Corporate tax cuts remain in budget.

While there is not all that new for business in the budget extending the tax cuts will be of huge benefits for corporations. Keeping the corporate taxes so low may make it difficult to start bringing down the deficit any time soon since the revenue will not be there. No doubt the Conservatives are preparing to cut entitlements and attack federal workers. This is from the CBC.

Budget leaves corporate tax cuts intact

The Tories' promised corporate tax cuts escaped the scythe Thursday in the face of the $49.2-billion deficit, but there was little fresh help for companies staggered by the recession.

"We are staying on course to having the lowest corporate income tax rate in the G7 by 2012," Finance Minister Jim Flaherty said in his speech.

"Some argue that we should cancel these tax reductions. Our government will follow through on our commitment. Reducing the tax burden on businesses is a key part of Canada's advantage in the global economy."

The federal general corporate tax rate is 18 per cent and set to reach 15 per cent in 2012, down from 22.12 per cent including the corporate surtax in 2007.

Flaherty did extend a hand to the country's battered manufacturing sector, pushing ahead with a plan to eliminate tariffs on machinery and equipment as well as tariffs on production inputs that was started last year.

A first phase was implemented in the budget last year, saving companies about $88 million. The government expects to fully eliminate the remaining tariffs by 2015 in a second phase that is expected to save companies $300 million a year.

Thousands of workers have lost their jobs in the manufacturing sector in recent years — especially in southern Ontario — hammered first by a rising loonie compared with the U.S. dollar and then by the recession as its key market in the United States dried up.

"It will help our manufacturers to invest and innovate, especially small- and medium-sized manufacturers," Flaherty said. "It will help keep jobs in Canada and create new jobs for Canadians for years to come."

But Jason Safar of PricewaterhouseCoopers said the minister's decision to stick to its plan on corporate tax cuts in the face of the deficit was the most welcome.

"They are staying the course on that, which I think is huge," Safar said. "When you look at where corporate rates have come from over the past decade ... it's a big drop."

Safar said given the size of the deficit, there was a real danger the government may have delayed the cuts. "I wouldn't have been surprised if they had been pushed off," he said.

Jayson Myers, president and chief executive of Canadian Manufacturers and Exporters, said the tariff reduction will help, but more targeted measures are still needed to sustain innovation, investment and growth.

"While the savings are marginal, it is a bottom-line boost to cash flow for manufacturers at a time when it is needed the most," Myers said.

However, Canadian Auto Workers president Ken Lewenza said the budget did little to help workers.

"With hundreds of thousands of Canadians facing tremendous insecurity and hardship because of inadequate Employment Insurance and pension benefits, I expected to see tangible support from this government," Lewenza said.

"After taking more than two months to recalibrate, this budget is nothing short of pathetic."

The minister also announced the government would move to reduce red tape with a commission of parliamentarians and the private sector to review federal regulations.

"Its work will be of special benefit to small businesses, the engines of job creation in Canada," Flaherty said.

Also included in the budget was an extension of the mineral exploration tax credit for one year, for those who invest in flow-through shares.

The government also committed $7.2 million over two years to improve the fish and seafood industry's access to the international market and $75 million over three years for cattle processing plants.

Harper tireless fighter for corporate profits

Flaherty and Harper seem to have it in for McGuinty. Of course the tax cut mantra is standard Conservative rhetoric. In this instance Harper does not even try to disguise whose interests he intends to further. He does not mention personal tax cuts just corporate cuts. Of course he does not mention either how Ontario is to fund schools hospitals and infrastructure by decreasing tax revenues. The more the entitlements of people to education, health care, etc. are cut the less drag on the rich who can afford to pay all those costs personally.
What we need is a trickle up theory. Money distributed from corporations to the less well off stimulates the economy because the less well off will spend the money stimulating consumption and thus increasing production. The corporations that produce the goods thus will increase their profits!

