House of Commons photoWon his last election, in 2011, with 42% of the vote.
Canada-United States Tax Convention Act, 1984 December 13th, 2007
Mr. Speaker, that was my point. This bill should have been sent to the finance committee. It should have been sent to the proper people to look at this bill in a proper fashion.
Why did the Liberals not ask for witnesses? As usual, the bill was probably presented at the last minute and they were probably not ready. The finance committee at that time was travelling and I think it just shows the lack of preparedness on the side of the Conservative members.
Canada-United States Tax Convention Act, 1984 December 13th, 2007
Mr. Speaker, it is a pleasure today to speak to Bill S-2, An Act to amend the Canada-United States Tax Convention Act, 1984. We are now on third reading, which happened quite rapidly earlier today. I think the cooperation in this House seems to be quite rampant at this time of year.
The Canada-United States Tax Convention Act was last updated in 1997 and, prior to that, in 1995 by the former Liberal government. It is important that these conventions get reviewed and updated regularly. In fact, the former Liberal government had already started negotiating this new tax convention with the U.S. even after the adoption of the last convention.
Like any tax convention or tax treaty, these agreements are important to the economic success of a country and, in particular, under current conditions where countries and all stakeholders need to compete on the international scene.
This particular convention is important since it is with our largest trading partner, a country with over $50 billion of trade on an annual basis.
While international tax law, especially in this place, does not always make for the most exciting of debates, its importance is indisputable, especially as we move toward greater globalization and greater free movement of labour and capital across international borders.
We have had tax treaties in place with many countries for many years and, as with most laws, there comes a time when they need to be amended in order to reflect the changing times. This is one of those situations where we see a more rapid change in the actual conditions than the actual conventions themselves. Consequently, this bill presents some routine amendments that I believe will help to ensure Canada remains a leading participant in the global economy.
International arrangements, such as these, allow for relatively free movement of people and capital across borders, contributing greatly to the rich, multicultural nature of the country.
Some members in this House think that tax treaties are signed as a way of avoiding taxes. In fact, if these treaties are well written and properly understood, they make the taxation system more effective and promote trade—the exchange of goods and services—and do not add an administrative burden. Everyone benefits from treaties that are well written and signed in due form. They encourage foreign investment and increase trade, as I was saying.
Bill S-2, in turn, would also be a valuable tool to help certain industries improve Canadian productivity. Even though the latest Conservative measures, such as reducing the GST, do not improve productivity, nothing is even close to being fair about some of the Conservative latest tax planning or tax initiatives that they have come up with.
The worst example in the last couple of weeks is their tax policy or tax system where in the 2006 budget they raised the lowest personal income rate to 15.5% and now have announced that they will bring the rate back down to the original Liberal rate of 15%. People can all try and figure that one out.
Another advantage of Bill S-2 is that it would eliminate source country withholding tax on cross-border interest payments. Canadians who borrow money, and I would say mainly large corporations that borrow money from American lenders, would no longer need to withhold and remit Canadian tax on the interest payments.
Bill S-2 would also provide an advantage for Canadians to better access the U.S. debt market. Sometimes we see larger corporations having difficulty in accessing capital here in Canada. The Americans have a larger capital base and I think that will help the opening up to the debt market. We will see what happens in the short term with some of the crisis that we are seeing in the U.S. right now. However, this convention should definitely provide an easier flow of obtaining some debt for some of the Canadian companies. It also will be easier for companies to finance their expansion and, hopefully, their expansion into other markets other than here in Canada.
The bill would also allow taxpayers to require otherwise unsolvable double tax issues to be settled through arbitration. This arbitration rule is an important element of the bill because it would increase taxpayers' confidence that the tax treaty will resolve potential double taxation situations. These convention tax treaties, the basic purpose, in normal circumstances, is to avoid double taxation, should solve the fact that no double taxation of gains or even deemed gains of immigrants to Canada will arise.
The bill would also extend treaty benefits to limited liability companies by removing a potential impediment to cross-border investment which arises from private equity funds and their comings and goings. I will probably address this point later on in my speech because this point was brought up at the finance committee during the prebudget consultations in the past. This would make it easier for companies to bring their products from the research stage to the actual market commercialization phase. Hopefully, this will result in more research and development work to be completed in Canada and potentially for exporting to other markets, in this case the U.S. market.
