A federal election about taxes

Lana
Lana Payne
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Our prime minister is dabbling in voodoo economics again and trying to sell us a bridge that just doesn’t go all the way to the other side.

This time, he wants Canadians to believe that we need more corporate tax cuts because the $60 billion in corporate tax breaks in the past few years just weren’t enough, and cutting government programs and services or borrowing billions from the banks in order to pay for this latest round of corporate giveaways makes for good economics.

As my nine-year-old would say, “that makes no random sense.” And she’d be right.

The problem is for the past five years Stephen Harper has worked very hard at dirtying up taxes. After all this is the prime minister who boldly stated that all taxes — even those that pay for health care, education and clean drinking water — are bad.

And now our emboldened prime minister wants a racket on taxes. He is so emboldened that he is ready to defend another $6 billion in corporate tax cuts to some of the largest corporations on the planet — like Vale and Exxon Mobil, the big banks and insurance companies. Wow, brave indeed.

He’s hoping Canadians will buy the very simple line that lower corporate taxes will result in more jobs — leaving all those who know the difference to explain that it is just not that simple. But hey, the Harper Conservatives have never been too bothered with the facts.

Already low

Corporate taxes in Canada have been slashed repeatedly and deeply since the early 1990s and will be again if Mr. Harper gets his way, from a historic low of 18 per cent in 2010 to 15 per cent by 2012 —

costing the federal treasury billions of dollars. It never seems to be enough despite the fact that a bigger share of Canada’s GDP now goes to corporate profits.

How will we — because we will all have to — pay for this latest round of tax cuts to corporate Canada? Will it mean less money for health care? Or will the federal government have to borrow billions from the same banks who will benefit from a smaller corporate tax rate? Either way, working Canadians pay.

Only corporations making profits pay corporate income tax in Canada. Our system is designed

to tax profits, not assets. And as labour economist Andrew Jackson points out, high profits in corporate Canada have not been accompanied by a very impressive investment record.

Indeed, the big beneficiaries of corporate tax cuts are the energy, mining and financial sectors. They are already making money, tons of it, and don’t need any help from the federal government.

Big earners

Canada’s six big banks, for example, raked in a whopping $14 billion in profits in 2009 after paying out about $8 billion in bonuses. And Stephen Harper wants to give them another tax cut.

There are plenty of ways to deliver effective economic stimulus if that is the federal government’s objective. For example, spending on infrastructure or on a good child care program would be more effective economic stimulus than tax cuts.

There is no guarantee and very little evidence that businesses will actually create jobs with their tax cuts. Indeed, it’s just as likely that those tax cuts will be used to boost corporate executive bonuses or be spent in other jurisdictions in the world since so many of Canada’s biggest and most profitable corporations are now foreign-owed.

Today, about 54 per cent of the country’s biggest companies are foreign owned, swallowed up in a flurry of corporate takeovers.

For example, by 2010 Canada’s mining sector had been completely transformed. Inco and Falconbridge, once the Canadian mining top dogs, and hundreds of other mining companies had been gobbled up by the global mining giants.

According to a recent analysis by Prof. John Peters, in a very

short time companies like BHP and Xstrata grew to more than 10 times their original size and Vale expanded more than twentyfold. They are all raking in the dough.

In just the first nine months of 2010, Vale had made more than

$10 billion in profit — but Harper wants to give them a tax cut.

This is all part of the prime minister’s bigger plan to transform Canada into a more right-wing nation; a nation of tax-haters. A nation where values of caring and sharing are no longer part of our collective social and economic response and psyche, but rather left up to the whims of individuals. 

For five years, Harper has been preparing for this battle. And now it appears he is ready to have the mother of all fights on taxes.

It’s a gamble, but clearly one he’s willing to take — likely figuring he has the opposition parties too afraid to engage in an adult conversation on taxes.

An election all about taxes must also be an election about the kind of Canada we want for our kids and our seniors.

Those who still care about a caring and sharing Canada had better be ready, as Harper has just laid down the gauntlet.

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by email at lanapayne@nl.rogers.com. Her column returns Feb. 12.

Organizations: Exxon Mobil, Harper Conservatives, Falconbridge BHP Newfoundland and Labrador Federation of Labour

Geographic location: Canada

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Recent comments

  • Anon
    January 30, 2011 - 12:52

    We need to back our money with gold and get off Fiat Currency, otherwise all this talk about jobs, tax cuts, economics, etc. is just nonsense. We will always be in debt because under the fiat currency system, money is debt and can not exist without it. So when the next big "threat" comes and the economy "tanks" again, and everyone tries to withdraw money at the same time, there wont be enough. And you'll be left with a piece of plastic or a few worthless pieces of paper that won't buy you bread if you have a wheel barrow full. History people, study it. There's a reason why JFK and Lincoln were killed when they tried to get the US off Fiat Currency.

