Mr. Speaker, I am pleased to speak today to Bill , 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 .
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 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.
Madam Speaker, it is encouraging to hear my colleague from Winnipeg talk about the implications of tax policy, with having done so much research on it, because those implications affect so much of what we do in this place, primarily the government's ability and willingness to collect taxes fairly across the country. Are there special understandings within the political class here, the cabinet, and those families that can even afford to even consider things like tax havens?
I suspect that most Canadians watching this have not contemplated with their families around the dinner table what to do with their tax haven structures this year. Most Canadians are struggling to make ends meet and pay their fair share of taxes, and are willing to do so, but it is when they hear stories of the excessively rich families in Canada making a certain amount of money, wanting to avoid taxes and then skipping town, essentially.
Some of these same folks end up getting a little pin on their lapels or the Order of Canada from prime ministers for their great and dutiful work for Canadians. The irony and the hypocrisy in that alone smacks so hard against Canadian values.
Bill is a bill that has come forward from the Senate. It is great to know that every once in a while the senators rouse themselves from their afternoon naps and produce something. However, it is a bill that does not necessarily mean a lot in its particulars but, in general, has implications for all of us.
In Bill , as my friend from Winnipeg said, the government quite intentionally included a country that may cause problems, because it is trying to do a free trade deal with Colombia right now and now it is slipping it into this taxation bill. It is striking to me and to others why these three particular countries are locked together and why it is of interest to the government to include such diverse economies together into one piece, but the government has chosen to do that so we must work with that.
The issue that is in front of us is how to deal with this bill. The NDP has suggested, quite rightly, that the bill should be split, that it should be broken up into its contingent parts so we can deal with each reality on its own. The government at this point has refused that, but let us look at the pattern of how the government operates when it comes to making legislation and the role of the government.
Right now at the finance committee, members are dealing with Bill , which, by all measures and accounts, is a Trojan Horse bill. It is supposed to be a budget bill but it is an omnibus bill, which means that it includes a whole bunch of different pieces. The government has included things like raising airport taxes and the selling off of Atomic Energy of Canada Limited, the largest crown corporation in this country. It is the nuclear industry. It has also included a watering down of environmental regulations on, of all things, the oil and gas industry, which is quite ironic to think about doing that right now. All of these things are embedded into a piece of legislation that is meant to be a budget bill, a finance bill. That is a cynical form of politics. It is a form of politics that says that it does not want to debate these things on their merits.
Let us just take one of those pieces as an example, the selling of AECL. Canadians, over the 50 years of this crown corporation existing, have put somewhere north of $21 billion into it to develop the nuclear industry here in Canada, both on the energy side and creating isotopes. That is a lot of money. What else could have been done with $21 billion? However, here we are and the money has been put in.
It actually says in legislation that was crafted in this place that in order to sell or break up AECL, the government must bring a bill before the House for debate. That makes sense. That is reasonable. That is what every other country around the world does. However, rather than debate the sale of AECL or how to break it up, or any of these other things, the government instead has slipped it into a budget bill and has said that it is a matter of confidence.
It also tacked in this thing about raising taxes at airports. This is from a government that is constantly claiming that it is cutting taxes. It is becoming laughable because at the same time it is raising them, like the HST.
I am a member from British Columbia and I was just at our first farmers' market in Terrace, B.C. this weekend. I manned the HST booth for a couple of hours and heard from constituents in British Columbia how frustrated they are that when they flick on the evening news they hear Conservative minister after minister talk about their glorious tax cuts, when they know in British Columbia and in Ontario that they are moving the HST onto the backs of hard-working families who will pay more taxes.
It was a tax that was brought in by a British Columbia premier who promised not to do it. The Conservatives pretend they had nothing to do with it, forgetting that their fingerprints are all over a $1.6 billion bribe that they sent to Ontario. The government took $1.5 billion from taxpayers to bribe another level of government to raise taxes on those same taxpayers. This is the way the Conservative government cuts taxes.
It is unbelievable that those guys can still walk upright and claim the high moral ground on taxation when they took $1.5 billion and slipped it into a budget bill to raise taxes in British Columbia and another $3.5 billion or so to Ontario. That is remarkable.
What is remarkable is that the folks who were coming up to us at this farmers market were from all political persuasions. Folks from across the political spectrum were saying that whether it was this type of tax or another type of tax, the process stunk. They were signing a petition so a free and fair vote could be held in British Columbia to decide things.
Bill is another effort at talking about things without actually doing anything. We have asked for evidence from the government about the effect of these treaties. The government has signed, I believe, 87 agreements. The Conservatives think they are great free traders because they have signed these agreements. They say that they are fantastic, thereby implying that something actually has changed in the world.
It must have cost a lot of money to print 87 treaties, never mind sending negotiators all over the world to make these things happen. These things are not free. We have invested in these things. We are asking for a return on our investment.
