John McCallum

[Supply, December 4th, 2001]

Mr. Speaker, I will be sharing my time with the hon. member for Hillsborough. In a sense this is a strange motion to have less than a week before the budget because members opposite should understand there is such a thing as budget secrecy. There is no way we on this side the House can tell them what is in the budget or respond to their proposals in a concrete fashion.

Over the last several weeks we have been hearing the views of Canadians across the country through the finance committee, the report of which has just been published. If there is something sensible and novel coming out of the opposition today it is perhaps not too late to include it in the budget.

[Supply, December 4th, 2001]

Mr. Speaker, I would like to ask a question about a comment which made no sense at all. The hon. member said that the finance minister was walking Canada into a recession. It appears he does not have a clue that this is global.

All countries in the world are slowing down. Indeed, in sharp contrast to the recession of the early eighties and early nineties, everyone under the sun from the OECD to the IMF to the private sector is saying that Canada would perform better than the United States. We are not an island but we are doing better than the United States. How can the hon. member possibly contend that this is in any way a made in Canada recession?

[Income Tax Conventions Implementation Act, 2001, December 3rd, 2001]

Mr. Speaker, I am pleased to rise today to speak to Bill S-31, the Income Tax Conventions Implementation Act, 2001, at third reading stage. This bill enacts recently negotiated tax conventions between Canada and eight countries.

Exports account for more than 40% of our annual gross domestic product. In addition, foreign direct investment and inflows of information, capital and technology also impact on Canada's economic wealth.

The existence and nature of a tax convention can have an impact on decisions made with regard to investment and international trade. Therefore, the importance of such conventions cannot be underestimated.

Tax treaties do not impose tax. Nor do they generally restrict countries from taxing their own residents as they see fit. Among other things, however, tax treaties set out rules whereby one country can tax the income of the resident of another country. This is important for traders, investors and others with international dealings who are interested in doing business in Canada. It is only natural that they want certainty as to the tax implications associated with their activities here.

The importance of eliminating tax impediments to international trade and investment has grown even more important now that the world economy has become so intertwined. It should not therefore come as any surprise that it can be advantageous to have tax treaties in place with other countries.

If anything, tax treaties have become a more important issue since the events of September 11 because the whole purpose of tax treaties is to grease the wheels of trade, commerce and investment flows. The events of September 11 have raised potential barriers to international transactions so it has become that much more important that we implement measures such as tax treaties to reduce the barriers.

One of the things we have had to fight against in terms of the risk of barriers being erected has been the highly irresponsible language of the official opposition in the Chamber when it says with no justification whatsoever that Canada is a safe haven. That message goes through the Canadian media into the U.S. media and becomes part of our problem in convincing the Americans of the safety and security of our system.

The fact that Mr. Ashcroft is here today and the U.S. administration has seen fit to sign agreements with us designed to keep the border open is welcome news. However it is not because of the opposition. It is in spite of its behaviour.

Before September 11 tax treaties were highly advantageous. Since September 11 this contention has become even more valid. Today we have over 70 tax treaties in force with other countries. Passage of the bill would increase that number to over 75. The bill would legislate eight tax treaties including new treaties with Slovenia, Ecuador, Venezuela, Peru and Senegal plus revised treaties with Germany, the Czech Republic and Slovakia.

There is considerable agreement in the House on the bill. It is a bill of great importance but of little if any controversy.

The elimination of double taxation is the principal benefit we would have from these new treaties. This would increase the certainty with which transactors and investors could live, work and invest in these countries. It is therefore in the interest of Canada.

In conclusion, I would like to summarize some of the benefits that passage of this bill will bring to taxpayers and businesses.

Canada will know exactly how the taxation regime of the eight countries involved will apply to Canadians, just as these countries will also know how our taxation regime will apply to their residents.

Moreover, the bill contains measures that will facilitate trade and investment, that will bring certainty and stability and that will create a climate more conducive to business between Canada and these eight countries.

Above all, Bill S-31 ensures the elimination of double taxation between Canada and these countries.

I urge all members to vote in favour of passing this bill immediately.

[Privilege, November 19th, 2001]

My contention is I did not make a mistake and I am offering facts to support it.

Nelson Mandela waited some minutes at the airport to receive the call and it was not received. Then as a consequence, protocol informed the PMO. The PMO called the hon. member's office and the representative from the PMO was told that a decision had been made not to make the call. That is the evidence on which I based my comment.

That having been said, the Prime Minister's Office remains open to facilitate a call should the member wish to make one at any time.

[Privilege, November 19th, 2001]

Mr. Speaker, I have three points which suggest that my statement was accurate and perhaps I could mention them.

The first is that yesterday afternoon I received information that Nelson Mandela wanted to see “the fellow who opposed my nomination”. I immediately notified the Prime Minister's Office of that fact. The second point is that this morning a call was placed to the hon. member's office to call Nelson Mandela.

[Nelson Mandela, November 19th, 2001]

Mr. Speaker, this morning, Canada gained a new citizen. In my opinion, Nelson Mandela is the entire world's number one citizen.