Harper preaches cuts to taxes for Ontario
TheStar.com - Canada - Harper preaches cuts to taxes for Ontario

March 20, 2008
Richard Brennan
in ottawa
Robert Benzie
in toronto

Ontario's economy can thrive again if it lets Ottawa lead the way to the promised land of tax cuts, Prime Minister Stephen Harper said yesterday.

Speaking in London, Ont., Harper said Ontario can't be allowed to lag behind the rest of the country, but rather must remain the country's economic powerhouse.

More measured in his criticism of Ontario taxes than Finance Minister Jim Flaherty has been, Harper still made the point that Canada's most populous province has to be tax competitive.

"I've got to say that Ontario is still the engine, still the heart of the Canadian economy and it is in our interest that Ontario be a good place to invest," Harper told a news conference. "And we want to work with the government of Ontario to get the policies right, to get the kind of policies that we need right across the country to have success, and there is no reason that the Ontario economy can't be as strong as any other part of this country," he said.

Among his many attacks, Flaherty has warned off potential investors from Ontario, accusing the province of having the highest taxes in the country, if not the developed world, something provincial leaders have vehemently denied.

Premier Dalton McGuinty mocked suggestions that cutting taxes is the only way to aid the economy.

"I'm always open to advice from any quarter. I just don't think it's helpful to panic," McGuinty told reporters, suggesting Harper and Flaherty were jittery about the province's prospects.

"The federal government has a different view from ours. I respect their view, but I strongly disagree with it," he said.

"They believe that the single most important thing that we could and should do at this point in our history is to further cut corporate income taxes. They're asking that we reduce taxation levels on profitable corporations. We've got a different approach."

McGuinty said Ottawa is taking its cues from the previous Ontario Progressive Conservative government that closed hospitals, fired nurses and made cuts to education.

He rejected the attacks on him directed from Ottawa, including claims he is weakening the fabric of Confederation.

"I'm a proud Ontarian, but I always see myself as a proud Canadian first," the premier said.

The Conservatives have cut the GST by two percentage points since coming to power, and have cut corporate and personal taxes.

"Our government is taking across the country the actions we believe are necessary to sustain the strength of the Canadian economy, not just during this period of uncertainty but into the future," Harper said.

With files from The Canadian Press

B.C. gets better grade from Flaherty than Ontario

At least we know what Flaherty's job is: pimping for corporate tax cuts. Of course he skirts around the B.C. carbon tax and doesn't include that in his praise. This is from Canwest.B.C. gets better grade from Flaherty than Ontario

Nathan VanderKlippe
Canwest News Service


Wednesday, March 05, 2008



CREDIT: Reuters
Finance Minister Jim Flaherty addresses a luncheon of the Board of Trade in Vancouver Wednesday. He avoided direct comment on the centerpiece of the B.C. government's budget, a carbon tax that will add to the price of fuels and other fossil fuels.

VANCOUVER - The contrast could hardly have been more stark. Minutes after pelting Ontario with another round of verbal stones for its high corporate-tax rates, federal Finance Minister Jim Flaherty strolled into Vancouver's Four Seasons hotel restaurant with his British Columbia counterpart, Carole Taylor, looking quite cozy indeed.

It could not have hurt that he had just finished lavishly complimenting Taylor for the "excellent fiscal leadership" she showed in the provincial budget announced two weeks ago.

His praise, which came in a speech he delivered to a pinstriped audience at a Vancouver Board of Trade luncheon Wednesday, was directed at the corporate tax cuts B.C. announced in its recent budget. The cuts will bring the province's rate down to 10 per cent "perhaps as early as 2011," Flaherty said - ahead of the 2012 target he has asked provinces to reach.

"It gives us a chance as Canadians to brand our country as a low business tax jurisdiction," he said in a speech that reprised for his western audience budget remarks he has already made elsewhere in Canada.

