On Taxes and Foreign Investment, Flaherty's Aim is Off

Federal Finance Minister Jim Flaherty’s March 19 budget included important — and unexpected — proposals that would dramatically reshape income tax rules affecting foreign investment by Canadian corporations. The budget’s proposal to withdraw tax deductibility for interest expenses incurred to finance investments in foreign affiliates is momentous. It could affect Canadian businesses’ ability to participate in the global economy and even to remain competitive in home markets.