We want to know what has changed in tax policy. Have we caught those folks who take their money offshore to a tax haven? Have we recovered any funds from the people who have earned their money from investments by Canadians and then skipped town before the bill is due? The government has not provided any evidence.
This leads one to some suspicions. This is again the portrayal of action without anything actually changing. This is a level of government of which people are growing increasingly tired. If the government is going to do something, then it should do it.
I come from a remote rural part of northern British Columbia. When somebody says he or she is going to do something, often it is a handshake and the agreement is made. Then we go forth and do it.
To set up all these agreements with no evidence as to whether they work or not, or which kind work better for which situation, is governance by a certain ideology rather than governance by any kind of thoughtfulness and debate.
With this bill, the government is lumping three countries together so it can get the numbers up. It is signing more treaties, all the while refusing a fundamental principle of trade, which has been evolving, growing and maturing around the world for the last 50 years.
That is the counter to the free trade ideology. We can trade with other partner countries but we have to do it fairly. Everybody knows that nothing is free in this world. Even the terminology free trade must sound good, it must mean good things. However, when we ask about fair trade, when we ask about trade that is on good terms with our trading partners, that would improve working standards, that would take care of the environment, that would ensure we do not support regimes that we would never tolerate here, the government is silent. It is not interested in those types of trade agreements, and we see that with Colombia.
Our member for has been pushing hard to get some sort of review of the human rights situation in Colombia. He has made some progress with members after a massive campaign involving thousands of Canadians. They would like to know that their trading partners are living up to some sort of standards, some sort of requirement, for the privilege of trading.
That is how trade works. It is a privileged status. It is not a right. Countries do not trade with each other based on any fundamental rights. Countries trade as a privilege. It is the same with operating a business. It is not a right to operate a business in Canada. It is a privilege. One has to follow certain rules and those rules cannot be broken.
If someone ducks out on taxes, the government comes after that individual, and rightly so, except for a particular class of Canadians. When we get into the billions of dollars, suddenly a whole new set of rules apply. People go to what is called a tax haven, and tax havens, as has been described earlier today, are set up by countries that have a skeleton of a banking sector. They are often islands. They are often very small countries, sometimes democratic, sometimes not. The list of prestigious Canadian families who have their money socked away in these tax havens is astounding.
We see it time and time again, whether it is Liberal or Conservative governments. A little private meeting goes on and Revenue Canada says that is all right. We saw it with a former prime minister, for goodness sake, who got caught evading taxes. It was Brian Mulroney, a Conservative. Those folks used to know him, then they pretended they did not him and now they know him again, I think. What did he do once he got caught. He cut a deal with Revenue Canada. If he paid back a portion of those taxes, it would be satisfied.
I wonder if the government offers that same deal to the average hard-working Canadian taxpayers. If they are having a hard time this year or last year paying their taxes, Revenue Canada will cut them a deal and they will only pay 50%. Of course not. The system would not work that way.
However, when we move up into this upper echelon, if it is a Brian Mulroney, or a Bronfman, or somebody who has some connections to this place, they can cut deals with the government to pay half of the taxes they actually owe. How does that make any sense? How can those guys call themselves fiscally conservative if, at the same time, they allow tax avoidance to go on? How can they be running deficits while, at the same time, taxes owed to the good people of Canada are not paid. The only reason is because there are connections, there is the familiarity, there is a need to have some sort of comfort with certain Canadians who are of a certain wealth.
On the agreements with countries, we hope, as Canadians, that our presence in the world, our ability to connect with other countries is for a betterment of the world. We do not go forth, whether it is through military or diplomacy or trade, hoping to make the world a worse place. Part of our underlying belief as Canadians is that we have accomplished something in our country that is, as some have said, a country that works well in practice but not in theory. We want to be a symbol and an example on certain issues, particularly, for other countries struggling to establish a democratic rule of law, struggling to establish women's rights and rights for minorities, rights for the gay-lesbian community. Canadians feel okay with promoting those things overseas. We hope we do that through our diplomatic core and our military, from time to time.
However, when we look at the free trade ideology coming from the government, all these other issues get short shrift. One wonders if the government even believes that trade is a mechanism and a vehicle for promoting human rights and environmental standards around the world. Conversely, and I think this is much closer to the reality for those guys. The very nature and vision of the role of Canada, the very vision of Canada promoted by the Conservative government is not one that supports human rights. It is not one that supports environmental protection or the rights of first nations people. The reason I can make that strong statement is there is so much proof that the government does not mind cutting access to women's programs. The government does not seem to mind cutting back funding for certain groups that it does not like if their ideology is not right. It does not mind watering down environmental regulations on the oil and gas industry. In fact, the government suggests the oil and gas industry can regulate itself, which might be better.
