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Home about Canada Five Economic Reasons To Say No To More Corporate Tax Cuts

Five Economic Reasons To Say No To More Corporate Tax Cuts

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Canadian Centre for Policy Alternatives - January 28, 2011



ith debate over more corporate tax cuts dominating pre-budget speculation, CCPA Senior Economist Armine Yalnizyan lays down five economic reasons to say no to more tax breaks to corporations this year or next: jobs, investment, costs, opportunity costs, and the need for working capital.


 In this Globe and Mail article, Yalnizyan shows corporate tax breaks are the least effective way to create jobs. Better to invest in repairing aging infrastructure or improving supports for the still jobless and low-income Canadians.





Canada’s previous corporate tax cuts (a 10% cut in the tax rate over 10 years) has been proven to have little impact in terms of getting businesses to invest: business investment in 2009 was exactly the same as it was in 2000: 12.4% of GDP.


Canadian taxpayers end up subsidizing corporate tax cuts because Canada’s federal government is in a fiscal deficit – it has to borrow money to give corporate Canada another break.

Canada’s roads, bridges, water and waste systems, transit and municipal buildings face a $123 billion backlog of repair and maintenance. The corporations may be getting a break, but they aren’t responsible for public infrastructure. Governments are. We are. It is a false economy to stick the next generation with an unnecessarily higher price tag to repair the foundation for business, family and community needs everywhere, particularly when borrowing costs are at historic lows and unemployment still high.

Canada’s corporate taxes are among the lowest in the developed world. Who are we competing with? It’s time for a reality check: Canada’s corporate sector is sitting on a growing pile of cash. When businesses finally decide to put that money to use, we are likely to witness a wave of corporate consolidation. But mergers and acquisitions don’t necessarily create jobs in Canada.

An across-the-board general corporate income tax rate cut rewards companies whether they create jobs or kill them. Surely we can find a better way to use that money for the benefit of us all… including businesses.

Click here to read the whole article.

© 2011 Canadian Centre for Policy Alternatives