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. We provide a foreign tax credit; that is, we allow a deduction for foreign taxes against Canadian taxes paid.
So in those circumstances, the profits of the U.S. financial institution owned by the Canadian parent bank would produce no additional Canadian tax, and that seems reasonable because you need to provide the foreign tax credit to eliminate double taxation. That's one case.
Another case is where a financial institution owned by a Canadian bank, a subsidiary, is located in a jurisdiction that has a lower tax rate than Canada's. In those circumstances we don't impose current tax on that foreign subsidiary's business profits, just as almost every other country does not tax to that income.
That leads me to my third point, which is the suggestion that we can look at these foreign financial institutions owned by Canadian banks or other financial institutions and simply apply a Canadian tax rate to it. I think this is misleading at best, because it suggests that if we imposed a 25% tax on these profits, the Canadian bank would still get the business. Every other bank in the world having operations in that same location is subject to the same non-taxation rules, and that's why for competitive reasons we don't tax. So applying a fictional tax rate or applying a tax rate to this fictional income would, I think, be a misleading way to measure Canadian revenue losses.