Thank you, Mr. Chair, and thank you very much to all the witnesses.
I'd like to begin with Ms. Urquhart and make a couple of comments and then ask a question.
First of all, I can't really understand why the government measures created a level playing field. I would say it tilted the playing field deliberately in such a way as to destroy income trusts, and witness after witness has confirmed that point. While it's true that a 31.5% tax rate equalizes statutory rates, the critical point is that the average corporation pays far less than that, so it's not truly equalizing.
Secondly, you seem to criticize the argument that you specifically connect to the Liberal Party that the acquired entities won't pay much tax when they're acquired by a combination of public pension plans and private equity outfits that load up on private debt. I don't think you deny that they won't pay much tax under existing rules, but you're proposing to change the rules, to change to the thin capitalization rules so that they won't be allowed to load up on debt anymore. But under existing rules, we are claiming that in many cases they'll pay little tax, partly because public pension plans pay no tax in the immediate and partly because there are these devices, by loading up on debt, so that private equity firms of the kind that are likely to acquire BCE will pay little tax.
I don't disagree with you that maybe CCRA should alter the rules to limit the degree to which they can load up on debt, but that's kind of a separate issue. I agree with you on that.
I guess that brings me to my question, because this is reminiscent of our discussion of that old issue on which the government has backed down: interest deductibility. The experts who came to talk to us a few weeks ago were unanimously of the view that the real source of abuse in the interest deductibility issue had nothing to do with double dipping and had everything to do with so-called debt dumping, where corporations load up on debt, deduct the interest on that debt, and thereby avoid taxes.
Would you agree with me, first, that this thin capitalization is also applicable to the interest deductibility issue, and secondly, that in the absence of such changes we are right that, in many cases, little tax will be received by the government by these acquisitions?