Statscan on Corporate Tax Cuts
Statscan economist Philip Cross weighs in on how trivial is the impact of cuts in the overall scheme of things, as reported in a fine story by Heather Scoffield of CP.
I agree, but fear his career will be in serious jeopardy. Or perhaps he is on the eve of joining Munir in retirement. Minister Clement will not like this one bit.
Here is what he had to say:
“A couple of billion dollars (of savings from tax cuts) is a drop in the bucket of corporate income here,” Cross said in an interview. “It’s trivial.”
Canada’s natural resources, the price of oil, currency fluctuations and the state of the country’s financial markets have been far more influential on corporate investment decisions than recent tax cuts, he says.
“These huge forces were going on — globalization of supply chains, commodity price booms and so on. And somewhere in there you’re going to be able to separate out the impact of small changes in the tax rate? You’re kidding,” Cross said.
Generally, the impact of more tax cuts “is going to be relatively small, given the huge flow of money driven by other forces.”
The caution cited by the federal agency comes as Conservative ministers claim that cancelling corporate tax cuts would be “dangerous” for the economy — and warn an election could be the result of a standoff with the opposition on the issue.”
The Tyee has a good piece today Jan. 31 looking at banks and the capital tax that was removed in BC, and that at one time was in place in all provinces. Looking at the reduction in capital taxes in the context of CIT cutbacks gives a more comprehensive account of tax breaks.
I better not comment lest I lose my own job, but I will say, I tip my hat to Phillip, I am surprised by his actions. Very.
Must be that time in his career.
In the article linked to by Andrew Heather Scoffield is talking about CIT cuts costing more than $10 billion in lost revenue over three years. A new Star piece by Les Whitington and Richard Brennan Harper Sets Stage for Commons Showdown is talking about $6 billion this year, and $60 billion over six years.
Anybody got a reliable figure of the cost?
Duncan, re capital taxes, I think there was a case for these as applied to the banks where they functioned as a kind of surplus profits tax. But I don’t think that taxing companies in a loss position was a very good idea, and capital taxes did that.
Of course, one option is to have capital taxes only for banks (as Saskatchewan does). Ontario threw out the baby with the bathwater when it eliminated its capital tax altogether. Retaining it just for banks would have saved half a billion dollars annually.
Way to grow some balls for the rest of us, Philip.
Hey, here’s a novel idea: allow these smart Canadians to speak freely about these issues and share their knowledge with the electorate without fearing reprimand… No?
I mean, if Tony Clement can share his opinions via Tweets why couldn’t StatCan’s top economic analyst?
Let’s crack this government open and together we’ll come up with the solutions!