The centre of the financial district in Toronto.
_ Photograph by: Mark Blinch, Reuters
It has reduced the federal levy on corporate profits from 21 per cent to 16.5 per cent at the beginning of this year, with a further reduction to 15 per cent set to kick in next year. The opposition parties, in turn, are aligned against the measure, and if they join in defeating the upcoming federal budget, the corporate tax cuts will probably be the focal issue of the subsequent federal election campaign.
Of course, the opposition would have to find reasons other than the corporate cuts for credibly sinking the new budget, in that the cuts were set in the 2007 budget that received parliamentary approval and won't be mentioned in this one. And while there is no pressing need at this time for another election, which would probably deliver the same Tory-minority result as the past two, the debate over the tax cuts would at least make for a worthier issue than personality differences among the leaders.
The debate would offer a clear-cut choice between the Conservative position, which is that corporate tax cuts will pay off in increased investment in the Canadian economy and boost job creation, and the Liberal-New Democratic Party position that such a return counts too heavily on the invisible hand of free-market economics and that the money in actual hand from cancelling this year's and next year's cuts could be better spent in the national interest on social programs and infrastructure projects. (The Bloc Quebecois is also opposed to the cuts, but has signalled that it could be swayed on the matter by $5 billion in supplementary federal booty for Quebec.)
It's true that the Liberals failed to vote against the cuts when they had the opportunity, and that while in power they introduced corporate tax cuts of their own. But that was before the global financial meltdown of the late last decade drastically altered the Canadian economic equation and left us with a $4-billion budgetary deficit instead of the healthy surplus the Liberals maintained while in power.
Expert assessment is as divergent as the political rhetoric. On the one hand, a recent report by University of Calgary economists projects a $30-billion increase in the country's capital stock and the creation of 100,000 new jobs if the remaining 1.5 per cent cut goes through on schedule next year. On the other hand, there's Canadian Auto Workers economist Jim Stafford who, citing a federal Finance Department report from last year that says spending on infrastructure, housing, employment insurance and personal tax cuts are better job-creation investments than are corporate tax cuts, estimates that such measures would create nearly half again as many jobs as a corporate cut would produce.
It is a complex issue, but one that offers Canadians a decisive choice. It might take some effort to make an informed choice on the matter, but Canadians should relish the opportunity, if called to the polls, to have their say in how they will be governed. Elsewhere in the world today people are risking their personal safety for just that.
http://www.montrealgazette.com/business/Business+opens+worthwhile+debate/4222280/story.html#ixzz1D0iKMLzq