April 12, 1957

PC
LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

I would have thought that was about the weakest argument that could be advanced, because if the Conservative party meeting in December had not been able to decide its course of action, based on what the conditions were on that date, I am afraid they are just following the usual practice of living in the past and not considering the present.

The third resolution reads:

Increase the married rate of war veterans' allowances and Increase the ceilings on total permissible incomes.

We have increased the ceilings on total permissible income, and in the two speeches that have been made by hon. gentlemen opposite I have not heard them say that the increase was not a proper one.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Mr. Chairman, the minister is not repeating what I said at all. I said they should be increased so the veteran would get the full benefit of his old age security payment when he reached 70 years of age. I repeated that several times, and have said that time and time again in this house over the years.

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LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

Subject to that amendment,

which I did not hear in the last 30 minutes, may I point out that the remainder of the resolution reads:

Increase the married rate of war veterans' allowances.

Well, now, instead of increasing the married rate of war veterans allowances, sir, we now hear a request for an increase for the single veteran under the war veterans allowance. I take it that this is an extension which has been thought up by hon. gentlemen opposite since the budget speech of March 14, when we did in fact increase the married rate for war veterans allowances.

Now, Mr. Chairman, I do not wish to detain the committee any longer on the matter of veterans legislation. May I point out that the proposed increases which were detailed the other day-I am not going to use the word generous again, because in dealing with veterans affairs one does not do so with generosity, one deals with what is considered to be proper by way of compensation for distinguished service to the country under conditions of great difficulty and suffering, physical disability and the like- what I am saying is that I rather think the proposals the government made are highly pleasing to the representatives of Canadian veterans, and took by surprise the opposition who did not expect we would do this at this particular time.

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CCF

Thomas Speakman Barnett

Co-operative Commonwealth Federation (C.C.F.)

Mr. Barnett:

Mr. Chairman, there are three matters with which I would like to deal

Interim. Supply

briefly while I have the opportunity of bringing them to the attention of parliament, and I hope they will receive some consideration by the government in the interval before the new parliament assembles. The first of these has to do with a matter of policy presently being followed by the air transport board. I think I can best explain the situation by referring to some correspondence I have received from the parent-teacher association of Tahsis on Vancouver island. In a letter written by the secretary under date of October 16, 1956, addressed to the Minister of Transport and dealing with the subject of air line fares for students, the association says:

From necessity there are a number of students attending schools away from Tahsis.

We have one means of transportation, the Pacific Western Airlines, and they give us very adequate service, but the fare over twelve years is $66 return.

They go on to explain that there is a weekly freight boat, and say that if students were to travel by boat and could not be out of school on a certain day they would have to wait a week for the next boat. The letter continues:

The Pacific Western Airlines are quite ready to discuss the situation and realize the hardship of three annual fares being paid by parents if they wish to see their children for vacations.

We request a reduction in air line fares for students attending school. Your acknowledgement and advice will be appreciated.

As might be expected, this letter addressed to the Minister of Transport was handed over to the air transport board, which replied to the parent-teacher association under date of November 9, 1956, in a letter addressed to the secretary in which they said:

Your letter of October 16th, 1956 addressed to the Minister of Transport on the above subject has been considered by the board.

The situation is that under the provisions of the Aeronautics Act, it is, in the first instance, solely within the discretion of air carriers whether or not they will grant reduced fares and the authority of the board is limited to approving or disapproving what air carriers may, themselves, propose. The board has no authority to direct an air carrier to extend assistance of the above kind to any person or class of persons nor can it properly initiate the establishment of reduced fare arrangements.

That is in line with my understanding of the manner in which the air transport board must act under the present statute, but the last paragraph of this letter is the one to which I particularly want to draw attention. It says:

The board understands the views you have expressed in support of the granting of reduced rate transportation for students attending schools away from Tahsis. It would, however, have to refuse a request of this nature if submitted by an air carrier in view of the precedent it would establish.

That, Mr. Chairman, is the particular point to which I wish to draw the attention of the committee. I fail to understand how, if the application of an air carrier to the board would create a precedent, it would constitute a valid reason for the board taking a position in advance of an application. That point of view is one which also caused considerable surprise to the parents of the community of Tahsis. In a rather forthright reply addressed to the secretary of the air transport board under date of December 10, 1956 the parent-teacher association said:

We have your letter explaining procedure to be followed in making a request for a fare reduction and your comments that such a reduction would not be granted because it would establish a precedent.

We wish to state that we cannot accept your explanation that a student fare rate cannot be granted because it would establish a precedent. To us, any alteration of set fare structure is a precedent.

