Mr. Speaker, it is always good to rise in the House, and as I have announced I will not be running in the next election, every time I rise in the House, I am still overwhelmed with not just the beauty of the chamber, but also the great responsibility I have had from the people of Battle River—Crowfoot in being entrusted with bringing their voices to Ottawa.
Today we rise to support Bill S-6, an act to implement a convention between Canada and the Republic of Madagascar that has the objective of eliminating double taxation and preventing tax evasion. Tax treaties of this nature meet this objective through the sharing of information between signatory countries.
We know that for governments to build strong economies at home, it is important that they look at a number of very important subjects. All three or four of the points that I want to make today deal with having a strong economy at home. They deal with making sure that jobs stay here at home, making sure that our young people are not travelling overseas necessarily to work but can find jobs here so that we can prosper here at home, and making sure that Canadians who invest abroad or find work abroad will have a better opportunity to prosper there.
There are some very important conditions that have to be laid out in order to find that prosperity and allow those jobs to be created. We know in the Conservative Party know that one of the vitally important aspects of securing a strong economy and creating jobs is trade. We are an exporting country. Canada, whether it is resources or agriculture, exports more than what we use at home. We are a vast country. Our geography and land mass make us a country of amazing opportunity. It is one of the largest countries in land mass in the world.
However, compared to many other countries, our population base is fairly small. We have only 35 or 36 million people. How do we guarantee that we will be able to prosper in spite of having a small population base? One way is through trade, through making sure that our resources and our agriculture can be sold and marketed around the world.
I live in a fairly rural riding in Alberta, a province whose economy has been hurt over the last four or five or six years in a remarkable way. In my riding, we have many different industries and many different sectors of the economy: gas and oil, resources, coal. We are rich in resources in Alberta, and my riding is also very strong in agriculture.
With all of these, we have a high level of exportation of our products. In order to have a free trade agreement in South America, we realized that people there had a desire to secure a safe food supply and were looking to Canada to provide grains, oilseeds, pulse crops, and other agricultural products, including beef and pork. Much of the food stock for the world is created in Canada, and much of it in Alberta.
We realized that we want to have free trade agreements with many countries, and if we do not have a free trade agreement with a country, we still want to have some kind of opportunity to trade with that country.
We do not have a free trade agreement with China, but we still carry on a great amount of trade with China. However, always, agreements enhance our trade. Likewise, agreements on taxes will enhance it as well.
Regarding our agricultural products, right now we are really feeling the pinch with canola. We are feeling the pinch, with one of our largest markets, China, basically stopping our canola from coming into that country. We believe that this is unfair and ungrounded. We have no doubt that this is not about food safety. It is not about the product. As I have said, we have the safest, best product in the world. However, we do not have a free trade agreement with China. Maybe when we see what is happening, we understand why we do not have a free trade agreement with China.
Right now, our canola farmers are really feeling the pinch. Indeed, at this time of year, in the spring, when our crops are being planted, I am getting calls to my office asking me if I am expecting the market to open up. They are asking whether they should be planting canola or cutting way back, although their rotation does not allow them to do that. We are hearing all the concerns coming from agriculture with regard to trade.
The Conservative government had a free trade agreement with Europe. We were pretty well ready to sign onto the TPP. It was not ratified, but everything was laid out. We wanted to get our product into these countries so that we could prosper at home.
However, it is not all about trade. If we want a strong economy, we also have to recognize that we have to have training. We have to have a skilled workforce. We have to be able to invest so that when times get tough, if we cannot compete with Mexico on wages to manufacture, we can compete with the skill sets we have here in Canada. Therefore, we invested greatly in training young people and enhancing the skill sets our workforce had already. This was a driving force in our Conservative government in the last 10 years we governed. We put money into innovation and training.
It was trade, training and red tape. How are we going to have job creation? How are we going to enhance it? How are we going to attract businesses to start up in Alberta, or wherever in Canada, if the red tape to get that business going is a mile long?
We brought forward a red tape reduction strategy to make it easier for businesses, investors and job creators to create those jobs right here at home. That job is unending. With more government and more bureaucracy, the tendency is to see red tape grow. One of the strong things we brought forward was making sure that we were able to cut red tape, and we still need to do it. Therefore, I am pleased that Premier Kenney is committed to the reduction of red tape. There is a level of optimism we have not seen in Alberta for many years. I would also say that our government has always and would continue to look at ways to enhance job creation through the cutting of the red tape burden.
The fourth and final aspect, besides trade, training and red tape, is taxes. If we are not a country that can attract manufacturing and investment because our tax regime is so out of whack, then we cannot expect to see our economy grow. We cannot expect that people will have confidence in investing their capital here in Canada. In Alberta, because of regulation, red tape and high taxes, including the carbon tax, we saw between $80 billion and $100 billion in foreign investment capital flee, and with that went jobs and hope for a lot of young Canadians and Albertans.
To have a strong economy, we have to make sure that we have a strong tax system that has integrity but is also not overly burdensome. When the Conservatives came to power, and when the world fell into a global recession, we moved our corporate rate from 22% to 15%, because we knew that business and manufacturing would flee to the United States or Mexico, predominantly, and other places if we did not compete with a tax structure or a tax rate that would attract investors to Canada.
A lot is about taxes. A lot of what we want to do in building a strong economy is in regard to the tax structure. Tax levels make a large impact on investment, and we have seen that.
