By Sheldon Leiba
In 2007 the federal government announced that it would introduce a series of graduated corporate tax reductions. The implementation of these tax reductions would have positive effects for Canadian businesses as it would keep Canada competitive on the global stage with its trading partners, many of whom have reduced corporate and payroll taxes in recent years, even through the recent recession.
With Canada slowly emerging from the global recession, businesses worry as political leaders look for ways to balance its books, and one suggestion being debated is scraping the planned corporate income tax cuts.
While some may see this as an appropriate strategy, businesses and jobs would be negatively affected.
Businesses are facing unprecedented challenges today, with the domestic and global economy having slowed down, and competition increasing, not to speak of the myriad of ever-changing red tape and regulations businesses have to comply and contend with on a day-to-day basis.
Many businesses have structured their company financials factoring in the previously-announced tax reductions, meaning that businesses in Canada would be forced to pay billions of dollars in taxes that they had not anticipated if the government suddenly changes its plan. This would hamper investments in equipment and jobs – jobs that you, our family and friends have, that are important to our economy and ultimately to our quality of life. The federal government will in return be impacted by lower tax revenues that would have been generated by this needed business spending and related income taxes.
Aside from paying unexpected taxes, eliminating corporate tax reductions would decrease Canada’s global competitiveness at a time when we are already falling behind in productivity. With Canada’s trading partners already driving down taxes to reduce the burden on their businesses, our federal government should be continuing to find ways to decrease costs to business. Doing so would make Canada a much more attractive place to invest and expand, freeing up capital that will grow Canadian businesses, jobs and our economy.
As government stimulus programs come to an end in 2011, the Mississauga Board of Trade strongly urges our government to make Canada’s economic growth and success a top priority and follow through on its planned corporate tax reductions.
Sheldon Leiba is President & CEO for Mississauga Board of Trade Tel: 905-273-3527; Email sleiba@mbot.com.
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