Thank you, Mr. Chairman.
I'm going to take a little different tack from what I'd planned coming in here, because I don't think repeating what these very smart individuals have already said makes any sense. I agree with Mr. Pantaleo, Mr. Raizenne, and Dr. Hines on what they've said.
Maybe I'll just step back and ask, what is the context that I would encourage the committee to take as the setting in which all of this is happening? We've seen, in the last 25 years, a massive globalization of the business world, so lots of corporations are globalizing, operating in more countries, and facing situations where they are operating under very different tax jurisdictions. As was pointed out, there are many more tax treaties than there used to be and all sorts of complicated rules.
What's happening is that the opportunity for international tax arbitrage is increasing dramatically, and companies--wisely, as Dr. Hines has said--in the interest of being as efficient and effective as they can be, are being much more sophisticated than they would have been 25 years ago on this front. That's not going to change. If anything, they're going to get more sophisticated as more opportunities arise.
The big question for Canada is what's the incentive that we create for these companies to be more aggressive rather than less on international tax planning? I think the fact that we are an exceedingly highly taxed jurisdiction as it relates to corporations is the root issue we should be looking at. So I think this is why the corporations right now are very upset with this particular measure. It's not because it's crazy; it's an attempt to get more neutrality in the tax system. But any tax that increases for us, to make us an even higher corporate tax jurisdiction, will hurt our corporations and cause them to come and object to this.
I think we will have these kinds of challenges in trying to get neutral tax regimes on the corporate side as long as we have, along with Germany and the U.S., the highest marginal effective tax rates on corporate income in the world. I think that's what the committee should be paying attention to, the need to get that rate down considerably, because right now we have a tax system that, overall, discourages corporations from making investment. The result is that corporations invest less in Canada in machinery and equipment than they should to make themselves more productive. That is the bigger question, not the question of particular measures of interest deductibility.
Thank you very much.