Finance committee  If I understand the question correctly, it's a reference to the fact that individuals are entitled to a dividend tax credit on dividends they receive from Canadian companies, whether or not the dividends have been subject to Canadian tax. That issue can arise in a purely domestic context if the firm itself is in a non-taxable position but is still able to pay some dividends.

Finance committee  All I can tell you is that the dividend tax credit is not set up to be based on the actual amount of underlying Canadian tax paid. It's set at a level that we hope will recognize the maximum amount of corporate tax paid.

Finance committee  It's probably a regret for our society that we have some very bright people employed in such things as tax planning, but we do have them, and they are very inventive. There will be issues that will take place or new structures identified in the next few years that will have to be taken into account.

Finance committee  Thank you. I tried to speak to this earlier. A little of what you hear now will reprise that earlier point. That kind of analysis would be valid if you take as a given that the Canadian tax deduction is fixed and the second deduction is the extra deduction. But if you've set up a regime, as I said before, where you're required to make a choice on where you take a tax deduction, then you can have a fair fight, if you will, and where you end up taking the deduction will be dependent on the competitiveness of your tax structure versus that of the other country.

Finance committee  That's a regime we're trying to install and enhance to make everything you said true, and truer all the time.

Finance committee  Well, this last budget noted that actions included in that budget, and perhaps in combination with 2006's--I've frankly forgotten, I'm sorry--will move us from the third-highest tax rate in the G-7 to the third lowest. And with other possible changes, including movement at the provincial level in respect of capital taxes and possibly sales tax harmonization, we could conceivably have the lowest marginal effective tax rate in the G-7.

Finance committee  Thank you for the question. I do want to stay clear of any potential cases that are under litigation or any similar cases that are currently in appeal or before the courts, but I think I'm still able to answer your question. Yes, there are certain circumstances. The illustrations in the material we provided at the beginning of today demonstrate or provide examples of certain situations in which a deduction may be claimed in Canada and in another jurisdiction under the law as it's written today--perhaps not in every case, but it's not a hypothetical situation.

Finance committee  I wouldn't land on either spot specifically. I would say that a situation in which you get a double deduction can provide real value to you. There's a question, in terms of balancing competitiveness with tax fairness and neutrality, of whether that's the regime you want to allow or whether you want to draw the line at allowing a deduction in Canada for a foreign investment, if that's what someone proposed to do, but not allowing them to do that along with a deduction elsewhere as well.

Finance committee  Barbados does not hold a monopoly on a low-tax regime. That's right.

Finance committee  Thank you for the question. I have two points in response. First of all, $40 million was not the full amount. The estimates in the budget material referenced a $10 million revenue associated with the proposal in the first year and a $40 million revenue gain for the government associated with it in the second year.

Finance committee  I assume that there are people from the U.S, the U.K., and Japan who would argue that it does make sense. The observation we have, in addition to the one I've made, is that in our regime, by providing an exemption for foreign business profits, we help the competitiveness of our firms.

Finance committee  No, that's not the policy proposal.

Finance committee  The policy proposal is built on the existing system. It reflects an exemption regime for foreign business profits that are brought home to Canada. I've already mentioned a couple of times today that there can be some perhaps perverse effects of imposing a system of taxation only on repatriation.

Finance committee  I want to be careful not to characterize them as loopholes or having been opened or closed—

Finance committee  Yes, I believe you're referring to some changes that were made in 1994 to our listing rules for tax treaties to make sure there was a treaty in effect for exempt surplus treatment to apply, corresponding with the actual treaties we had in place. There was not an intention to affect any of our current treaties then in place.