Mr. Speaker, I have to say to my hon. colleague, for whom I have a great deal of respect, that I am somewhat disappointed. The issue that I know the member really wants to talk is the issue of taxes and multinational companies, but it disturbs me that the hon. member is more than suggesting that the former minister of finance deliberately created a tax loophole in 1995. This allegation by the member is unwarranted, of course. It is an attack on a very honourable parliamentarian. I would suggest to the hon. member that if in fact he believes that what he says is true and he believes these allegations have any substance, then he should take them outside this chamber and make them out there, where he will be outside parliamentary immunity. To me, to suggest that there was a deliberate action taken by the former minister of finance of course is outrageous.
But I would like to talk about the issue which I know the member really wants to talk about, I am sure, and that is the issue dealing with taxes.
First of all, with regard to Liberia it was taken off the list because no formal treaty was ever consummated with Liberia, so Liberia never signed on, it was never ratified and that is why Liberia was off the list. I want to point that out to the hon. member to start with.
I also want to point out that the issue of tax policy obviously makes a key contribution to business success. As members know, it has been part of Canada's tax policy not to subject to double taxation earnings of Canadian corporations and their subsidiaries in foreign countries. We do that in different ways, I would point out, by not subjecting to Canadian taxes the incentives, the active business earnings that a Canadian company's foreign subsidiaries earn in a country with which Canada has a tax treaty.
The member asked, and the question I think comes down to this: Why did the government revise certain aspects of these rules several years ago? Was the exemption left in place for a particular kind of subsidiary resident in Barbados that does not pay a substantial tax rate? The answer has several elements.
First, it is not clear that abruptly curtailing the exemption would have benefited Canada. In a world of tax planning opportunities, there is no assurance that corporate groups would not simply move their corporate functions performed by Barbados to another jurisdiction where similar results could be obtained. In that case, the corporations would not pay any more Canadian tax. Indeed, forcing businesses out of Barbados actually could be counterproductive. Why is that? Because as a tax treaty partner, Barbados gives Canada tax information and assistance, more than any other jurisdiction does. That is important, and I certainly will continue to elaborate on that after the member responds.