He avoided direct comment, however, on the centerpiece of the B.C. budget, a carbon tax that will add to the price of fuels and other fossil fuels, but return the revenues in the form of personal and corporate tax cuts. Canada needs to avoid a patchwork of provincial environmental regulations, he said, but would only comment that the carbon tax is "one approach."

"We're taking a regulatory approach in Ottawa, which we think is necessary to regulate all the industries in Canada with respect to the CO2 emissions," he said. "These are not mutually exclusive approaches."

Flaherty was more direct about Ontario's corporate taxes, a topic that has pitted him fiercely against that province's premier, Dalton McGuinty, in recent days.

Asked whether it was helpful for the federal finance minister to publicly disparage the business environment in the country's largest province - a stand McGuinty has called a "betrayal" - Flaherty said, "it's not helpful for Ontario to be the jurisdiction in Canada with the highest business taxes.

"Their business taxes are not just the highest in Canada, overall, they're the highest in North America. And, according to their own competitiveness panel appointed by the government of Ontario, they're among the highest business taxes in the major economies in the world," he said.

"This is not an academic discussion. This is important for the health of the Ontario economy, and therefore for the health of the Canadian economy, that the government of Ontario get its own house in order."

nvanderklippe@nationalpost.com

Economic Update gives 12% cut to wealthy corporations

As this article shows the tax cuts benefit the corporate sector most and that part of it that is doing best already. As it points out the depressed areas that are not making profits will not being paying taxes in any event so they do not benefit at present by a tax cut. The half percent reduction of the lowest bracket is just giving back what the Harper government had taken away. The Liberals would probably be no better. In fact they want to show the corporations that they will give them even more! THis is from the Harper Index.

Economic update gives 12% cut to wealthy corporations, misses opportunities

Oil industry and banks are chief beneficiaries

OTTAWA, October 31, 2007: Finance minister Jim Flaherty's pre-election "fiscal update" distributed small benefits to individual Canadians and large ones to corporations. At the same time, it committed no new funding to fight climate change, repair municipal infrastructure or improve social programs.

Corporate tax was cut by nearly 12 percent (from 22.12 percent currently to 19.5 percent in 2008). Harper and Flaherty claim this will help firms in sectors like forestry that have been hurt by the rising Canadian dollar, but since these firms aren't making profits, they are not paying taxes either.

"The cut in the corporate income tax rate will primarily benefit the booming oil and gas and mining sectors, which accounts for about one sixth of all corporate pre-tax profits today and will account for even more tomorrow given the demise of much of our manufacturing sector," wrote Canadian Labour Congress economist Andrew Jackson on the Progressive Economics blog. "The highly profitable financial sector accounts for about one third of all profits."

A better alternative for beleaguered exporters, he says, would have been targeted incentives to new investment in training, machinery and equipment. "Those losing money and going under because of the high dollar will get nothing because they have no profits to pay tax on."

Jackson says "corporate Canada gets the lion’s share of the tax cut, and working Canada gets a tiny tax cut at the expense of our social future."

For instance, the announced GST reduction will amount to about enough to buy a pizza a month, according to estimates.

"In the end, this is huge upper-income tax cut," writes economist Marc Lee of the Canadian Centre for Policy Alternatives, "because the ownership of corporate Canada is pretty concentrated in the top decile [ten percent of the population]."

Lee writes that one impact of the corporate tax cut will be to increase the profits of US-based subsidiaries, which will, in turn, "simply be paying that tax to the US treasury instead of the Canadian treasury. Why this is seen as good economic policy is rather baffling."

This contrasts with small benefits for ordinary taxpayers in yesterday's update. "The statement re-announced a cut in the basic personal income tax rate from 15.5% to 15%, and raises the basic exemption by about $1,000, worth $150 to most taxpayers," estimates Jackson. "The $6 Billion spent on the GST rate cut would have helped lower income families much more if it had been directed to an increase in child tax credits or other refundable tax credits which give most to those who need it most."