In committee this morning we heard that our national regulator that governs oil and gas for most of the country, with the exception of Newfoundland and Labrador, had said that it was no good to have these regulations any more, that we should just be goal-oriented in our rules. Let us not have rules, in fact. Let us just have guidelines. Would it be a good idea to just have goal-oriented guidelines for driving regulations or for the safety of our homes and our streets? Of course not. We put regulations in place.
As my father-in-law, who works for a compensation board in British Columbia, says that a lot of the rules and regulations that govern industry for workers' safety are written blood. What he means is those rules were not invented out of nowhere. They were often invented after there had been an accident. In his case, workers' safety, somebody died, or somebody was hurt seriously. They realized they had to change the rules guiding construction, or a certain industry. The had to make them stronger so people could go to work knowing they would come home at the end of the day. That is the principle from where regulations and rules come. There is not a little office of people sitting around Ottawa, not that I am aware of, who make up rules for the sake of it. We make up rules and regulations so they enable good practice to flourish, so they give people a fair opportunity earn a decent buck to be social citizens. There is a social licence to operate that is buried within it.
However, when it comes to the regulations, the government promotes a Canada that does not necessarily belive in this, that industry can self-regulate. If we look to the Gulf of Mexico right now, we see what happens when an industry is given more self-regulation.
This does not always happen in one shot. It happens over time. There is a creep, they call it. It creeps edge by edge. We saw it in the stock market in the U.S. and in Canada. We put rules and guidelines in place to try to contain some of the greed that would be rampant in any stock market, because it is a profitable place to make money. We put those in place because not everybody was very ethical. Some traders want to bend and break rules and rip off their investors. In American, it was the Glass-Steagall act. In Canada, we had a bunch of other stuff, but the creep happened.
Bit by bit, the Americans eroded some of their guidelines. They eroded the rules and decided to do outcome-based guidelines. The outcome-based guideline for the stock market is to make money. If people keep making money, that is all right, but they will not be guided. The invisible hand of the free market will save them at the end of the day.
The marketplace is a magical thing. It can bring billions of dollars into new technology, ideas that spur innovation and that ambition can be allowed to flourish. However, it needs to have some rules and some sort of containment so people who try to do the right thing are rewarded and those who are crooks are thrown in jail. We take away all those regulations and they make guidelines. We make goal-oriented objectives and we get what we get, which is the worst of the worst are able to manipulate the system to their best abilities and make money in unethical ways.
Now we move to trade in Bill , the bill from the Senate. We need to have these tax deals so people are not double taxed. That is a very fine principle. It is something we can support. Then we look at all the existing tax haven countries. Has the government signed any treaties with those countries, the places where people actually set up tax havens?
I have not known Turkey to be a great and rampant source of tax havens for the wealthy and rich around the globe, because it is not. We have the list of the places that are. Transparency International runs a list of the most corrupt regimes every year. Some of those are also the regimes where these tax havens exist. All one has to do is pay somebody off to not pay any taxes in the country, to never have to declare it and to have one board member.
Former Prime Minister Martin ran his whole shipping company under different flags of convenience. Why are they convenient? Because if people have shipping companies like the former Prime Minister of Canada did and they do not want to follow Canadian, American or European law, they fly them under the flags of some backwater African country, which has no rules or regulations for shipping. Therefore, they do not have to stand by any labour or environmental laws because they have this convenient flag flying over their ships.
The problem with the government's ideology on this is it also applies a flag of convenience to its trade policy. It uses trade in a convenient way to accomplish only a very narrow band of things. There are those of us who believe strongly that trade with a country can be an opening of a conversation about improving the conditions for people on both sides of the deal, both Canada and the country with which we are trading.
There is some evidence that this has happened around the world. In the last 25 years, we have seen steady improvements for the lowest-income people across the globe in some regions. However, it is false to think that this just happens naturally and that it is some byproduct that will happen no matter what we do. Very strong evidence exists to show this is the case.
We traded with Iraq during the entire Saddam Hussein regime. We bought its oil. The Americans bought its oil. We did not put a single stipulation in place. We had to drive furiously at a previous Conservative government to get a proper regime set up against South Africa when apartheid existed. We had to make the moral implication. The argument against any trade sanctions against South Africa was that free trade had to reign. That was the most fundamental principle. If we just traded with South Africa, it would eventually let apartheid dissipate.
Of course that was never going to happen. It would still be there today if the world did not get together and say that, as part of human trade, we would insist on human rights. As part of our trade with South Africa, to buy its resources and products, we would insist that it also treated all its citizens with some level of dignity. It was a good moment for the world when we finally decided that. Conservative ideological thinkers were against it. They opposed every step of the way.
We see it again here today. We need good trade policy in Canada. We are a trading nation. We need to shut down tax havens around the world and have people, whatever their social standing, pay their fair share of taxes. It is the right thing to do.