Finance committee  Thank you, Mr. Chairman. I appreciate the opportunity to return to this. Yes, I think the example you give of a Canadian bank owning a U.S. financial institution is an excellent one. U.S. tax rates are at or are increasingly above Canadian tax rates, and that may mean that the amount of tax paid in the United States on the U.S. bank income is greater than the Canadian tax bill.

Finance committee  Forgive me, Chairman. Do you mean how we feel about an amnesty or how we feel about voluntary disclosure, or...?

Finance committee  I think the policy has been in place since at least 1938, so it does predate this government. The main point is that I don't believe it is tax avoided. It's the application of Canadian laws to say that foreign companies owned by Canadians won't be taxable in Canada simply because of having Canadian shareholders.

Finance committee  That's what I had suggested earlier as a concern. There are considerations going the other way, that you can try to bring people back into the system, and that's helpful, too. But certainly one of the objections or concerns with having an amnesty is that yes, it would reward the non-compliant and perhaps provide an incentive for repetitive behaviour.

Finance committee  Actually, the suggestion was made that it comes from the U.S. treasury, but I don't know, so I can't confirm that.

Finance committee  I don't want to characterize it as a waste of time, but I think it would be a very difficult exercise. The number of assumptions one would have to make to arrive at a number would make the exercise perhaps of less utility than one would hope.

Finance committee  Thank you. I'll just take a moment to elaborate a little bit on what we have in the international context. There are obviously others that apply domestically. There have been foreign reporting rules that have been in place for a number of years and these are not, as I said earlier, declarations of income but rather simple declarations of the existence of foreign assets, which can be used as an indicator for the Canada Revenue Agency as to whether to conduct further investigations to determine if all income associated with those assets is being reported.

Finance committee  Thank you very much for the question. I appreciate the opportunity to come back to this, because I think it's an important point. First, if I've given the impression that I thought we didn't have information relating to our banks, I didn't mean to say that. I don't believe that's true.

Finance committee  I have a comment--hopefully it's responsive--to add to my colleague's comments. The idea of an amnesty is not patently unreasonable; I don't think anyone is suggesting that. But there are incentives it incorporates that give us pause. Functionally it's a reward for non-compliance, if by virtue of not paying your taxes you're forgiven interest and penalties and perhaps repay a fraction of the tax--that's better financially than if you paid your tax all along.

Finance committee  I will say that the committee has considered that question before, and I'm happy to attend again. I'm happy to offer a couple of observations today on that, if the committee is interested, to explain what I thought was the concern with that, but just to make note of the fact that I think it has been considered by the committee previously.

Finance committee  Perhaps. I don't have a ready answer for that. I will make the observation that I think there's probably a lot of overlap in the criteria we'd apply, in terms of having both lots of economic interaction, diplomatic relations as a threshold question, and the like.

Finance committee  A brief response is that I certainly appreciate the concern. I don't think there's a direct linkage between that and the exchange of tax information. Indeed we're pretty concerned about tax information being provided to other countries for the sake of making assessments of tax in that other country, and vice versa, so its use for other purposes would be something that would have to be given due deliberation.

Finance committee  I think some of the countries felt it was a bit undiplomatic that others were pressing them to agree to things such as this on greater exchange of information. There were from time to time many assertions of each country's own sovereignty and objections to being pushed or pressured into making these changes.

Finance committee  Well, there are 25 TIEAs in total, 11 that have been signed and 14 more under negotiation. So that's the total. That, combined with our treaty network, which is fairly extensive, with 87 treaties and a couple more to be ratified, means that we have some 120, with 110 or 115 jurisdictions or countries covered.

Finance committee  I think their proximity to the U.K. is important, and to Europe as well. Speaking personally, I've learned a little bit of geography as a result of this, and some of the smaller islands in the South Pacific are new to me, but it is true that you don't have to have a vast land mass to have sovereignty and to be able to offer certain regulatory or tax advantages.