Monday, January 31, 2011

Corporate Tax Cuts And The Harper Deficit

Why the corporate tax cuts the Harper Conservatives have made - and propose to make - are bad for the economy, bad for you, and bad for Canada... Another good Ralph Goodale weekly update:


Nearly four years ago in 2007 – before any recession and while Canada was still surfing on budgetary surpluses built-up by Paul Martin – the Harper government announced further reductions in the federal income tax rate for large corporations, to come into effect this year and next.

I say “further” tax reductions because the rate for these corporations had already been slashed by 35%. It was already the second-lowest in the G-7. It was already 10-points (or 25%) below the American rate.

In other words – BEFORE these latest Conservative cuts – corporate tax rates in Canada were already fully competitive, as confirmed by the Bank of Canada last year. Nevertheless, the Harper government insisted on cutting more.

But something serious happened between 2007 and today. The US housing and banking system imploded, plunging the world into recession and worsening Mr. Harper’s $56-billion deficit.

Suddenly his extra corporate tax cuts didn’t make sense any more, because the surplus was gone. They now have to be paid for with borrowed money -- $6-billion per year.

We said put them on hold! Until the country gets back into surplus, further tax cuts for wealthy corporations are simply not prudent. This is true for three compelling reasons:

1. As mentioned above, Canada’s corporate tax rate is already competitive.

2. The Finance Department itself says such tax cuts are NOT efficient job-creators, rebutting false theories imported from the Republican/Tea Party in the US.

3. Other priorities, more vital to average families, are crying out for attention – like household debt, the high cost of getting kids through college or university, adequate child care, the pressures of caring for elderly parents, and decent pensions.

It’s time to save that $6-billion per year – easing the mortgage Conservatives have loaded onto our children’s future and investing now in the practical needs of families.

post signatureVICTORY FUND


Anonymous said...

These talking points are classic NDP. If the cuts didn't make sense then Ignatieff has already missed several opportunities to overturn them.He is too late. The house has voted on them with his support.

Ontario has been devastated by the recession. I can guarantee that even McGuinty will not support taxing corporations more. Many Canadians rely on their investments to help them save for retirement. Higher taxes now will hurt the recovery.

Leeky Sweek said...

My question to myself is: Would I rather have corporations keep THEIR money, which it is, and create jobs, stimulate the economy, and help with investments...


...let the government have the money? Government track records being what they are...

WesternGrit said...

Err... Lately we've had more light shed on the way corporations tend to do business. Whether it is the major US banks, WorldCom, Enron, etc., etc. Did Conrad Blacks wonderful organization share his personal gains with anyone? Let's see... Hmmm... I have spent the last 20 years in the corporate world in some of Canada's largest corporations. I've seen rampant waste, "feast and famine budgeting" (with no true direction in departments), and CEO/owners who can pretty much do what they want while they fly around in their private jets. Governments, on the other hand, have the people to answer to. Corporations answer to no-one but themselves (the shareholders ARE the corporation).

But, let's be clear here. The Liberal answer is not to hand the gov't cash, but to put it directly into the hands of Canadian families.

The choice is simple: Money for corporations, or directly to Canadian families? And remember - Liberals cut corporate taxes to among the lowest in the G8. How much further do we need to go - none (in tough economic times). Feed the people first.

Anonymous said...

Sounds exactly like the GST debate, you know, the one where the Liberals promised to axe the GST if elected because it was "bad for Canada, bad for familys". There was a day when you could tell the NDP and the LPC apart, and, in those days Libs won majoritys, now, what exactly is the difference between the two?