More and more workers are temporarily being reassigned outside the borders and apparently more into the U.S.
Bill S-2 would give mutual tax recognition to pension contributors. In other words, provided certain conditions are met, cross-border commuters may deduct, for residence country tax purposes, the pension contributions they make to a plan or arrangement in the country where they work. People who move temporarily from one country to the other for work reasons can, subject to certain conditions, get tax recognition in their temporary new home country for pension contributions they continue to make to their original employer's pension plan. This proposal would facilitate the movement of personnel between Canada and the U.S. by removing a possible disincentive for commuters in temporary work assignments.
That is definitive a positive step. There is also an advantage for clarifying how stock options are taxed or, in other words, the harmonization of the rules in both countries. There are a whole bunch of other technical amendments in this bill that if we have some additional time I will get into.
I want to address the importance of these conventions. These conventions are great, fine and dandy. We can improve them, ratify them and pass them into law in this country, but the fact that they are international tax agreements, we require an entity on the other side to also sign these conventions. These conventions and tax treaties are not worth the paper they are written on if we cannot get the other countries to ratify them.
I wish that this particular legislation had been brought forward to the finance committee. Instead, the present government decided to bring it before the international trade committee. I am not sure why it went through without too many witnesses. We would have probably looked at ensuring that there was a willingness on the other wide to have this treaty ratified and signed quite rapidly.
There are some tax treaties that we signed in the past that have yet to be signed by other countries. I know of many in particular that have been negotiated with Italy. I think there are some agreements that are at least five years old that have not been signed by the other country to the agreement, so there are pending issues in terms of double taxation where there are people who are being taxed in Canada and other countries. Again I would caution the present government to make sure that even though we ratify these conventions or enact the legislation, the government make it a priority to have the other country ratify the agreement or convention as well.
Since I have some time, I will explain how some of the amendments got into this bill. I would like to take credit for some of them. I chaired the finance committee in 2004, and we did a very thorough job. There were a lot of presentations made before the committee in terms of what Canadians and Canadian businesses were looking for when doing business in the United States.
We devoted practically a whole chapter of our report to business growth and prosperity. We included in it some of the testimony given by witnesses. There is one paragraph I would like to read into the record where witnesses urged that changes be made to the non-resident withholding tax regime to ensure that Canada remained competitive. This was in 2004 and three years later we are still at this.
It was suggested, for example, that the Department of Finance negotiate a new provision with the U.S. to eliminate withholding tax on all dividends and interest to both related and unrelated parties. They mentioned a recent study which claimed that the elimination of withholding taxes on all dividends and interest would result in increased capital investment in Canada of $28 billion. Even a fraction of that would help certain sectors of this country, especially the manufacturing sector. It would also result in increased income of $7.5 billion annually. It was pointed out that while there would be a federal fiscal cost associated with eliminating withholding tax, the economy would benefit in the long run. Again this was in 2004. The committee also heard that Canada's dividend tax rate is now much higher than that in the U.S., with a 15% federal tax rate.
As a result of that, I am proud to say that in 2004 we made over 30 recommendations. Of those, there were at least five that pertained to items that needed to be addressed when it came to the Canada-U.S. tax treaty. I will read into the record one of the recommendations that I thought was important:
The federal government ensure that the effective tax rate for Canadian corporations is competitive with that in the United States and elsewhere. Within that context, the government should: review the timetable for elimination of the federal large corporations tax; review the timetable for the tax changes for the resource sector; consider immediate elimination of the corporate surtax; and review the corporate income tax rates and other taxes paid by corporations.
Recommendation 13 reads:
The federal government, bearing in mind Recommendation 16 regarding a review of capital gains, review the current federal tax treatment of dividend income and non-resident withholding taxes with a view to ensuring that the tax treatment in Canada remains competitive with the rest of the world, particularly the United States, and that the tax treatment does not distort investment decisions.
Another recommendation that was applied in the U.S.-Canada convention is that the federal government revise Canada's cost allowance rates such that the Canadian rates are similar to rates for comparable asset classes in the United States and other countries. In fact, this one has not been addressed yet by the current government.
