Harper gov’t GST & corporate tax cuts for little guy too

While I am not an economist or a tax specialist, I am a former small business owner (e.g., I ran my own special education private practice) who had to meet a payroll and all that implies. As such,  I would like to talk about some of the Harper government tax cuts and why they are important for economic stability, job growth and prosperity. Item # 14 on the Harper government accomplishment list relates, for example, to the lowering of the corporate tax rate from 31.3% to 22.2% in 2009, to 18% in 2010, to 16.5% in 2011  and to 15% in 2012.

Similarly, Item # 24 has to do with to the GST/HST tax cut that Canadians can see each and every time they pay for most products and services. Cut first from 7% to 6% and then to 5% back on January 1st, 2008 (or if it is the HST, from 15% to 13% as happened in Ontario), 2% may not seem like much, but added up over time, particularly on big-ticket items, it is a huge savings — making it possible for Canadians to have more money in their pockets.  

Some say, in this election campaign, the notion of corporate tax cuts is going to be a hard sell for the Conservative Party. I don’t think so once Canadians understand that, contrary to what the Liberal, NDP and Bloc opposition have said repeatedly, those tax cuts are NOT just for banks and big corporations.

Every single limited company is included to some extent, whether they have four employees or 400. In other words, if a business has “Ltd” or “Inc” after its business name, it is a corporation and, indirectly, both the employees and customers benefit from it receiving a tax rate reduction.  However, precisely what tax credits or tax rate deductions a business is entitled to will depend on the type of corporation it is. My point, however, stands — that corporate tax cuts do not only benefit the largest corporations.

However, Liberal Leader Michael Ignatieff doesn’t seem to care that raising the corporate tax rate again would be a job killer and have a major drag on the Canadian economy.  Specifically, he is on record as saying a Liberal government (or, one assumes, a Liberal-led coalition) would leave the corporate tax rate at 18%. The problem is, and Ignatieff must know this, the corporate tax rate is already down to 16.5%, meaning that a Liberal government would raise the corporate tax rate, not to pay off the deficit or accumulated debt, but for their “spending priorities.”  

As this “investincanada” website explains, there is a reason our economy is rebounding faster than all the other G7 countries. Canada has a 12 percentage point advantage over the U.S.  — confirming there is a very important and practical reason Canada’s economy is rebounding from the negative affects of the recession.

As Prime Minister Stephen Harper said yesterday when he spoke at Rideau Hall immediately after the writ was dropped, since his minority government was first elected in January 2006, Canadians have saved, on average, $3,000 a year in taxes. Now, that’s real money.

Vote for your Conservative candidate on May 2nd, 2011.

Other Sources: Craig Wong of the Canadian Press, cme-med.ca, canadabusinesstax.com and Richard Cloutier at Investopedia — who explains both the pros and cons of corporate and other tax cuts.

9 thoughts on “Harper gov’t GST & corporate tax cuts for little guy too

  1. “When the U.S. catches a cold, Canada sneezes.”

    This used to be a truism. The Harper Conservative gov’t hasn’t made this untrue, but has made it less true in a way thought impossible only five years ago.

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  2. Jeff — That’s true. Our economy is still closely linked, but like you say, not to same extent — because of Conservative policies and, in fairness, banking and other regulations put in place by the Chretien government (which was far more conservative than current Liberals).

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  3. For sure we have to concentrate on this Federal election, the most critical one in memory. We need to get the only person capable and deserving of the top job elected to Majority government.

    McGuinty has done his damage and it has affected us all in this province, it won’t be forgotten in five weeks. We have a reminder of his handiwork when we pay higher taxes on our properties and higher utility bills.

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  4. Right on Liz J. This federal election will cause Ontarians to think about what a Liberal government does — not what they promise that is for sure. Many people actually have trouble knowing what is provincial and what is federal. That can only benefit Hudak and the PCs — IMHO.

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  5. Thank you for your informative report.

    I want to point something peculiar and, I would argue gramatically errored turn of phrase. Ignatieff has reapeatedly said taxes take away from revenue.

    Imagine an intelligent, educated person saying this: “When my customers don’t buy a newspaper, they are taking a dollar away from me.” Just how many dollars belong to the store? How many times can money you don’t have be taken away from you before you no longer have it?

    I have noticed this linguistic oddity in other Liberals such as Trudeau, and Bill Clinton. They would not all use the clumsy metaphor of ‘moving or removing’ from one end to the other of a Balance sheet.

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  6. Pingback: The Corporate Tax Cut Canard | Blue Like You

  7. That was way too superficial a treatment of the subject. Simply saying that a drop in corporate tax rates creates jobs does not make it so. You have to look at the facts about what is really happening out there.

    Job growth is a lagging indicator. A company does not hire new employees the minute they have a few extra dollars in the bank. They hire them once they need new employees to handle expanding consumer demand, at a point where not hiring them would mean losing out on increased profits. This point has been shown to happen long after consumer spending increases, which means that job creation is not the catalyst for an economic recovery. Job creation is always the result of recovery.

    Letting corporations keep a slightly larger slice of their profits does not motivate them to hire, and will not lead to increased consumer demand. Over the last five years, Canada’s largest corporations have lagged behind the economy as a whole in job creation. They have, in effect, been subsidized by the tax payer to create less jobs.

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  8. Dwight — I am not an economist and have never claimed to be one. I write on topics as I see them as a citizen and taxpayer. The point of my argument is that we all benefit from corporate tax cuts. You say” Job creation is always the result of recovery.” That too is simplistic. A “recovery” is due to many factors, tax cuts being one of those factors.

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