Political Interpretation

The NDP scorns the Conservatives' determination to lower corporate tax rates as "corporate hand-outs". The Liberals, who before they lost power, incrementally lowered the federal corporate tax rate under the Chretien government from a high of 30% to 23%. They were lowered subsequently, and when the Conservatives came to power they stood at 19.5%.

Under a Conservative plan to continue lowering the corporate tax rate to make Canada more competitive, the rate was steadily lowered to its current 16.5% which became effective at the turn of 2011. The Liberals now claim that if they win the election they'll raise the corporate tax rate back to 18%. Which will give them enough revenue to pay for some of their expensive electoral promises.

The Conservatives promise that if returned to power they'll further reduce the rate to 15% by 2012. The Ignatieff-led Liberals consider this to be absolutely revenue-ruinous. When Stephane Dion led the federal Liberals he pledged to cut corporate taxes below the then-proposed Conservative rate of 18.5%, arguing that lower rates represented powerful incentives for investing and job creation.

It would seem that leading economists believe that Canada is heading in absolutely the right direction lowering corporate tax rates. The co-ordinated plan between the federal and most provincial governments is to have a much reduced total corporate tax rate; combined to 25%, which would render this country an impressive investment opportunity.

The plan is considered to be revenue-neutral in its result of expanding the tax base. Some experts appear to estimate that $50-billion in new investment would be attracted in the space of seven years, helping enormously to grow the Canadian economy. Which means more employment opportunities and more Canadians back to work.

What is really paradoxical is the polarizing opinions of the Ontario provincial Liberal government and that of the federal Liberals. These are considered to be "competitive business taxes" by the Ontario Liberals, not "handouts for Canada's wealthiest corporations", as the federal Liberals characterize them.

The federal Liberals contend that cutting the corporate tax rate while the country is in deep deficit is insane. Contrarily, the provincial Liberals, while carrying a multi-billion deficit consider slashing the corporate tax rate, good business sense. "A more competitive business climate is creating more jobs and higher incomes for people", claimed the just-presented Ontario budget.

Which also adds that the improved business climate has directly led to a 7.4% increase in private-sector investments in infrastructure, machinery and equipment from 2009 to 2010. More than validating the Ontario government's decision to reduce general corporate income-tax rate to 12%, scheduled to be cut to 10% by 2013.

A move, claims Ontario's Finance Minister, that "will position Ontario as one of the most attractive jurisdictions in the industrialized world for new investment. Increased business investment will lead to more jobs and higher incomes for Ontarians."

So which is it then, great fiscal management into the future, or "corporate tax giveaways"?