would have chosen Belize, because Belize is not necessarily even one of the countries on the best-tax-haven list, but still we certainly do not have a treaty with it.
Grenada is on the list. Just several weeks ago there was a report in the press about Grenada and how in the last two or three years there was a spectacular tax evasion scheme going on using a Grenadian bank. I believe an American or Canadian citizen went to Grenada and set up the bank, and it was just a front. It was a rented office. There was no real bank there at all. Millions and millions of dollars were being bilked from North Americans.
So there is obviously more at play here than what is involved in these tax treaties. Before we go around signing another 80 of these treaties, we should find out just what we have gained by signing the 80 we have right now.
