Thank you.
On the question of interest deductibility, it seems to me that the acid test for Canada is not what is necessarily the best policy in some academic sense, but that what other countries do is critical. On the question of interest deductibility, as you know, denying our companies that, given that in foreign acquisitions most European countries and the United States and Japan are allowed to do it, puts us at a very significant disadvantage, in terms of Canadian-based companies.
As Bruce Flexman of KPMG put it, this would lead to more “foreign takeovers of Canadian companies, stifling of Canadian investment in global markets, an exodus of head offices and...a weaker long-term Canadian economy over all”.
I guess my perspective would be that one shouldn't throw the baby out with the bathwater, that it's very important for our homegrown companies to be on a level playing field with foreign companies and not to have it tilted in favour of the foreign companies. But at the same time, there may well be abuses or things to fix, in terms of this rule, technical things like capitalization rules, income being attributed to passive versus active business income, all of these things, which could be fixed.
So my question is, would you agree that rather than what might be described as a nuclear bomb approach on this issue, it might have been better—and it still is not too late—to have a more surgical approach, wherein we don't penalize our leading companies, but, at the same time, to the extent there are abuses or problems in the application of this law, we clean those up?