Big Corporations Get a $6 Billion Tax Cut But No Guarantees for Job Creation
On January 1st, 2011 the Harper Government gave Canada’s largest corporations yet another tax break, even though Canadian corporations already enjoy one of the lowest tax rates in the G7 – about 15% lower than in the US. When recession hit, the Tories suspended all tax relief for ordinary Canadian tax payers. The Tories haven’t given Canadian tax payers an income tax cut in four years. But they’ve kept cutting the taxes of their big corporate buddies – the oil companies, banks, and telecommunications companies. But, these cuts don’t apply to the hundreds of small businesses, the backbone of our economy, that create most of our jobs here in Northumberland-Quinte West. In the third quarter of 2010, Canadian corporations were sitting on an accumulated stock of $489 billion in ready cash. They’re already rich and they enjoy one of the lowest tax rates in the developed world. Meanwhile many Canadians are struggling to make ends meet. Statistics Canada data shows that our region has the highest unemployment rate and lowest rate of people working in Ontario. Harper’s corporate tax cuts are not working in this riding.
What the Tories say about taxes: “…. we are against raising taxes period in our government. That’s not what we have been about”. Jim Flaherty, Minister of Finance March 15, 2010 The Reality: When Mr. Flaherty’s said his government is “against raising taxes period” he didn’t mean the taxes of ordinary Canadians. The Canadian Taxpayers Federation estimates that Ontario residents will see the biggest tax hit in 2011, when personal income and payroll tax hikes will average 4.3 %. The biggest tax bite, 5.1% or $389, will come for a single-income family with two children making $45,000. It makes no sense that Canadians have to pay more while big corporations get another tax cut. What the Tories say about taxes:“[Corporate income tax] rate reductions will decrease the cost of capital and increase the rate of return on investment, encouraging firms to invest more in all sectors of the Canadian economy (Jim Flaherty, Minister of Finance Dec 28, 2010). The Reality: Mr. Flaherty never tells us how he knows that the big corporations will actually invest savings from tax cuts back into the Canadian economy. They could just as easily give their executives big bonuses, invest the money outside of Canada, give their shareholders bigger dividends or add the savings to their multi-billion dollar cash hoard. What the Tories say about taxes: Corporate tax cuts are an effective way to ensure job creation. The Reality: The Tory’s own statistics show that corporate tax cuts are the least effective way for government to ensure job creation. Corporate tax cuts provide 30 cents worth of growth for every dollar of tax cut, compared to spending on infrastructure, which provides $1.60 worth of growth in return for every dollar spent. That’s well over 5 times the multiplier effect of a corporate tax cut (See graph below for the comparison).
Source: http://www.budget.gc.ca/2009/plan/bpa1-eng.html
What the Tories say about taxes: Corporate taxes will pay for themselves. The Reality: The corporate tax cuts granted by the Tories have already removed $6.7 billion annually from Canadian coffers. The next round of cuts will remove $13.7 billion annually by 2012. At the same time Canadians will face a $21-$26 billion deficit. Who gets to pay for all this borrowing? The taxes of ordinary Canadian pay the interest on the borrowed money that Mr. Harper and his team plan to use to finance tax breaks for already wealthy corporations. Mr Harper, you should tell Canadians why it is good economic policy to shift the tax burden even more away from highly profitable businesses and on to the shoulders of individual tax payers.
It’s time Mr Harper and the Tories had a reality check. Canadians can’t afford to pay for their extravagant gifts to rich corporations.
Join me in making a change in Northumberland–Quinte West!
