Finance committee  Again it's a complex field. There's a certain amount of truth in that, because if Canada has the highest rates then you take the deduction in Canada. But the problem is that with a double-dip structure you get such an incentive to borrow that you borrow more. I've seen layers whe

Finance committee  Yes. Given other factors and a lot of other considerations—foreign currency risks, financial markets, and so on—you'll tend to take the deduction where the tax rate is highest. Canadian rates are, for example, substantially higher than those in the U.K. or in most European countr

Finance committee  The total value of Canadian investment in foreign corporations and enterprises is higher than the value of foreign enterprises investing in Canadian enterprises. Despite that—we only arrived at this position in the last few years—the income flow is actually the reverse. The inflo

Finance committee  A foreign multinational with headquarters outside of Canada would have some tendency to try to move debt into Canada by getting the Canadian subsidiary to borrow money, perhaps to invest in shares abroad or something else, on which you will get very little in the way of dividends

Finance committee  We need to consult with our colleagues in other countries in order to get an overall tax system that's fair. The point is that different countries have different rules. If a taxpayer wanders blindly into this maze, a taxpayer can get stuck with double taxation, and that's unfair,

Finance committee  I think that both debt dumping and double-dipping are important problems. We don't have any statistics on how much money is available. You can't find that out. But I think they're both substantial, and they both require action. With respect to coming down to only borrowing money

Finance committee  Yes, I did. In broad terms, yes, that's the result of the combination of the legislation and the tax treaty between Canada and Barbados. There are large types of income that have been taxed only very lightly and that can be repatriated to Canada. I don't think that in itself is

Finance committee  That's a big question. First of all, I think the view is well supported by studies done by Professor Mintz at the University of Toronto and others that Canadian tax burdens on corporate activity are relatively high by world standards. Now, that's all the taxes that corporations

Finance committee  Yes, I think that's right. It reduces the incentive. It doesn't eliminate it, but it reduces it. When we have relatively high tax rates, we're immediately identified as a good place to dump deductions and to shift borrowing too, because the tax rate is so high you get a big tax s

Finance committee  Yes, you're talking about the tower structures of the limited liability partnerships. It's a little hard to describe them simply, because they're not simple. You take an entity that looks like a corporation, but it doesn't necessarily have limited liability to the shareholders.

Finance committee  That's right. Because of differences in the law, you can get tax-exempt operations and opportunities for tax avoidance, even in dealing with a large country with a complex system. The point, as I mentioned, is that every country has their own rules, and these rules are differen

Finance committee  In broad outline, what should be done on the disadvantages whereby foreign companies move interest selections into their Canadian subsidiaries? We need effective, thin capitalization rules that would limit the amount of debt that a Canadian corporation, which is owned by foreigne

Finance committee  There is a wide variety of techniques, as a matter of fact, some of the more complicated structures devised by the mind of man. A lot of them concern international financial centres, as my colleague has mentioned, and there are ways of essentially moving income out of Canada with

Finance committee  Thank you. First of all, the desire to have a better corporate tax system in Canada, including lower rates, is an important structural point in the total tax policy of this country. It's the way we get a vibrant economy. It's the way we get foreign investment. Our investment in

Finance committee  Yes.