Can We Risk Falling Behind?

The Canadian Chamber of Commerce President and CEO, Perrin Beatty took a shot at Michael Ignatieff’s Liberals over a controversial position taken by the Liberal Party of Canada during their March 28th, Canada at 150 Conference in Ottawa. This is where it was announced that Mr. Ignatieff’s Liberals will cancel all previously announced business tax reductions implemented by the Harper Government over the past few years. In a letter to Ignatieff, Perrin Beatty says “business tax cuts allow businesses to lower prices for their goods and services, raise wages or hire more people, or to increase amounts paid to shareholders to the benefit of many Canadians, including those who own equity through pension plans, RRSPs and mutual funds.” This may be where the rubber meets the road in the next Federal Election, speculated to be next Fall. According to press reports and the information on the Liberal party’s web site, the party has opted for new spending as opposed to improving our tax competitiveness at a time when we are recovering from a major recession and when the global competition is becoming more fierce every day. The average general corporate income tax rate in Canada is about 32 percent (federal plus provincial) compared to an OECD (Organization for Economic Cooperation and Development) average rate of around 26 percent, for the 30 countries who are members. In addition, other countries will continue to improve their tax competitiveness, with the risk that Canada will fall further behind. Yet, if elected, the Liberal’s are prepared to abolish the advancements made in tax reduction to business, regardless of the national economic fall-out. According to the Canadian Chamber lower corporate income taxes improve tax neutrality and discourage profitshifting by business to low-taxed jurisdictions. In contrast, the current business tax structure undermines growth by imposing higher taxes on businesses as they grow. Taxes on growth discourage investment and kill jobs.In his closing remarks at the Canada at 150 Conference, Mr. Ignatieff stated; “we can’t afford to stand still as a country…If we make smart fiscal choices, we can start moving forward again.” I fully agree Mr. Ignatieff and the Cambridge Chamber of Commerce and it’s 1900+ members believe a competitive tax system is a smart policy choice now and in the future!

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