I wanted to put our rationale for opposing CPC-1 on the record, if that's all right.
In analyzing this, we feel that CPC-1 introduces a sector-specific exemption to the EIFEL rules for regulated utilities, and that is unnecessary because there's already relief provided to all taxpayers in highly leveraged industries such as regulated utilities. The amendment would undermine the policy of preventing the erosion of the Canadian tax base due to excessive interest and financing expenses by large multinationals that are likely to use this debt to finance activities outside of the country.
Finally, the proposed regulated utility exemption is extremely broad. For instance, it would allow regulated utilities to claim excessive financing expenses for borrowings meant to support a utility business outside of Canada and for borrowings that support any part of the regulated utility business. In addition, the change would be vulnerable to inappropriate tax planning, as it allows interest expenses to be claimed on non-arm's length borrowings.
For this reason, we intend to oppose it. I wanted to make that clear on the record.
Thank you.