Tax Convention and Arrangement Implementation Bill, 2016
Bill to Amend—Second Reading—Debate Adjourned
November 15, 2016
The Honorable Senator Stephen Greene:
moved second reading of Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement.
He said: Ladies and gentlemen, I rise today in a modern circumstance because I stand before you as a senator who is not part of the government — and proudly not part of it — sponsoring a piece of government legislation. I am referring to Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement.
I'm honoured to be among the first of, I hope, many senators who, despite their general disagreement with the current government, which I share, are willing to recognize good ideas and policies when they see them by sponsoring government legislation in this place when they have no policy objections that would prevent them from doing so.
This bill is not only a good piece of public policy but also the culmination of work begun during the Conservative government's tenure. In fact, I sponsored three similar bills, virtual copies of this bill, for previous Conservative governments. In other words, I sponsored bills exactly like this when I sat on the other side of the aisle. If such bills were good enough for me then, why wouldn't they be now — for hopefully my brains are not where I sit but where I stand.
Ladies and gentleman, Bill S-4 is the result of negotiations between Canada and Israel to update the existing tax agreement first concluded in 1975; Canada and Taiwan to come to an arrangement on the elimination of tax barriers to trade in keeping with Canada's One China policy; and Canada and Hong Kong to add clarity to certain definitions in the existing tax agreement.
These types of deals take time to negotiate. They are not done overnight but rather are the culmination of years of talks. It is well known that Prime Minister Harper and his government were supporters of both Israel and Taiwan. Canada's strong support of Israel under the previous government stems from Israel's being the only real democracy in the Middle East. And that support was reciprocated when Stephen Harper was invited to address the Knesset in Jerusalem, an honour never before extended to a Canadian Prime Minister.
In the case of Taiwan, while it was Trudeau the Elder who recognized the People's Republic of China and originated Canada's One China policy, subsequent Conservative governments have been keen to increase economic cooperation with Taiwan and support its maturing democracy. The arrangement negotiated between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office here in Ottawa will help provide clarity to investors on both sides of the Pacific while boosting trade with Taiwan, which is Canada's twelfth-largest trading partner, with two-way trade valued at roughly $7 billion annually.
So, colleagues, this is really a continuity-of-government bill. The agreement and arrangement, as the case may be, conform to the OECD Model Tax Convention on Income and on Capital and adds to the existing 92 tax agreements in place between Canada and other jurisdictions.
Not only is this a continuity-of-government bill, but as I alluded to in my introduction, it is also good public policy. It's good public policy because, in addition to helping foster trade by lowering the withholding taxes on the movement of capital, it will also help residents of each jurisdiction and their families avoid double taxation. Nobody wants to be taxed twice — especially here in Canada where some combined income tax rates are above 50 per cent — but without legislation like Bill S-4 that is exactly what could happen to Canadians working in Israel or Taiwan.
Senators may be wondering why I refer to the Canada-Israel convention as an agreement and the Canada-Taiwan deal as an arrangement. This is because Canada and Israel enjoy full diplomatic relations, so we can have a formal agreement; and in keeping with Canada's One China policy, Canada enjoys full diplomatic, economic and cultural relations with the People's Republic of China while maintaining lesser economic and cultural relations with Taiwan. The full relations with Israel allow an agreement; while the economic and cultural relations with Taiwan allow an arrangement.
For those senators curious about the effect that our coming to a tax arrangement with Taiwan will have on Canadian relations with China, as a non-government member of this place I cannot give an official statement, but I can tell you that Taiwan has similar arrangements with 30 other countries and that Canada and Taiwan cooperate in many multilateral organizations, such as APEC and the WTO, working on an agenda of free trade and economic liberalization.
Economic liberalization and free trade are at the heart of the policy of pursuing tax agreements. As a Conservative I certainly appreciate a policy that reduces barriers to trade, investment and the international mobility of labour by reducing the problems and stresses of double taxation. I was a supporter of a government that signed or negotiated a record number of free trade agreements, such as the Canada-Israel FTA, the Trans-Pacific Partnership and of course the Canada-European Union Comprehensive Economic Trade Agreement or CETA.
While these were Conservative initiatives, they do not represent uniquely Conservative values. Liberals came to value free trade in the 1990s after realizing that free trade between Canada and the United States was actually a good thing. And the government deserves praise for coming to a final agreement with the European Union on CETA.
To conclude, the double taxation agreement and arrangement in this bill will promote certainty, stability and a better business climate for taxpayers and businesses in Canada and in partner jurisdictions. More importantly, the double taxation agreement and arrangement in this bill will help to further secure Canada's position in the increasingly competitive world of international trade and investment.
For all those reasons I urge all senators to support this bill. Thank you very much.