Ted Menzies

[The Economy, November 22nd, 2010]

Mr. Speaker, the finance minister continues to speak with Canadian families, families like the Bucci family in Oakville, about Canada's economy. They are a typical hard-working Canadian family that makes this country great.

Helping protect the financial security of hard-working Canadians and their families is our priority. That means living within our means and keeping our taxes low. That is why the next budget will not include reckless new government spending.

[Taxation, November 22nd, 2010]

Mr. Speaker, the Liberal leader has indeed promised to hike taxes, hurting our job creators when we need them most. The Canadian Chamber of Commerce has warned that the Liberal plan to raise taxes is a “disastrous idea”. It would “put the brakes on job growth” and it is the wrong thing to do if we want to create jobs and growth in the economy.

Our government on the other hand has taken a different approach, cutting taxes, saving the average family $3,000.

[Hydroelectricity, November 22nd, 2010]

Mr. Speaker, one thing this government does is ensure it is fair to all provinces. All provinces have the opportunity to apply for funding under the P3 Canada fund. We would encourage any projects out there that might fit the criteria to do that. They will be reviewed on the basis of merit. We will see where it goes from there.

[Hydroelectricity, November 22nd, 2010]

Mr. Speaker, we have put in place a public-private partnership called PPP Canada Inc. That is an independent crown corporation that operates in an objective arm's-length manner. In fact, it has received a request to review this project for partnership funding. PPP Canada will review that, and any decisions will be based on merit.

[The Economy, November 22nd, 2010]

Mr. Speaker, the priorities of Canadians were laid out in budget 2009 with an economic action plan that was a two-year plan for getting Canadians back to work. That is what Canadians asked for. That is what Canadians wanted. That is what we delivered, despite who voted against it on the other side.

We have a proven record of 430,000 net new jobs as a result of Canada's economic action plan. That is the answer the hon. member deserves.

[Tax Conventions Implementation Act, 2010, November 22nd, 2010]

Mr. Speaker, I thank my colleague, who also sits on the finance committee. Those are pretty specific questions. I will certainly attempt to get back to that hon. member with answers to those specific questions.

However, having had the opportunity in Berlin, about a year and a half ago, to sit in on an anti-tax haven discussion, I was frankly surprised by the countries that were pushing back against movements such as the tax treaties that we are dealing with here today. For what reason, I guess we will leave that up to everyone's imagination.

With regard to the initiative that Canada has taken to push this forward, I have long list and it would take time and many answers to list off. We have been successful. That is why we are repeating this in one more. We plan to continue to do so, because as much as we welcome investment in this country, we want to ensure that our companies that are investing in other countries are protected as well.

[Tax Conventions Implementation Act, 2010, November 22nd, 2010]

Mr. Speaker, I appreciate the great support I am getting from across the way. As a matter of fact, I will refer to the hon. member's support.

I thank the House for the opportunity to start the third and final reading on Bill S-3, and before continuing, let me quickly thank all fellow members of the House of Commons finance committee for their swift consideration of this legislation and their unanimous support of its passage.

This important legislation will implement Canada's tax treaties with Colombia, Greece and Turkey. Tax treaties like these are important for Canadians, as they protect taxpayers both by helping to prevent unfair double taxation as well as in the matter of tax evasion. Canada has nearly 90 tax treaties already in place with other countries, and Bill S-3 is simply part of our Conservative government's ongoing effort to update and modernize the already extensive network of tax treaties.

Before continuing, let me again emphasize that although Bill S-3 is important legislation, it follows closely in form to previous similar tax treaties adopted by this Parliament. For instance, in the 39th Parliament, tax treaties with Finland, Mexico and Korea were adopted. Additionally, in both the 38th and 37th Parliaments, under the previous Liberal government, numerous tax treaties with countries such as Gabon, Armenia, Mongolia, Moldova and Norway were also adopted.

Furthermore, let me again underline that Bill S-3, like the legislation related to tax treaties from previous Parliaments, is based on the commonly accepted international standard for such treaties, and that is the OECD model tax convention. This OECD framework has long been established throughout the world as the standard for tax treaties. Indeed, as the OECD itself points out:

Most bilateral tax treaties follow both the principles and the detailed provisions of the OECD Model. There are close to 350 treaties between OECD Member countries and over 1500 world-wide which are based on the Model, and it has had considerable influence on the bilateral treaties between non-member countries.

Likewise, Peter Barnes, the noted former U.S. Treasury Department tax counsel, has remarked, in a recent edition of the OECD Observer magazine:

the OECD model has achieved a consensus position as the benchmark against which essentially all tax treaty negotiations take place. [...] But make no mistake: the OECD is a vitally important organisation and the OECD Model Tax Convention is a tremendously important tool for smoothing the way of international business and global trade.

