Cut corporate tax burden to help economy
University of Calgary report calls for an end to targeted tax help.
OTTAWA — A new study is calling on the federal and provincial governments to cut corporate tax rates as a way to boost revenues and broaden the tax base.
The authors of the University of Calgary report also say Ottawa and the provinces should level the playing field by ending targeted tax help for certain industries and small businesses.
The study recommends Canada introduce uniform corporate tax rates – 11% federally and 9% for the provinces.
Study co-author Jack Mintz says in 2012, of the 34 countries of the Organization for Economic Co-operation and Development (OECD), Canada had the 19th highest tax burden on medium and large corporations.
Mintz says Canada had the 14th-highest business tax burden last year, in large part because other countries have become more competitive through their own tax reforms.
While the federal Conservatives have lowered corporate rates in recent years, NDP Leader Tom Mulcair has said a New Democrat government would raise the 15% rate closer to the OECD average.
Mulcair has also proposed dropping the tax rate for small businesses to 9% from the current 11%, as a way to kick-start the sputtering economy.
The report, co-authored by Duanjie Chen, also suggests provinces should harmonize their sales tax with Ottawa’s GST, if they haven’t already.
Alberta, which doesn’t have a sales tax, could become more competitive by introducing a harmonized sales tax, which could provide extra cash for the province to slash personal and corporate taxes, the study added.
Alberta Premier Jim Prentice said he has no intention of hiking corporate taxes in order to offset the economic damage inflicted by plunging oil prices. He warned doing so would contribute to the decline by scaring off investment and killing jobs.
© 2015 The Canadian Press