Happy New Year, corporate Canada

Lana Payne, President of the Newfoundland and Labrador Federation of Labour, Opinion, The Telegram:

The great Canadian giveaway continues. Canada's most profitable corporations - such as banks, oil and mining companies - are about to get another big gift from the Harper Conservatives.

How low will corporate taxes go before common and economic sense prevails?

On New Year's Day, the federal corporate tax rate will be reduced once again as it has been every year since the Conservatives have been in power, dropping from 21 per cent in 2006 to 15 per cent in 2012.

Canada now has among the lowest corporate tax rates in the industrialized world, lower than even the United States.

The Parliamentary Budget Office says the reduction to 15 per cent in 2012 from 18 per cent in 2010 has cost the government $11.5 billion in annual tax revenue.

It has significantly contributed to the federal deficit that is being used as the excuse to slash government programs and services and lay off thousands of federal civil servants.

What is becoming clearer and clearer is, despite billions and billions in tax breaks, corporate Canada, for the most part, is not creating the jobs it could be, not spending on capital investment or raising wages.

In fact, a study by Canadian economist Armine Yalnizyan shows that average annual business investment was about the same at the end of 2010 as it was in 2000, despite a decade of corporate tax cuts worth billions and billions of dollars.

A study by economist Jim Stanford, for example, found that Canadian corporations have received a whopping $745 billion in excess, uninvested after-tax cash flow since 2001 - money not reinvested in real capital projects in Canada.

Another study by economist David Macdonald of the Canadian Centre for Policy Alternatives tracked 198 of the 245 companies on the S&P/TSX composite between 2000 and 2009. It found that those 198 companies are making 50 per cent more profit and paying 20 per cent less tax than they did a decade ago

"Despite their growing profits and massive tax savings, the number of jobs created by Canada's largest corporations was lower than the average employment growth across all sectors of the economy," says Mr. Macdonald. "In essence, the largest beneficiaries of corporate tax cuts are dragging down Canadian employment growth."

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