That last sentence appeals to me as being a logical way of expressing the situation. The letter continues:

We understand there are special rates on trains for certain classes of travellers. Air lines have family rate plans in effect . . .

They also adhere to board of transport rulings. When such a plan benefits both transportation company and traveller, it is justified.

The letter then goes on to explain some details of the situation that apply, and outlines a plan under which the air line in question would be able to bring students home on flights that would be filled on the trip out by workers leaving the community on holidays.

I wish to bring this matter to the attention of the committee at this time in the hope that in the immediate future some very careful study and review will be given to this policy now being followed by the air transport board, as described in this letter.

May I call it one o'clock, Mr. Chairman?

At one o'clock the committee took recess.

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AFTER RECESS The committee resumed at 2.30 p.m.


LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

Mr. Chairman, on a point of order, it has been agreed that we shall take the tax convention bills and from time to time return to this debate.

Progress reported.

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INCOME TAX

LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Hon. J. J. McCann (Minister of National Revenue) moved

the second reading of Bill No. 413, to implement an agreement between

Canada and the Netherlands for the avoidance of double taxation with respect to income tax.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Mr. Speaker, I would like to ask if the minister would make a statement on this bill, either in committee or in the house, whichever is convenient. Perhaps it would be better in committee.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Applewhaite in the chair. On clause 1-Short title.


LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

The purpose of this bill is to give legal effect in Canada to an agreement which, as a result of negotiations and subsequent exchanges, has been reached between the government of Canada and the government of the Netherlands for the avoidance of double taxation and the establishment of rules for reciprocal fiscal assistance in the matter of income taxes, which agreement was signed at Ottawa on April 2, 1957. The agreement follows the pattern established in the present income tax agreements which Canada has made with the United States, United Kingdom, Sweden, New Zealand, Ireland, Denmark, France and the Federal Republic of Germany, and has as its purpose the avoidance of double taxation and the exchange of information.

Double taxation is avoided chiefly by a reciprocal system of tax credits in which the country of residence gives credit for the tax imposed by the country on the income at its source. The agreement contains the usual provisions limiting the taxation of trading profits through the permanent establishment rule. In addition certain special provisions are made; profits from the operation of ships and aircraft will be taxed solely in the country of the residence of the operator.

Then, Mr. Chairman, the schedule which is attached to the bill has certain articles, and I suggest that probably after we have taken up clause 1 we can go to clause 2, then deal with the different articles in the schedule and then come back to clause 3.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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Clause agreed to. Clause 2 agreed to.


LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

Is it the desire of the committee that we now consider the schedule? Does the minister wish me to call articles by number for discussion purposes only?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

Yes, Mr. Chairman.

On the schedule, Article I;

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Could I ask the minister

if he would say a word first of all with respect to the clauses of the bill which I think

Income Tax Agreement are not identical, certainly, with the last tax agreement, entered into last year with Denmark. Would the minister say generally with regard to the agreement in the schedule whether it follows substantially the same lines or whether there is any material difference. I might say that on making a comparison one is not able to identify them, clause by clause or word by word, but I thought the officials would be able to tell us whether there is any general substantial difference.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

No, Mr. Chairman, there

is no substantial difference between this and the former agreement. I might say with respect to article I that this article contains specific reference to its respective taxes to which the agreement applies. That means that some taxes in the Netherlands are not named in the same way as ours in Canada. For instance, it applies to the income tax including surtaxes in Canada, while in the Netherlands it applies to taxes and what are called wages tax, company tax, dividend tax and tax on fees of directors, all of which correspond very closely to income taxes in Canada. It also provides that the agreement will apply to any substantially similar taxes which may be imposed by either government during the time the agreement is in force.

Article I agreed to.

On the schedule, Article II.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

I wish to ask a question

under article II, and the minister has partially answered this already. He has read out a list of taxes which indicates that in the Netherlands the approach to tax on income is broken down in a way different from the way it is done in Canada. My question is this. Have we been satisfied first of all that there is an absolute parallel between this list of taxes and our own? Do they cover exactly the same ground as our differently named taxes, and was it possible to arrive at complete agreement in this respect? I understand that in one or two cases agreement on the question of situs posed some difficulties, and they were more or less left in the air because agreement could not be reached. Can we take it that our experts are satisfied that these taxes in the Netherlands on the one hand and in Canada on the other cover the same ground?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

That is exactly right, Mr. Chairman.

Article II agreed to.

On the schedule, Article III.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION
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April 12, 1957