Ottawa - Feb. 7, 2011 - The issue of corporate taxes has been a very popular topic of discussion in the news recently. The 2007 Budget presented by Finance Minister Jim Flaherty included a 5 year plan to lower the tax paid by corporations to 15% by January 1, 2012. On January 1, 2011 the rate was reduced from 18% to 16.5% as scheduled, and the rate will be reduced a further 1.5% on January 1, 2012. The Bloc Quebecois and the NDP voted against our 2007 budget but, the Liberal party supported it by ensuring that many of their members were not present for the vote.
Approximately 2 months ago Liberal leader Michael Ignatieff decided he could no longer support the decision that was taken in the 2007 budget. He abruptly announced that if the Government did not rescind the legislation and put the tax rate back up to 18% he would vote against the upcoming budget which would result in an election. He has maintained that position ever since and has solicited the support of the Bloc Quebecois. Jack Layton and the NDP have not confirmed that they will support Ignatieff, but their Deputy Leader, Thomas Mulcair, does support Ignatieff's position.
So, without even reading the budget, two of the three opposition leaders have stated they will defeat the government if we don't raise taxes. Here we are in a fragile economy, trying to create jobs and recover the economy, and we have two parties insisting we raise taxes for those businesses that create jobs and invest in our economy. This is the kind of challenges our minority government faces each and every day.
Canada is the envy of the world because of how we are recovering from the recession. Our stimulus funding created 400,000 jobs; Tim Hortons returned their corporate headquarters to Canada because of our lower corporate tax rates; The Wall Street Journal is lauding our low corporate tax rates; and more and more investors and businesses are looking at setting up in Canada because they know by January 1, 2012 we will have the lowest tax rate of all G8 countries. Canada would lose all credibility on the world stage if we now reversed our position and raised taxes.
Mr. Ignatieff claims we need to increase corporate taxes to help pay down the deficit. He does not realize that by lowering taxes and encouraging business to grow and hire additional employees, government revenues actually increase. After the 1.5% reductions of 2008 and 2009, during the worst part of the global recession, Canadian corporate tax revenue held steady. Corporations react to lower taxes the same way as individuals do. If individuals have more money in their pockets as a result of paying less tax, they do one of two things. They either spend it or invest it. Corporations are no different. In either case lower taxes grow the economy, create additional employment and increase government revenue.
Member of Parliament