Canada not only mines and extracts resources around the world, it invests around the world. We have people who prosper and earn an income from foreign investment. We want to be sure that if we are allowing that, we avoid double taxation. If taxation is important, who, as an investor, would want double taxation, where a country, Madagascar, in this case, would tax us, and then Canada would when we came back home? How much investment do members think would take place in those countries, and here, if we allowed double taxation?
Predominantly where we have massive investment, we have double taxation treaties. A tax treaty contains rules regarding the circumstances under which a signatory country may collect certain taxes on income so that when investors invest, they are aware. They look at the treaty and say that this is what we have to pay, this is what we do not have to pay and this is what we will pay back home. It is a single tax base. In the absence of a tax treaty, the income of a Canadian citizen abroad would be hit on both sides, and investors would flee.
For that reason, we come to this today. This debate, I would say, is the meat and potatoes of what is going on here in Parliament. This is not a day when we are talking about the issues that are really important to Canadians. I do not know if I have had a call to my office in Camrose about Madagascar. My constituents expect that we are taking care of business so that they can prosper, whether on the farm, in investing or in the oil patch.
Most of the tax treaties to which Canada is partnered follow the Model Tax Convention. This is a tax treaty or convention that is given as a model by the OECD, the Organisation for Economic Co-operation and Development. This was done in 1963, and subsequent to that, there have been a number of occasions when it has been revised. Currently, Canada is signatory to 93 agreements. This is not something new. We are not stepping out into uncharted territory. This is common.
As I said at the outset, I fully support the intent of Bill S-6, but I am particularly concerned about the tax evasion side. We have heard much from all parties today about tax evasion and the ability of the Canada Revenue Agency to consistently enforce compliance rules and collect taxes.
I do not like high taxes. I look for ways to cut taxes. I formerly served as the minister of state for finance. We looked at every opportunity we could to drive this economy by lowering taxes and keeping more money in the pockets of Canadians. However, tax evasion is different. I think every Canadian expects that there is a certain level of taxes that they are required and willing to pay, not just by law but in order to have the services we have here in Canada.
From report 7 of the 2018 fall reports of the Auditor General of Canada, on compliance activities of the Canada Revenue Agency, the public accounts committee, which I have had the privilege of chairing, learned the following: “Most taxpayers are individuals with Canadian employment income. We found that the Agency requested information from these taxpayers more quickly,” and this is the important part, “and gave less time to respond, than it did with other taxpayers, such as international and large businesses, and taxpayers with offshore transactions.”
The Auditor General went on:
For example, if the Agency asked an individual to provide a receipt to support a claimed expense and the taxpayer did not provide the receipt within 90 days, the Agency would automatically disallow the expense as an eligible income tax deduction. The Agency would assess the taxpayer’s income tax return on the basis of the information it had available and would notify the taxpayer of the taxes due.
In other words, average middle-income Canadians are not cut much slack when it comes to their domestic income here in Canada.
Comparatively, the Auditor General's report states:
For other taxpayers, such as those with offshore transactions, we found that the time frame to provide information was sometimes extended for months or even years. For example, banks and foreign countries could take months to provide information on the taxpayer’s offshore transactions to the Agency or the taxpayer.
It continues, and this is important:
Sometimes the Agency did not obtain information at all, and the file was closed without any taxes assessed.
We can see that these agreements are vital. These agreements enhance what the CRA is given. If people understand the treaty, they know what to claim, they know what to put forward and they know what to show CRA. They feel less vulnerable to the Canada Revenue Agency and can also invest with greater confidence.
The Auditor General's office said that “over the past five years...the Agency took, on average, more than a year and a half to complete audits of offshore transactions.”
These agreements speed that up. The fall 2018 report was not the first time the Auditor General noted how long it took the agency to enforce compliance. The Auditor General further stated:
As we noted in the 2013 Spring Report of the Auditor General of Canada, Chapter 3, Status Report on Collecting Tax Debts—Canada Revenue Agency, the longer it took the Agency to enforce compliance, the less likely it could collect the taxes due. This was especially true for taxpayers with offshore assets, who may have been inclined to liquidate assets or transfer funds to make it more difficult for the Agency to obtain information and collect taxes due. On the other hand, for individuals and domestic businesses, the Agency had a better likelihood of collection by garnishing wages and seizing assets.
To add insult to injury, the Auditor General found that the Canada Revenue Agency did not proactively consider waiving penalties and interest consistently for all taxpayers. Again, the Auditor General stated:
We found that the Agency offered to waive interest and penalties for taxpayers in some compliance activities but not others—even when the Agency had caused the delays.
The inconsistent application of relief for taxpayers contradicts the Taxpayer Bill of Rights, according to the Auditor General. The report states:
[The] Taxpayer Bill of Rights gives all taxpayers the right to have the law applied consistently. It also gives all taxpayers the right to receive entitlements, such as benefits, credits, and refunds, and to pay no more and no less than what is required by law.
Although it may not quite be unanimous, I am pleased that most in this House, as far as I can see, see the importance of these kinds of meat and potatoes regulations and bills. Coming into compliance and making sure that Canadian investors are not vulnerable or put on an uneven playing field is imperative if we are going to increase foreign investment coming to our country and our investment in those countries, all of which will help build the economy, help Canada prosper and help us create jobs.