  • CYBERCLARK
    January 29, 2011 - 12:47

    There is no record anywhere of corporate tax cuts increasing employment! This is a misdirection pushed by Conservatives who are following party lines! What does increase employment is stability, something that the Conservatives in their chaotic rule have not been able to produce. Trickle down policies of the Conservatives do not work! In Alberta billions have been put into make work projects for the oil industry trusting that trickle down will be good for the whole economy. In fact, the young turks that were doing the drilling came to town and bought new wheels for their trucks or, new trucks and that was the end of the blip. Service companies are working crews 2 or 3 days out of a week! There is no trickle down!

  • CYBERCLARK
    January 29, 2011 - 12:24

    Good article; but the coming election is about much more than corporate taxes and is quite probably the most important election Canadians will ever have! Voter apathy is what gave Conservatives across the map control of our politic. It is time to undo that! If Conservatives and their trickle down policies are elected again it will mean the loss of the CPP, OAS Health Care for starters. The attack will be lead by Alberta and backed by the other 4 Western Governments and the Bloc. There will be no stopping them! The 5 western governments have started a club in the US which if allowed to proceed beyond an election is unstoppable! Link to the nuts and bolts of the plot and the US club: http://albertathedetails.blogspot.com/2010/12/canada-is-under-seige-from-within.html Link to accurate speculation of what we may reasonably expect from it: http://albertathedetails.blogspot.com/2011/01/conservatives-on-course-of-sedition-you.html

  • Stephen Brockwell
    January 29, 2011 - 10:14

    Congratulations on the very precise analysis. And Mr. Cohen, all the studies suggest that reduced taxes on corporations lead only to marginal increases in bonuses and shareholder equity. Some of that money gets spent; most of it stays invested. We have among the lowest corporate tax rates in the developed world. I own a businesses in the USA and Canada. A lower tax rate will have no impact whatsoever on my investment decisions. My dividends, yahoo. Personal income tax decreases are what we need if we're going to address structural problems in this country. And reduced payroll taxes, which are a persistent burden. Please note that super Harper has INCREASED these taxes just this month.

  • Cris Ross
    January 29, 2011 - 09:41

    The gist of your writings is bull. The big corporations are owned by share holders, who mostly just happen to be RRSP, insurance and pension investors, who just happen to be you and me. Investments into the country and corporations makes our economy good. A good economy is what the country needs for good health care and social programs. Don't let the politics of socialists (commies) ruin the country.

    • cyberclark
      January 29, 2011 - 12:41

      Well Cris that is so typical of a Conservative and their trickle down policies. We have a long entrenched Conservative Government in Alberta. We also have the lowest resource royalty in the world. Under this Government, the province is entitled to no more than income tax; the rest belongs to industry. We are in a deficit position in budget and this same Government is attacking health care and education but will do nothing to increase the abhorrent low rates on our resource. They have announced 6 billion dollars in pipeline construction to the west coast; all paid for by the taxpayer. They have announced another 10 billions in power line construction; to be paid for by the tax payer. We will be lucky to have soup money the way these guys are going! No; I do not want them in charge of my country too!

  • Daemon
    January 29, 2011 - 09:33

    To David Cohen, you have not grasped the truth of Corporate Tax cuts is that they don't create jobs, and in fact the CCPA has shown that the whole trickle down down economic theory has been an utter failure as a social experiment. While more money has been funneled to the wealthiest it has not created more jobs, just bigger bank accounts. Economists like to use terms like fluidity to describe the economy when talking about the importance of bailing out banks, but they seem totally void of the word when talking about trickle down theory. Creating large pools of wealth essentially drys up the river (economy) below it. Giving tax breaks to the wealthiest is in fact killing the economy and not creating jobs . Release that pool of wealth that has been dammed up in the elite's bank accounts and the economy will flow.

  • David Cohen
    January 29, 2011 - 07:23

    I take it from your concern that you feel it is more important to stop business from putting money into growth of jobs or dividends than it is show that you feel it is wrong for these companies or individuals to make money. Sad, as unemployment is high and the government, if it had the money will use it for unemployment relief payments, or more government jobs that will increase my taxes. While so many of my neighbours, are looking for work, wasting money on a federal election, where the government is encouraging investment and productivity makes no sense. The question you must ask yourself as a labour leader is how not reducing corporate taxes will make life better for Canadians.