(August 5, 2011 - press release) “As the axe falls on 776 jobs at Environment Canada as a supposedly ‘necessary’ cost-saving measure, the Harper government plans to continue with unnecessary and outrageous multi-billion dollar tax cuts to large highly profitable corporations, including oil companies,” said Chandra Pasma, Vice President of Canadians for Tax Fairness. “Let’s be clear: these are political decisions which impede or dismantle public services and programs, while redirecting scarce public financial resources to support certain private-sector interests.”
“Treasury Board President Tony Clement says he needs to find $4 billion in annual savings,” said Pasma. “Those savings could be produced simply by rolling back the unnecessary across-the-board corporate tax cuts.”
For example, restoring the corporate tax rate to the 2007 level would produce approximately $30 billion during the period of 2011-2014, according to the 2011 Alternative Federal Budget prepared by the Canadian Centre for Policy Alternatives.
Pasma noted additional reasons why it makes no sense to cut important public services in order to help finance further across-the-board tax cuts for large corporations:
- At 29.5% (the combined federal and provincial corporate tax rate in 2010), Canada is already comfortably below the OECD weighted average of 33%. Among the G7, only two have slightly lower rates than Canada.
- Between 2005 and 2009, Canada’s 198 largest corporations created proportionately fewer jobs than the economy-wide average, despite paying 20% less in taxes and making 50% more in profit.
- According to the Government of Canada’s own Department of Finance, direct government spending on infrastructure creates five times more benefit ($1.50 growth for every dollar spent) than corporate tax cuts ($.30 for every dollar). In fact, every other use of funds they studied – from investment in housing, employment insurance, support for low income households, hiring more nurses and teachers – had far more immediate economic benefit than corporate tax cuts.
- In 2010, Canadian corporations were already sitting on more than $500 billion in currency and deposits that could be invested in new jobs.
“The government is turning a blind eye to a more balanced, practical and less ideological approach to meeting the social and economic needs of Canadians,” said Pasma. “We need more common sense and less ideology to ensure we preserve the Canada we love and can build the Canada we need.”
Canadians for Tax Fairness (CTF) was launched in spring 2011 to promote a fairer and more progressive tax system. CTF’s founding board includes long-time NGO leaders who have been active in poverty elimination, the environment, fair trade, social justice and democratic reform, as well as leading tax expert Neil Brooks and author Linda McQuaig. CTF Advisory Council members include Dr. Alex Himelfarb, former Clerk of the Privy Council and Secretary of Cabinet for three Prime Ministers, and Tom Kent, CC, former principal policy advisor to Prime Minister Lester Pearson, and former royal commission chair.