Thursday, June 5, 2014

Conservative, Liberal corporate tax cut folly

After more than a decade of corporate tax cuts, Canada has the lowest effective corporate tax rate of ALL major economies.

The Chretian-Martin Liberals and Harper Conservatives cut corporate taxes by 50%. Harper’s 25-point cut cost $14.9-billion a year according his 2009 budget.

NDP leader Jack Layton stopped Paul Martin from cutting corporate taxes further when propping up his minority government in 2004. Liberal leader Justin Trudeau supports Harper’s corporate tax cuts.

Former Ontario Liberal leader Dalton McGuinty cut corporate taxes from 14% to 11.5% — costing $2.4-billion a year. He planned to cut them to 10%, but NDP leader Andrea Horwath stopped him for support of his 2011 minority government.

PC leader Tim Hudak plans on cutting corporate taxes to 8%, which would cost $6-billion a year in total.

International rates

According to KPMG’s international business guide, Competitive Alternatives:

Corporate income taxes are lowest in Canada (7.3 per cent effective corporate income tax rate), France (14.7 per cent), and China (14.8 per cent).
At the other end of the scale, effective corporate income taxes exceed 30 per cent in Japan (31.5 per cent), Brazil (36.1 per cent), and Italy (37.6 per cent).

Corporate revenues

According to the OECD, resource-based economies take in a large share of corporate tax revenues: Norway 10.7%, Australia 5.2%, Canada 3.2% (of GDP.)

Every single percentage point represents $19-billion dollars a year in Canada.

Over the past decade, we had a resource boom that killed 300,000 manufacturing jobs in Ontario. But instead of getting our fair share, we awarded tar-sands corporations big tax cuts and subsidies.

Result

Corporations have been pocketing the money, not “creating jobs.” These tax cuts have not bolstered GDP or productivity growth. Economic growth is anemic. Productivity growth is “abysmal” according to former Bank of Canada governor Mark Carney.

End this corporate welfare!

Both federal NDP leader Tom Mulcair and Andrea Horwath are right: it’s time to reverse these failed tax cuts. When policy fails to get results the sensible thing to do is scrap it!

Our ultra-low corporate tax rate amounts to nothing more than tens of billions of dollars a year in corporate welfare.

While families are struggling in an anemic economy caused by soaring inequality, Conservatives and Liberals are fattening the stock portfolios of the wealthy with lavish corporate welfare. This neo-liberal corruption has to be stopped.

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