Canada maintains one of the world's largest networks of bilateral tax treaties, serving as a key feature in both our ability to compete and to ensure everyone pays their fair share of taxes. Without a doubt, parliamentarians and Canadians are strongly opposed to tax evasion. We all know that tax evasion by some only punishes honest, hard-working Canadians and job-creating businesses. This is simply not fair. To detect and deter tax evasion, we need to work with and share information with our international partners. That is why Canada participates in international tax information exchange agreements and encourages countries to do so, as demonstrated in Bill S-3 here today.

Indeed, our Conservative government has been very aggressive and proactive in that regard. For example, in 2007, we unveiled a policy that introduced incentives to have non-treaty countries enter into OECD-model tax information exchange agreements with Canada. It also requires that all new tax treaties and revisions to existing tax treaties include the OECD standard for tax information exchange.

I am happy to report that negotiations on tax information exchange agreements are all well under way with over a dozen jurisdictions. Indeed, Canada signed its landmark first tax information exchange agreement with the Netherlands Antilles last August.

Canada also contributes actively to the efforts of the OECD's Global Forum on Transparency and Exchange of Information, as well as in the G20, in order to push for further implementation of the previously mentioned OECD standard.

What is more, according to the director of the Centre for Tax Policy and Administration of the OECD, Jeffrey Owens, during his tenure as chair of the G7 and G20, Canada's Minister of Finance has, “shown leadership in getting G20 members to crack down on tax havens with new sanctions.”

Clearly Canada is serious about combatting tax evasion and is committed to advancing this effort internationally.

While tax treaties help guard against tax evasion, they also provide individuals and businesses in Canada and the other signatory countries with predictable and equitable tax results in their cross-border dealings.

I would now like to talk in a little greater detail about how these tax treaties will improve a number of areas, namely: reducing withholding taxes, avoiding double taxation, preventing tax evasion, and removing barriers to trade and investment.

First, let me briefly look at the withholding taxes. Withholding taxes are a common feature in international taxation. They are taxes imposed by a country on income arising in that country and paid to residents of another country. Indeed, Canada with respect to non-tax treaty countries usually taxes this income at a rate of 25%. Given that one of the principle functions of a tax treaty is to fairly allocate taxation powers between the respective treaty partners, tax treaties include provisions to properly determine the level of withholding tax that can be applied by the jurisdiction in which certain payments arise.

The withholding tax rates vary from one tax treaty to the next as they reflect the result of negotiations with Canada's tax treaty partners, as is the case in Bill S-3. Indeed, Bill S-3 provides for a maximum withholding tax on portfolio dividends paid to non-residents of 15% in the case of Colombia and Greece, and 20% in the case of Turkey. For dividends paid by subsidiaries to their parent companies, the maximum withholding rate is reduced to 5% in the case of Colombia and Greece, and 15% in the case of Turkey.

Withholding rate reductions also apply to royalty, interest and pension payments. The treaties in Bill S-3 cap the maximum withholding tax rate on interest at 10% in the case of Colombia and Greece, and at 15% in the case of Turkey.

Each treaty in Bill S-3 also caps the maximum withholding tax rate on royalty payments at 10% and on periodic pension payments at 15%.

Tax treaties like this one help ensure fairness for taxpayers, both domestic and international, and help ensure that they are not essentially overtaxed due to withholding taxes.

As the Liberal member for Scarborough—Guildwood, a former colleague on the finance committee and a former parliamentary secretary to a finance minister, has pointed out:

withholding taxes do not provide for the deductability of expenses incurred in generating income and are imposed on the gross amount of the payment. The taxpayer will therefore be subject to an effective rate that is significantly higher than the tax rate that applies to net income in either the source or the residence country. To remedy this, Canada's network of tax treaties limits the rate of withholding tax that can be withheld by the source country on various types of income so as to more accurately reflect the level of taxes that would be payable on a net income basis.

The second area that I would like to address is somewhat similar, that being double taxation. Double taxation in an international sense arises when two or more states tax the same income for the same period of time. Obviously, nobody should have to pay their income tax twice.

Tax treaties like in Bill S-3 help avoid double taxation and ensure that taxpayers pay tax on the same income only once. Again, in the words of the member for Scarborough—Guildwood, “Without a tax treaty in place to set out the tax rules, the same income can be taxed in both countries without consequential relief. This situation can have a negative impact on the expansion of trade, and the movement of capital and labour between countries”.

Tax treaties utilize numerous methods to address the potential for double taxation. This happens in one of three ways. First, the income may be taxable exclusively in the country in which it arises, that is the source country. Second, it may be taxable only in the country in which the taxpayer is resident, that is the resident country.

Third, it may be taxable by both the source country and the residence country, with double taxation relief provided in some form.

The treaties in Bill S-3 grant exclusive taxing rights to a number of items, meaning the other treaty partner cannot tax those items, thus avoiding double taxation.

