Posted: Wednesday, 25 January 2012
OTTAWA – A new research study from the Canadian Labour Congress shows that companies in Canada will be popping the champagne corks to celebrate Corporate Tax Freedom Day on February 1st. Thanks to big corporate tax giveaways, they will have, by then, paid their entire share of taxes to all levels of government for the year.
“Corporate income taxes in 2010 amounted to only 8.8% of all government revenues,” says CLC President Ken Georgetti. “The Conservative government's latest round of tax giveaways on January 1st means Corporate Tax Freedom Day will arrive on an even earlier date in years to come.”
Georgetti says, “In return for tax breaks, companies are supposed to invest to create jobs, but they are not. Instead, they are hoarding cash and paying out fat dividends to their shareholders.”
The CLC study shows that the top 10 corporate hoarders have accumulated $30.7 billion in extra short and long term cash assets between 2000 and 2010. The companies include Potash Corporation of Saskatchewan, George Weston Limited, Barrick Gold Corporation, Research In Motion, Kinross Gold Corporation, and Air Canada. CEOs from the top 10 cash hoarding companies are among the highest paid in the country.
The Conservative government has slashed the federal corporate income tax rate from 21% to 15% since it took office in 2006. Each percentage point reduction in the federal corporate tax rate costs the government about $2 billion a year in foregone revenues. Georgetti says, “Our polling around corporate tax cuts shows that 92% of people who were asked say that if corporations don’t use their tax breaks to create jobs, then they should be forced to give back the money.”
Georgetti warns that the government is planning massive cuts to needed public services in order to pay for these corporate tax giveaways. “We oppose that. We want Ottawa to use its 2012 budget to invest in job-creating infrastructure projects and badly-needed public services. This can be paid for by restoring the federal corporate income tax rate to 19.5%, which would still be lower than the 21% rate in place when the Conservatives took office in 2006.
Georgetti notes that according to the Department of Finance, $1 billion invested in infrastructure investment creates more than five times as many jobs as the same amount spent on corporate tax cuts.
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