In the last century, there have been three great champions who have fought for the freedom of their people: Ghandi, Martin Luther King and Nelson Mandela.

Emerging from prison after 27 years, Mandela forgave his tormenters and in so doing averted bloody civil war in his country. Yesterday in a gesture that was vintage Mandela, our new citizen said he wanted to speak to the hon. member who had initially blocked his citizenship. In the event that hon. member declined to return Nelson Mandela's call.

[Income Tax Conventions Implementation Act, 2001, November 9th, 2001]

Mr. Speaker, I am pleased to have the opportunity to speak to Bill S-31, the income tax conventions implementation act, 2001, at second reading. The bill would enact tax treaties that Canada has signed with eight countries, five of which are new treaties with countries with which we did not previously have a treaty, namely, Slovenia, Ecuador, Venezuela, Peru and Senegal. We have revised conventions with Germany and the Czech and Slovak republics. The reason being that the latter two countries were previously one country so we now have a new tax treaty with each republic.

I will provide the House with a brief overview as to why these tax treaties are important. The first reason is fairness in taxation and the avoidance of double taxation because in the absence of a tax treaty it is highly probable that citizens would be subjected to double taxation.

A second and related reason is that foreign activities of Canadians and foreigners in Canada are increasingly important. This is true for foreign trade which now accounts for more than 40% of the Canadian GDP. In addition, foreign investments in both directions are increasing in importance. Having a tax treaty increases the certainty for both Canadians and non-Canadians as to how they will be taxed in Canada and foreign countries. This increased certainty on the tax liability encourages more foreign trade and investment.

I think that now, if one wishes to see a connection with the events of September 11, there may be some potential obstacles to international exchanges and the flow of foreign investments as a result. It is even more important than ever, therefore, to adopt measures to encourage foreign investment and international exchanges.

One of the principal disadvantages of not having a tax treaty is double taxation. Double taxation is something that citizens and companies do not relish. Double taxation is to be avoided because it represents a very important potential impediment to international transactions which are becoming increasingly important.

It is really a simple matter. I do not know if I have to say much more. I am a bit less longwinded than some of my opposition colleagues because I have made the essential points.

One important element of these tax treaties is that they affect withholding taxes. Withholding taxes are those taxes imposed by Canada on income earned by non-residents. In the absence of tax treaties, the withholding tax rate would be 25%. However, as a consequence of these tax treaties, those withholding taxes would be reduced to a range of 5% to 15%. This greases the wheels of international commerce and international investment and, hence, is in the national interest.

Bill S-31 is not something radical. It is not rocket science. It is standard, routine legislation to increase our stable of countries with which we have tax treaties and to improve the tax treaties from some of the existing cases. In general, these tax treaties are modelled on a standard OECD model.

In saying that the bill is not terribly radical, I do not want to belittle the work done by our public servants because the devil is in the details. There are important technical differences across the various tax conventions depending upon the nature of our relations with those countries and the state of those negotiations.

I hope hon. members will support the bill. It is pretty simple stuff in principle, although the details could get quite technical.

There are three basic advantages to adopting these tax treaties: first, it would avoid double taxation, which is good for corporate and private citizens and good from the point of view of the national interest; second, it would lead to a simplified tax system; and third, it would enhance the degree of certainty and provide a more stable environment for international transactions. Given that the global scene is becoming more important for Canada, this increased ability to conduct foreign transactions is definitely in the national interest.

[Prebudget Consultations, November 7th, 2001]

Mr. Speaker, I have a question for the hon. member on the subject of health care. I heard her echoing the thoughts of the Ontario government that this was a problem caused by the federal government. I would like to suggest two facts and see what her answer is.

First, she may be aware that recently, just before the election, the federal government put an extra $23 billion over five years into health care. This year alone the increase for Ontario was $1.2 billion which was 100% of the increase in Ontario government spending this year on health care. Effectively the federal government this year covered 100% of the increase.

Second, I would have thought that governing was a question of choices. The Harris government chose to have major tax cuts long before it was into a surplus, when it still had big deficits. It is choosing to implement a corporate tax cut of $2.2 billion on January 1 next year. Surely it is equally or more the case that the problems it has in health care are a function of its own rapacious tax cutting long before it got out of deficit.

[Prebudget Consultations, November 2nd, 2001]

Mr. Speaker, I thank the hon. member for that excellent question. I spent the whole day in the House yesterday and I thank members for many excellent suggestions.

On the whole we had from the left the tax and spend from the NDP I have mentioned before. On the right from the fifth party we had a blank slate and not one suggestion in concrete terms, suggesting it has no ideas for the budget. From the Reform Alliance a few suggestions were useful, but on the whole it was more slash and burn.

[The Economy, November 2nd, 2001]

Mr. Speaker, it seems to me that the NDP remains mired in the failed tax and spend permanent deficit policies of the 1970s, a morass from which thinking lefties have long ago escaped. The budget will be in December.