For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment such as two to three months to any one of the three treaty countries contained in Bill S-3, Canada has the exclusive right to tax that person's employment income. Also, from an administrative point of view, this greatly reduces the paperwork and red-tape burden associated with multiple jurisdiction tax filing. However, in the case of most items, taxing rights are shared.

The third area I would like to elaborate on is tax evasion. Tax evasion and avoidance are also unfair and economically damaging. One of the most important benefits of increased co-operation between Canada and the other countries is preventing tax evasion.

Indeed, tax treaties are an important tool in protecting Canada's tax base in that they allow consultations and information to be exchanged between Canada and the countries with which we have tax treaties. What this means is that these treaties help ensure fairness and equity in our tax system by helping to ensure that taxes owed are indeed paid.

Equally important, as I mentioned earlier, international tax treaties help ensure that taxpayers do not pay more tax than they should. Treaties such as those found in Bill S-3 permit the exchange of tax information between revenue authorities, and in so doing, help them identify cases of tax avoidance and evasion and act on them.

Indeed, our Conservative government firmly believes all Canadians should pay their fair share of taxes and has aggressively targeted tax loopholes. We again confirmed that fact in budget 2010 when we rolled back nearly 10 tax loopholes in order to protect Canada's tax system. This included, for instance, better targeting tax incentives for stock options, as well as ensuring that businesses cannot inappropriately capitalize on differences between the tax systems of Canada and the other countries to artificially increase foreign tax credits in order to pay less tax.

Noted public policy commentator and co-founder of the Dominion Institute, Rudyard Griffiths, writing in the March 10 National Post in response to budget 2010's aggressive initiatives to close tax loopholes, said:

the Conservative’s snipping of a raft of erroneous tax loopholes met with near universal applause, and rightly so.

...it defies logic, in an era of fiscal restraint, to allow corporate mucky-mucks to use generous stock options to take gobs of cash out of their companies tax free.

The final area that I would like to discuss is how tax treaties help remove barriers to trade and investment. Investors, traders and others involved in the global marketplace want to know the tax implications associated with their activities both in Canada and abroad. Equally important, Canadians with business interests or investments abroad want to be sure that they also will receive fair and consistent tax treatment.

Tax treaties boost international trade in goods and services by providing individuals and businesses in Canada and the other signatory countries with predictable and equitable tax results in their cross-border dealings. This in turn helps Canada's economic performance at home by encouraging our exporters. Indeed, over 40% of Canada's annual GDP can be attributed to exports alone. Moreover, it helps attract new investments into Canada as well.

In short, the tax treaties contained in Bill S-3 will serve as a key step in solidifying Canada's economic links with Turkey, Colombia and Greece by eliminating tax barriers to bilateral trade and investment.

In the words of the Hellenic Canadian Association president, Theodoros Aslanidis, “The agreement is very positive”.

To summarize, the tax treaties covered in Bill S-3 comply with the international OECD standards. They would promote certainty, combat tax evasion, and promote a better business climate for taxpayers and businesses in Canada and in these treaty countries.

Additionally, these treaties would help to secure Canada's position in the increasingly competitive world of international trade and investment.

[November 19th, 2010]

Mr. Speaker, I am pleased to have the opportunity to talk about the motion rather than a rant about NDP ideologies.

I want to speak in strong support of today's motion brought forward by the member for Kitchener—Waterloo, which has nothing to do with the Fraser Institute or in fact Greenpeace, the one about which he obviously avoided even talking. I do not think we want to address the funding of that.

Let me first of applaud the member for Kitchener—Waterloo for his hard work on this motion and his noble goal of helping Canada's charitable sector. What is more, since being elected in 2008, the member has been an intelligent and effective representative for his constituents, ensuring their voices are heard in Ottawa and their concerns are addressed. Without a doubt, Kitchener—Waterloo has a strong representative in Parliament, putting their best interests first.

Today's motion calls for the finance committee, of which I am a member, to conduct a study on charitable giving in Canada. Specifically, it asks the committee to examine how current tax incentives may be made more effective to encourage increased giving.

Unlike some other private members' proposals we see too often in Parliament, chiefly from the opposition, this is an intelligent way of developing good public policy. Instead of unilaterally dictating a solution to an issue, the member for Kitchener—Waterloo has asked the finance committee to study the issue first. He is asking for hearings to talk directly to Canadians, to listen to the experts, to listen to those who are involved in the charitable sector and to listen to them together across partisan lines.

I believe in working together, consulting with Canadians, looking at the facts, considering the costs and doing all of this in an open, public forum at our finance committee. I see this as a positive and constructive way to approach this issue. I am entirely confident my fellow committee members will be eager to undertake such a study and ensure it has a fulsome study.

Again, I strongly support the motion and truly hope all members would as well.

