You are absolutely right. The Canadian tax system indeed allows openings mainly to Barbados. In the 2002 report, the Auditor General stated that $23 billion had been invested in Barbados. There is a reason for that. Barbados, in particular, has a tax agreement with Canada. Because section 30 of the tax agreement stipulates that International Business Companies, IBCs, are exempt from the agreement, we are led to believe that Barbados has no preferential link to Canada.
With respect to what you said earlier about 1994, I will remind you that in 1995, an amendment was made to tax regulation 5907(11.2)(c) according to which tax agreements concluded before 1995 could permit entry of tax-free dividends. This is not a random occurrence.
Earlier, Ms. Alepin asked why we should feel obliged to reduce Canadian rates. Indeed, that is a good question. In Europe, competition takes place within the European Union. There was an upward trend in recent years. Ireland increased its tax rates in 2001, 2002 or 2003. Hungary also increased its rates in 2006. Currently, Bulgaria has a tax rate of 10%, the lowest corporate tax rate in all of Europe.
Our closest competitor is the United States. Therefore, we always feel the need to tie yourselves closely to the U.S. But let us be careful! Our tax system is entirely competitive. For example, the exemption on $500,000 of capital gain has been increased. The 1997 Mintz report clearly indicated that this measure did not create jobs in Canada and should be eliminated. Therefore, we should not only consider tax matters as they relate to tax havens, but also as they relate to our domestic tax matters.