Recommendation 24 was that the federal government undertake a comprehensive review of the personal taxation system in Canada, including the value of the basic personal amount and other particular aspects of the Income Tax Act, but always taking into account that the review should be undertaken with a view to ensuring that Canada's personal taxation system is both fair and as competitive as possible with other countries, particularly the United States.
We have seen the importance of this convention in the past. Other recommendations were made that also referred to making sure that we are competitive with the United States.
In the finance committee's 2006 prebudget report, everything is recapped in one little passage which states, “The federal government expedite the review of the tax treaty between Canada and the United States. This review should specifically address Canadian recognition of the United States limited liability corporations” . This is one of the items that is in the bill right now.
Budget and Economic Statement Implementation Act, 2007 November 28th, 2007
Mr. Speaker, I have had several opportunities to speak on past Conservative budgets and every time I speak on them, the same problem comes up, and that is the lack of vision displayed by this government.
We know it takes months to prepare a federal budget. It involves many hours of research and consultation. However, what good is a budget if it contains no vision for the country? What good is it if it does not set out a plan for Canada's economic security?
As we debate the implementation of the Conservatives' latest budget, I will like to discuss some of the most problematic areas of this document.
First, I would like to talk about Canada's economic prosperity and our ability to be competitive in the future. These subjects are important to me, as a member of Parliament, because I believe that without a strong economy and prosperous citizens, our country cannot and will not be able to continue to sustain its generous social programs.
As deputy chair of the Standing Committee on Finance, my role is to ensure that Canadians are constantly informed and that we are advancing progressive ideas in order for this government to keep the economic prosperity of our country growing.
These various economic proposals are developed in different ways. The Standing Committee on Finance provides me with one of these opportunities, as we meet with hundreds of business leaders, non-profit organizations, environmental groups, artists, industry stakeholders and many others.
Over the last two years, overwhelmingly experts from these non-partisan meetings have told us that Canada's next major economic challenge will be to improve our productivity. Some of the economic solutions that have been suggested are to allow manufacturers the ability to write off assets in accordance with their useful lives. Other suggestions are to make all research and development credits earned refundable. However, cutting income taxes is at the top of almost everyone's list: first, corporate and second, personal income taxes.
However, no one advocates cutting the GST. Our leader, the member for Saint-Laurent—Cartierville, has been clear on this position. He is not advocating increasing the GST. His preference is to cut income taxes and has been on the record since last year. The only people who think cutting the GST will improve our economic prosperity are the Prime Minister and his Minister of Finance.
One may ask whether the Liberal Party has any credibility when it talks about the GST. The world has changed since 1993. The economic challenges are no longer the same. The world is changing faster and faster with increased trade. Technology has evolved and has transformed the way we do business.
Goods and services are exchanged more quickly and more efficiently than before. Fifteen years ago, income taxes were the main source of revenue for a number of countries.
The idea was to tax people and company profits. If the companies had physical infrastructures, governments knew that it was unlikely these companies would relocate, so they hit them harder with an endless barrage of taxes. They did not matter. Consumption taxes such as the GST were viewed as a deterrent to spending, so countries stayed away from that form of taxation. They needed spending to grow their economies internally.
When the Liberals came to power in 1993, they inherited a deficit exceeding $40 billion. They faced a dilemma because the country needed the revenue from the GST and from personal and business income taxes. The Liberal government had to make tough decisions, and all Canadians had to make major sacrifices.
Once expenses were brought under control, the next step was tax reform. Would it not have been a popular and politically smart move to reduce the GST then? Perhaps, but that would not have been the best way to proceed, nor would it have been in the country's best interest.
Let us not forget that our dollar was weak then. So why would companies invest here? Even though they would have had opportunities to make a profit, they would have been taxed on those profits, and the competitive advantage would have been lost because of the weak dollar. That is why the finance minister at the time, the member for LaSalle—Émard, chose to reduce personal and business income tax instead of the GST.
Was that the right decision? The proof is in the pudding. Today, in 2007, Canada has enjoyed a decade of annual surpluses, high employment, has paid down over $75 billion in debt during that same period and has become the country with the lowest debt to GDP ratio in the G-8.
The government now needs a vision to attack the productivity agenda. Instead of formulating a solid plan to improve productivity, the Conservatives have spent most of their time in office bringing in legislation to make short term political gain, never looking beyond the next election.