Michèle Demers of the Professional Institute of the Public Service of Canada (PIPSC) is concerned the update "commits no money to investment in repairs on the country's aging infrastructure, support for scientific research, or measures to ensure the safety of the country's food supply."

Nearly half the bridges in Quebec and a third of those in Ontario are structurally deficient



She points to the Johnson Report into the collapse of the Laval overpass, which indicated that "nearly half the bridges in Quebec and a third of those in Ontario are structurally deficient." She believes "the government should be putting money into the renovation of infrastructure essential for the health and well-being of Canadians ­ like the country's bridge network."

Demers says "Instead of putting $10 billion on the debt, the government should be hiring more food inspectors and veterinarians and taking the necessary steps to ensure that imported children's toys are safe. If the government can't invest in public health and safety now, when it's running huge surpluses, when will it be able to make those crucial investments?"

Stephane Dion, Champion of Corporate Tax Cuts!

This is from James Laxer. I agree with Laxer. The promise makes no sense except as an appealt to the right and the right will stay with Harper for the most part. Dion's policy will lose more votes than he will gain. It seems Dion's handlers are telling him to commit suicide. But then there are those in the party who want him out of the way by hook or crook.

Stephane Dion: Champion of Corporate Tax Cuts

Since the recent by-elections in Quebec, Liberal leader Stephane Dion has been looking alarmingly unsteady. In an effort to reconnect with terra firma on Friday, Dion told a business audience at the Economic Club of Toronto that he wanted to push the corporate tax rate well below that in the United States.

He charged that the Harper government hasn’t done enough to reduce the corporate tax rate. He said that the former Liberal government had been on track to lower the rate from 28 per cent to 19 per cent. (The current corporate tax rate is 21 per cent.) The Tories, he charged, plan to reduce the rate to 18.5 per cent by 2011.

Dion told the applauding corporate crowd that he could do better. Why wouldn’t they applaud? Nothing makes the heart of corporate Canada beat faster that the sight of the two largest political parties vying to see which one can cut corporate tax rates more deeply.

“A low corporate tax rate is not a right-wing policy or a left-wing policy. It is a sound policy,” Dion told his delighted listeners.

That’s wrong, Mr. Dion. It is a right wing policy, culled straight from the playbook of trickle down economics. And Dion is also wrong to claim that reducing the corporate tax rate will induce corporations to spend more on capital equipment. What induces increased capital spending is increased economic demand, not supply-side tax cuts for the rich. The notorious and failed experiments in various kinds of tax cuts for the wealthy in Ronald Reagan’s and George W. Bush’s administrations, and in Mike Harris’ Ontario, demonstrate irrefutably that all you get from such tax cuts is more money in the pockets of the rich and less revenue for governments to spend on infrastructure, job training, and social programs----and the latter, by the way, do increase demand and prompt businesses to invest more. Tax cuts for the rich plunged the U.S. and Ontario into increased government deficits, creating a golden opportunity for wealthy bond holders to make money on the public debt. Tax cuts for the rich reduce economic demand and slow economic growth.

Dion also claimed that corporate tax cuts would strengthen Canadian companies against foreign takeovers. What the cuts actually do is to make them more attractive takeover targets.

In the next few weeks, Stephane Dion may find himself fighting a federal election. During the campaign, his only hope of winning will be to position himself as the leader of a broad coalition of progressive Canadians who are determined to stop Stephen Harper.

At a time when the gap between the rich and the rest is yawning ever wider, progressive Canadians will be appalled by Dion’s emergence as a tax-cutting pal of big business. Quite apart from the merits of corporate tax issue, where does Dion think he’ll find the votes he needs to win?

They’re not on the right, Mr. Dion. You’re not going to pry any votes away from Stephen Harper’s hammer lock on the one third of electors who form his base. The votes you need are in the centre and on the left. In addition to those who want to vote Liberal are many NDP, Green and Bloc voters who might be recruited by a progressive crusade against the Harper government.

One the eve of the Speech from the Throne, Stephane Dion has inflicted a new wound on himself.