KPMG on Corporate Taxes
On Wednesday, The Globe and Mail ran the headline, “Taxes Are Falling, But Not Here: Global Business Tax Rates Are Dropping, But Canada’s Remain High, KPMG Report Finds,” immediately above a table showing Canadian corporate taxes to be within the lower half of G8 countries. Today, The Globe printed the letter from yours truly that is pasted at the bottom of this post.
The KPMG report is quite interesting because it provides comparative figures from 1993 through 2007 for many countries on actual “Corporate Tax Rates,” as opposed to the questionable “Marginal Effective Tax Rates” generated by the C. D. Howe Institute.
Despite my Russian ancestry, I am not convinced that Russia’s corporate-tax rate is a particularly relevant benchmark for Canada. Therefore, I include only G7 countries in the following table.
It shows two things, both of which contradict The Globe’s headline. First, Canada has low corporate taxes compared to other major, western, industrialized countries. Second, Canada has reduced corporate taxes by a far greater amount than any of these countries but Germany.
G7 Corporate-Tax Rates
| Â |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
|
Japan |
42% |
42% |
42% |
42% |
42% |
41% |
41% |
41% |
|
US |
40% |
40% |
40% |
34% |
34% |
40% |
40% |
40% |
|
Germany |
52% |
38% |
38% |
40% |
38% |
38% |
38% |
38% |
|
Italy |
41% |
40% |
40% |
38% |
37% |
37% |
37% |
37% |
|
Canada |
45% |
42% |
39% |
37% |
36% |
36% |
36% |
36% |
|
France |
37% |
35% |
34% |
34% |
34% |
34% |
33% |
33% |
|
UK |
30% |
30% |
30% |
30% |
30% |
30% |
30% |
30% |
Corporate Conundrum
Re Taxes are Falling, but Not Here (Report on Business, June 27): The table near the secondary headline, Global Business Tax Rates Are Dropping, But Canada’s Remain High, KPMG Report Finds, shows that Canada’s corporate-tax rates are within the lower half of G8 countries. KPMG’s report also confirms that Canada cut its corporate-tax rates from 45 per cent in 2000 to 36 per cent today.
During this period, Canadian corporate profits rose to record heights while business investment stagnated relative to gross domestic product. The suggestion that further corporate-tax cuts will reverse this pattern is unfounded.
Erin Weir, economist, Canadian Labour Congress, Ottawa