For the remainder of this speech, to help inform the discussion, I would like to provide some background on the framework for charitable giving in Canada and how tax incentives help support it.

First and foremost, all parliamentarians have long recognized the immense importance and good work of charities in communities across this country. There are currently over 85,000 charities registered with the Canada Revenue Agency. Being a registered charity under the Income Tax Act provides a unique privilege, namely the ability to issue tax receipts to donors for gifts.

Donors, in turn, are entitled to claim a tax credit for donations made to registered charities, thereby reducing the amount of income tax that they pay. I should note that even though Canadians can receive tax benefits for their giving, in most cases that is only a secondary consideration.

In the words of Peter Nicholson, an experienced investment adviser:

The last reason that someone is going to give is because they are going to get a tax break. I show clients how they should give but prior to me showing you how, there has to be a 'why' and a 'who,' and that is all done on emotion.

Clearly we all know Canadians support charities because of their desire to help others or to support the causes in which they believe. Make no mistake about it, Canadians firmly believe in the importance of charities.

That is why we are among the most generous people in the world. In fact, Canada recently ranked third on the 2010 world giving index, an international comparison of giving and volunteering generosity in over 153 different countries.

As I have already noted, the tax system encourages Canadians to support the charitable sector by allowing individuals to claim a tax credit for gifts made to charities. For instance, the charitable donations tax credit allows Canadians to increase their charitable giving by providing tax relief. This credit provides federal tax assistance of 15% on the first $200 of donations and 29% on accounts above $200. Combined with the provincial tax relief for donations, the total average tax assistance for giving is about 46% for donations over $200.

In addition to the general tax incentives for charitable donations, special incentives are provided to encourage Canadians to donate particular types of property. Donations of ecologically sensitive land, Canadian cultural property and publicly listed securities are generally exempt from capital gains. As a result, the total tax assistance provided on these types of donations can be even higher, in fact as high as 60% of the value of the donation.

Since taking office in 2006, our Conservative government has taken key steps to build on that framework by increasing the generosity of tax incentives to better help the important role charities play in communities across Canada. For example, we have introduced a complete exemption on capital gains tax associated with the donation of publicly listed securities and exchangeable shares to public charities and private foundations. We also extended the exemption to donations of ecologically sensitive land to public conservation charities.

I note that our Conservative government's actions have been warmly welcomed by charities across Canada.

For instance, the Community Foundations of Canada has noted it would “help philanthropy continue to grow and will benefit charities across the country. We all win when the government encourages people to give. This tax relief will be welcome news”.

The steps have already had a positive impact on charitable giving in Canada.

For instance, commenting on our change in 2006 to encourage the giving of publicly listed securities, the Saskatoon Community Foundation has publicly declared, “in less than two years the foundation's endowment has grown by several hundred thousand dollars through donated stock. We've had some pretty significant donations so far in terms of size”.

We continued to build on our record of supporting charities earlier this year in budget 2010. We did this when we significantly reformed the disbursement quota rules for charities, reducing administrative complexity to better enable charities to focus their time and resources on charitable activities. This made it easier for charities to raise the funds they needed to help people who needed it most. Again, this action was warmly welcomed by charities as well.

In the words of the Salvation Army, the reform would “provide the Salvation Army, one of Canada's largest charities, with increased flexibility in meeting the needs of Canadians...allow(ing) us to better respond to the needs of the people we serve in 400 communities across Canada”.

We have also taken steps to encourage more giving in response to specific international crises in Haiti and Pakistan by matching dollar for dollar the donations of Canadians to those relief efforts.

Clearly our Conservative government has been a strong supporter of charities and charitable giving in Canada. Nonetheless, we recognize it is always important to study whether we could increase charitable giving in Canada to keep the charitable sector vibrant. That is why I strongly support today's motion as it calls for a finance committee study.

Moreover, I am confident that I and other finance committee members will give careful consideration to both the effectiveness of any new measures we might propose and their cost, ensuring they are affordable and sustainable.

I strongly hope the motion will be successful and we can undertake this study. I again applaud the member for Kitchener—Waterloo for his leadership on this issue and for the great work he is doing in Parliament on behalf of his constituents.

[Taxation, November 19th, 2010]

Mr. Speaker, unlike the Liberals, we believe in lower taxes for Canadians and leaving more money in their pockets where it belongs.

A PricewaterhouseCoopers study released today reveals Canada has leaped to the top of the global rankings as the best place for job creators. According to that report, our tax cuts for job creators mean that Canada “is moving in the right direction...stimulating economic growth and restoring confidence following the global economic recession”.

[Hydroelectricity, November 18th, 2010]

Mr. Speaker, I think we are referring to the offer that was presented to PPP Canada Inc. Public-private partnership is the operative term here. We are encouraged that it is looking at a private sector solution for this sort of investment. However, we do not interfere with a crown corporation. It makes its decisions based on merit.