Corporate Tax Cuts
February 8th, 2011 - 7:55pm
Mrs. Carol Hughes (Algoma—Manitoulin—Kapuskasing, ON):
Mr. Speaker, I am delighted to be here for the curious debate that we are having today. It is like the Liberals are having a costume party that nobody else was invited to.
We are debating a motion that is designed to get the Liberals off the hook for supporting the very corporate tax cuts that they now say we cannot afford. It is not that they oppose them in spirit, but surely they have noticed that there is less than exuberant support for these measures at the table that really counts and that is the kitchen table.
I would like to welcome the Liberals into the fold for the day and get on with explaining why New Democrats have long been critical of across-the-board corporate tax cuts.
What we are hearing from the Liberals is that we cannot afford the current round of corporate tax cuts. This again is old news for New Democrats. We said this last year and it remains true today.
New Democrats understand that we have incurred a significant deficit in the past few years trying to keep the country from suffering the very worst effects of the global economic crisis. We understand that we are not out of the woods yet so this is no time to be handing out tax breaks to corporations that benefit from doing business in Canada and can afford to be part of the solution. That is just common sense.
We can look at other rationale for delaying or, in the best case scenario, cancelling the next round of tax cuts, and that is the fact that Canada's current corporate tax rate is already very low and not a barrier for doing business. New Democrats said this last year when the budget was being debated as well.
We are wondering where the Liberals were during last year's budget debate. That is the budget that made these cuts possible. The answer is simple. During that debate, the Liberals said that they agreed with the cuts and thus justified their vote on the budget, which resulted in the HST.
Support for these no-strings-attached measures is nothing new for the Liberals. They have a long history of providing corporate handouts. How they can imagine that a debate here today will erase such a long and consistent record is somewhat mind boggling. We knew in the last election that the Liberals were planning to go ahead with these tax measures full bore.
The leader of the Liberals told the Empire Club that corporate tax breaks were “the thing to do”. He ignored the fact that for many of these corporate entities it was just money going back into their pockets and nowhere else. He ignored, with these kinds of cuts, that there were no guarantees of jobs created or any investment, at least not in Canada.
In fairness, he had a tough audience. These are not the men and women who ride the buses and carry their lunch to work every day. These are not the people living paycheck to paycheck. These are the elite of society, the ones who will benefit from the cuts we are discussing here.
New Democrats do not think that kind of reward system is necessary or smart. We believe tax breaks should be earned. There are many good reasons to lower the tax burden of specific corporations. We may want to promote innovation through research and development. We may want to reward progressive environmental measures. We may even want to help a company that has a commitment to a community and shows a real need to lower their current tax burden. That is smart.
The difference is New Democrats do not have blind faith in corporations that they would take the money and then deliver. We just have to look at Vale for that.
We understand that corporations do not have good or bad intentions; they have interests, which is only natural. Why should they be expected to do anything that can be considered above and beyond without a carrot to lead the way? Sadly, this pragmatic view is not shared by the Liberals. They prefer to have faith in these corporations to do the right thing.
Just to be clear, it is not only this latest round of corporate tax cuts that the Liberals supported. They have supported them all, whether proposed by Conservative or Liberal governments, it does not matter to them.
Why would that be? These cuts go hand in hand with the model of global trade that both the Liberals and Conservatives helped to create. They agree wholeheartedly on the broader issue. This is why New Democrats have maintained that there is little difference between these two parties.
Both ignore the real cost of creating an economy where it is conceivable that companies will run from one favourable tax rate to another, able to do business pretty much anywhere in the world, but accountable to no one in the process. They believe this is the only way to go about doing business and everything else is doomed to failure.
We saw how fickle this model can be during the global economic crisis that began in 2008 and, more specific, in the way these policies left Ireland so exposed. Its economy collapsed pretty much overnight leaving, it indebted to the EU and IMF for an 85 billion euro bailout package with strings so firmly attached that any future government would have little room to maneuver for years to come.
Ireland was called the Celtic Tiger and in the years leading up to the crisis, Liberals and Conservatives sang its praise and thought Canada should follow in its footsteps. The Liberal finance critic said as much in the finance committee claiming, “We're the party of deep corporate tax cuts, and I'd like to see Canada as the Ireland of North America”.
I wonder where he stands now?
It is important for Canadians to realize that this is the real vision of the Liberal Party. The Liberals want to pretend that this is not the case because people are waking up to the true cost of these kinds of measures. It is too little and far too late for this deathbed conversion to be taken with anything less than a grain of salt.
We know where the Conservatives stand on the issue. They are the main cheerleaders for corporate tax cuts. To them, it is the mantra. Conservatives tell us that the corporations will pack up their stuff and go somewhere else if we do not give them these cuts. They truly believe that the final round of scheduled tax cuts is all that is keeping corporations in Canada. They do not seem to believe there is much else that makes Canada special or a good place to do business.
New Democrats recognize that there is a lot more that is great about doing business in Canada. Canada is home to strong, skilled, proud workers who give a full day's work and who contribute to their workplaces, their communities and their country.
The view of the Conservatives is somewhat sad. Judging by their arguments, it appears there is a crisis of confidence in their own country on the government's benches. They truly seem to believe there is no benefit beyond the tax rate for corporations to remain in Canada. New Democrats cannot share that view.
The Conservatives must be nervous because they are set to spend $6.5 million to promote this latest corporate gift. That is a lot of money. Even Conservatives must recognize this is a difficult issue on which to sell to Canadians.
I have heard smaller amounts called “exorbitant”. I can think of no end of ways that $6.5 million could help out some of the towns in my constituency. People in Algoma—Manitoulin—Kapuskasing do not need to be told what to think. They need a place to go to work. It is just wasteful to spend money promoting these tax cuts and it is grotesque to do it when so many Canadians are still hurting.
Some might ask, what can we do instead of corporate tax cuts? Are there other ways we can retain and attract business in Canada? Of course there is.
There are many ways we can make Canada even more attractive to business, ways that could help out more Canadians in the process. We could make higher education and skills training more accessible. We could improve our health care system and do more to promote to preventative health solutions so our workforce is even more healthy and reliable. We could ensure we have dependable pension plans that would not fail, thereby removing a level of responsibility from companies and protecting our citizens at the same time.
New Democrats are very interested in working with corporations to create an environment that is beneficial to the business community and Canadians alike. We do not believe sweeping corporate tax cuts create that kind of environment and we would like to see appropriate incentives in place that allow corporations to earn their tax benefits.
[...] I would tend to think that $6.5 million to promote this latest corporate gift is really atrocious, given the fact places like White River, Smooth Rock Falls and Opasatika actually need jobs in the forestry sector. The government could be propping up the forestry sector, but it does not want to do that. It could have tied the black liquor subsidy to the mills that were producing it, but it failed to do that.
Unlike the Liberals and the Conservatives, New Democrats are confident that there are many reasons to do business in Canada and that the sky will not fall if we do not go ahead with these scheduled cuts.
I want to talk about the rate of tax cuts in the United States. It is quite interesting. The rates in the United States, if we look at the table, Canada's total tax rate, provincial and federal, is 29.2% compared to 46.8% in the U.S. We are in fact well below our OECD comparatives. Based on all of this, why would companies want to leave Canada if we did not lower our tax rates?
[...] The Liberals only have one thing on their mind, and that is how to save their bacon. Again, if we look at the U.S. federal rate, which, by the way, is 35%, that means when a U.S. corporation active in this country is taxed on its income in Canada at 16.5%, it then passes on the difference to the U.S. treasury. What is that? A tax transfer courtesy of the Canadians. This is estimated to be worth approximately $2.4 billion this year alone.