Despite corporate cash reserves, more tax cuts

The Canadian Press:

Ottawa - Profitable Canadian businesses are set to reap $2.85 billion in additional income tax savings in 2012, even as Prime Minister Stephen Harper complains about all the private "money sitting on the sidelines."

The last of five annual corporate tax cuts took effect Sunday, reducing the federal rate by another 1.5 points to 15 per cent.

The move comes as corporate Canada, from multinationals to midsize businesses, squirrels away hundreds of billions of dollars as it rides out a second storm of global economic turbulence in the past three years.

The latest figures from Statistics Canada through the third quarter of 2011 show Canadian business sitting on more than $583 billion in Canadian currency and deposits, and more than $276 billion in foreign currency.

Those cash reserves have climbed nine per cent since last year and 27.3 per cent since 2007, when the Canadian economy was booming and new corporate tax cuts were announced.

Even after removing Canada's banks from the equation, non-financial corporations saw their currency and short-term paper assets climb $33 billion in the third quarter of 2011.

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