Not much bang for the buck’: Harper’s $60B corporate tax cuts under fire
Canada business tax cuts under fire by small business, NDP as budget nears | Executive | Financial Post
OTTAWA — It’s a $60-billion venture for the federal Conservative government.
That’s the estimated amount of tax relief Prime Minister Stephen Harper’s government has offered up to businesses in Canada since taking power in 2006 — reducing the country’s corporate tax rates to some of the lowest in the world.
The government maintains the widespread corporate tax relief has been an answer for the sluggish Canadian economy — spurring investment and job creation, while putting tax dollars back into the pockets of business owners, taxpayers and shareholders.
But with a federal budget coming soon, the $60-billion in business tax breaks are also sparking questions and criticism for a government trying to rein in a deficit estimated at $26-billion and balance the books within two years.
“They’ve reduced (corporate) taxes but there has been really not adequate major investment in capital expenditures or job creation,” argues NDP finance critic Peggy Nash.
The federal government points to the creation of more than 900,000 net new jobs since the end of the recession in July 2009 as evidence its tax policies are promoting economic growth.
However, small businesses across Canada are still feeling the tax pinch and hoping for some additional relief, or at least that their situation doesn’t worsen.
The Canadian Federation of Independent Business, which represents approximately 109,000 small business owners, wants the federal government to consider lowering the small business tax rate, which is currently 11%.
The general corporate tax rate has been reduced from about 22% (including a now-eliminated surtax) to 15% over the past six years, but the small business rate has only dropped one percentage point in that time.
“There is a little bit of a growing degree of impatience for the government to get back to some broader tax measures for smaller firms,” says CFIB president Dan Kelly.
However, the OECD has also warned that lowering the corporate tax rate substantially below the top personal income tax rate — such as in Canada — can “jeopardize the integrity of the tax system as high-income individuals will attempt to shelter their savings within corporations.”
The extent to which governments increase or decrease corporate taxes can jeopardize their political success, too, not just their revenue stream.
For the 2012-13 budget year ending in March, the federal government expects to collect nearly $164-billion in income tax, with approximately $33-billion of that total from corporate income tax revenues.
However, the federal government’s corporate income tax share of revenues has slowly decreased since the Conservatives came to power — albeit amid an economic downturn and continued sluggishness — while the share of r
Canada business tax cuts under fire by small business, NDP as budget nears | Executive | Financial Post
OTTAWA — It’s a $60-billion venture for the federal Conservative government.
That’s the estimated amount of tax relief Prime Minister Stephen Harper’s government has offered up to businesses in Canada since taking power in 2006 — reducing the country’s corporate tax rates to some of the lowest in the world.
The government maintains the widespread corporate tax relief has been an answer for the sluggish Canadian economy — spurring investment and job creation, while putting tax dollars back into the pockets of business owners, taxpayers and shareholders.
But with a federal budget coming soon, the $60-billion in business tax breaks are also sparking questions and criticism for a government trying to rein in a deficit estimated at $26-billion and balance the books within two years.
“They’ve reduced (corporate) taxes but there has been really not adequate major investment in capital expenditures or job creation,” argues NDP finance critic Peggy Nash.
The federal government points to the creation of more than 900,000 net new jobs since the end of the recession in July 2009 as evidence its tax policies are promoting economic growth.
However, small businesses across Canada are still feeling the tax pinch and hoping for some additional relief, or at least that their situation doesn’t worsen.
The Canadian Federation of Independent Business, which represents approximately 109,000 small business owners, wants the federal government to consider lowering the small business tax rate, which is currently 11%.
The general corporate tax rate has been reduced from about 22% (including a now-eliminated surtax) to 15% over the past six years, but the small business rate has only dropped one percentage point in that time.
“There is a little bit of a growing degree of impatience for the government to get back to some broader tax measures for smaller firms,” says CFIB president Dan Kelly.
However, the OECD has also warned that lowering the corporate tax rate substantially below the top personal income tax rate — such as in Canada — can “jeopardize the integrity of the tax system as high-income individuals will attempt to shelter their savings within corporations.”
The extent to which governments increase or decrease corporate taxes can jeopardize their political success, too, not just their revenue stream.
For the 2012-13 budget year ending in March, the federal government expects to collect nearly $164-billion in income tax, with approximately $33-billion of that total from corporate income tax revenues.
However, the federal government’s corporate income tax share of revenues has slowly decreased since the Conservatives came to power — albeit amid an economic downturn and continued sluggishness — while the share of r