For 12 years, the Liberal government helped set the vision for our economic prosperity.
What has the present Conservative government done in the last two years? Has it presented a vision of any type? Yes, it has supported a combative role in Afghanistan. It has increased spending, the bulk of which has gone to the military, and in two years the Conservative government has become the highest spending government in the history of Canada.
Economically, Canadians have seen no vision. The finance minister says that Canadians are overtaxed but in budget 2006 he increased personal income taxes at the lowest rate from 15% to 15.5%. During his economic update, the minister announced that he would lower the tax rate back to the original Liberal rate of 15% and he had the audacity to call it a tax cut.
With regard to this bill's corporate income tax cuts, they merely match the ones proposed by the Liberal government in 2005. These cuts have been advocated by our party's leader, the member of Parliament for Saint-Laurent—Cartierville during the last year.
Furthermore, last year, the Minister of Finance decided to tax income trusts despite his campaign promise not to do so. Because of this, Canadians lost between $25 billion and $30 billion overnight.
A lot of Canadians were affected by that broken promise, but many had no idea what was going on because most of the losses were in pension funds. Individuals can ask the people in charge of their pension funds or their brokers to explain the situation.
The energy and resource sectors are looking for ways to finance expansion. Just a few months ago, our weak dollar encouraged foreign investors to buy up Canadian income trusts at fire sale prices.
We can take the example set by Nordic countries where social spending in these countries has always been a priority and now income taxes are being lowered to continue to attract foreign investors.
Budget and Economic Statement Implementation Act, 2007 November 28th, 2007
Constitution Act, 2007 (Senate tenure) November 16th, 2007
Mr. Speaker, if the members on the opposite side would like to play games, I am a Liberal member and I am in the House, so I would like to know how many members there are from the Conservative Party.
Foreign Affairs November 16th, 2007
—and signed an agreement in principle worth $12.5 million. This funding was to be used to make amends for the injustices suffered by Italian community members who were imprisoned and declared enemy aliens during the second world war. To the surprise and horror of the community, the Conservative government has decided not to honour its commitments.
What makes this government think it can betray communities, the Italian community in particular, that have given so much to Canada, and tarnish the memory of the victims who suffered injustices in the past?
Foreign Affairs November 16th, 2007
Mr. Speaker, in 2005, the Liberal government reached an agreement with the Italian community—
Hockey November 13th, 2007
Mr. Speaker, Canada is famous around the world for a number of things. Foremost among these is its ability to stay on top in a celebrated athletic discipline: hockey.
If we want to keep developing talented players, communities all over Canada have to take an interest in our young people, for whom sports are an excellent way to develop important values. That is why I want to congratulate members of AAA, AA, BB, and CC teams that took part in the 34th annual Saint-Léonard international midget hockey tournament held recently in my riding, Saint-Léonard—Saint-Michel.
I would also like to congratulate Gabriel Paradis, the president, who did a great job of organizing the tournament, which took place under the honorary patronage of Roger Brulotte. I would also like to thank the many volunteers and generous sponsors, including the Langelier Cage aux sports, the Saint-Léonard McDonald's, the Saint-Léonard Caisse populaire and Atlanta Aluminum.
Income Trusts October 31st, 2007
Mr. Speaker, today marks the first anniversary of the famous Halloween income trust surprise, when Canadians suffered a loss of more than $25 billion.
One year ago, the Minister of Finance claimed that the tax treatment of income trusts would cause major revenue losses for the government, but refused to give any details.
Today the government has been proven wrong. That is why, yesterday evening, instead of admitting its error, the government decided to hand out tax treats to redeem itself.
Canadians are shocked not only that seniors have lost this hard-earned money, but also that the government broke the promise it had made not to tax income trusts.
Fortunately, we in the Liberal Party are doing everything we can to help Canadians. We will not forget them.
Canadian Radio-television and Telecommunications Commission October 26th, 2007
Mr. Speaker, on July 24, the CRTC recognized Avis de recherche TV as a television service of exceptional public interest. This channel helps police authorities apprehend wanted criminals with help from the public. Instead of recognizing this innovative service, this Conservative government has bowed to the demands of Quebecor and is asking the CRTC to review its decision.
This government brags about being tough on crime, so why is it trying so hard to force Avis de recherche TV to close?