Hon. Wilfred P. Moore:

Honourable senators, it is my pleasure to rise today to speak to Bill S-8.

I would like to commend my colleague Senator Greene on his words of explanation regarding this bill, which allows for more brevity on my part.

As the global economy grew more integrated, a treaty on international taxation was sought to deal with the problems of double taxation and tax evasion. The OECD began to address these issues in the 1950s, eventually creating the Model Tax Convention on Income and on Capital. Since then, more than 3,000 tax treaties have been put in place worldwide. Simply put, the model tax convention establishes a guide under which countries can harmonize their double tax treaties.

If a Canadian company sells its goods in another market and at home, there is the possibility that it would end up paying tax at home and abroad. As Senator Greene mentioned, not only is such double taxation unfair to the company, it also causes major problems in international trade.

Tax treaties prevent these problems in several ways. I quote from my briefing book:

Tax treaties allocate taxing rights between two countries by resolving the issuance of residence where a taxpayer would be considered a resident of both countries. With respect to each category of income, treaties assign the primary right to tax to one country, usually but not always the country where the income arises. A residual right to tax is usually but not always assigned to the country of residence.

Treaties provide rules for determining which country will be treated as the source country for each category of income.

Lastly, treaties also provide rules limiting the amount that the source country can impose on each category of income and places the onus on the resident country to eliminate double taxation.

A dispute mechanism is included as well that seeks ultimately to avoid double taxation by having representatives from each of the countries arrive at a mutually satisfactory resolution regarding outstanding issues. I believe the 2008 model update to the model tax convention introduced a "mandatory binding arbitration provision to resolve difficult issues."

Senator Greene mentioned that these treaties also deal with the issue of excessive taxation through the reduction of withholding taxes. Maximum levels are set for these withholding taxes and, in fact, Canada often seeks the outright elimination of withholding tax for some types of income.

All in all, these tax treaties, including the three we are dealing with today in Bill S-8, are meant to enable an easier international tax regime between Canada, Colombia, Greece and Turkey. To do so under the rules as set out under the OECD's Model Tax Convention on Income and on Capital, I support this bill and look forward to further discussion in committee.

I would be remiss, however, if I did not comment on Senator Greene's words regarding the state of Canada's economy prior to entering this worldwide recession. He said:

It is important to remind honourable senators that while we have been impacted by the current global recession, Canada is facing this downturn in an enviable position.

What Senator Greene did not mention is who was responsible for preparing this country for such a financial downturn. If it was not for the actions of the previous Liberal governments of Prime Minister Jean Chrétien and Prime Minister Paul Martin, Canada, indeed, would not have been able to weather such a storm, and to weather the storm despite the actions of the current government.

When the Conservative opposition of the day, including Stephen Harper, was calling for deregulation of Canada's banking system, it was Jean Chrétien who refused to loosen the rules. It was he who refused to let the charter banks merge, thereby preventing the disaster that occurred to our southern neighbours. Today, we hear the government quoting the international community regarding our enviable financial system. Canadians would be in a gigantic mess if it were not for that Liberal government holding firm.

One of the first moves by this Conservative government was to deregulate the mortgage industry in Canada. The Minister of Finance opened the industry to new players, such as AIG, saying: "These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home insurance." It took the government an entire year to deal with the problem they had created. Despite warnings from both private and public sources, the sad end result would be the Canadian taxpayer being saddled with the debt created through the actions of this government.

The Prime Minister and the Minister of Finance denied the existence of a recession. Indeed, the Finance Minister appeared before the Standing Senate Committee on National Finance on March 10, 2009, and declared: "Nobody, I mean nobody, not one economist, not one, not one senator, predicted the global recession." I wonder how the Finance Minister missed the June 2007 warnings of William White, a Canadian and the chief economist of the Bank of International Settlements, a bank in which Canada is a shareholder. Instead, he appears at committee and denies that anyone saw a recession coming. At that point, it was only the Prime Minister and the Finance Minister who were still in the dark.

It is absolutely amazing that our current government has spent so much money that it has become the most free-spending administration in Canadian history. That was the extent of this government's preparations heading into recession: empty the cupboard and deny reality. This Conservative government inherited a surplus of $13 billion, and not only did the government spend that, it also spent the $4 billion rainy-day fund when the day was still sunny.

The Finance Minister and the Prime Minister promised Canadians they would never enter into a situation of deficit spending, and as we know now, they already had. If it were not for the revenue windfall upon the sale of communications channels, the current systemic deficit would have been on the books in the beginning of the second quarter of 2008. The same Prime Minister, on October 7, 2008, advised Canadians who were losing their jobs and their savings that, "I think there's probably some great buying opportunities emerging in the stock market as a consequence of all this panic."

This government was calling for surpluses in the economic update before proroguing Parliament in order to save their own jobs while Canadians were losing theirs. In fact, this government refused to provide any stimulus spending until forced to doing so by the opposition, which leaves us with a few unanswered questions.

Now that the government has managed to undo all the good work of the previous Liberal government, and had done so long before this economy was hit by recession, how does the government intend to return the books to surplus? When and how will the government pay back the debt it has placed on the shoulders of Canadians? When will Canadians have a government that is fiscally responsible again? While awaiting the answer to these important questions, let us give our support to this bill.

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