Corporate tax cut battle heats up

The Conservative government and Opposition Liberals have renewed their pre-budget sparring over corporate tax cuts, with each side insisting it has the right plan to create more jobs for Canadians.
Liberal Leader Michael Ignatieff says his party would roll back corporate tax rates to 2010 levels and would 'welcome a debate' on job creation with the Conservatives. ((Pawel Dwulit/Canadian Press))

The Conservative government and Opposition Liberals have renewed their pre-budget sparring over corporate tax cuts, with each side insisting it has the right plan to create more jobs for Canadians.

The message blitz comes amid speculation in Ottawa that Prime Minister Stephen Harper's minority government could be defeated over the upcoming budget in late March, which would force Canadians to the polls for a federal vote.

Finance Minister Jim Flaherty kicked off the Conservatives' co-ordinated defence of the rate cuts on Wednesday, saying higher taxes mean fewer jobs in Canada.

Meanwhile, Liberal Leader Michael Ignatieff said his party would use the $6 billion from rolling back the rates for job training and helping Canadian families afford post-secondary education, instead of "gifts" for big corporations when "things are already going well for them."

"We think if you are going to create jobs, you have got to work with small and medium enterprise, you have got to invest in education and training," Ignatieff told reporters at the closing of his party winter caucus meeting in Ottawa. "When the choice comes, we know which side of this argument we stand on."

His comments came after Flaherty hailed the "beneficial circle in Canadian life" created by the rate cuts, which he said give companies more cash to invest and grow their businesses domestically and hire more people.

"Low taxes are encouraging businesses to invest more in the Canadian economy, which is stimulating job creation and economic growth," the finance minister said.

Flaherty also said he would "never presume to say never" about another "very substantial economic shock" when asked by a reporter whether he would consider raising the GST if Canada's economic recovery faltered.

But the minister stressed the government's expectation is for continued moderate economic growth and continued tax reductions over time.

The Liberals were quick to jump on Flaherty's comment, saying in a statement that the minister wasn't ruling out a GST hike and "again added his name to the list of Conservatives calling for higher taxes."

The Conservatives are referring to the corporate rate cuts as "tax relief for job creators," while the Liberals are calling for rates to be restored to the 2010 level of 18.5 per cent, up from the 16.5 per cent rate that came into effect this month.

The Tories held similar events for ministers and MPs across the country throughout the day:

  • Ted Menzies, Flaherty's minister of state for finance, joins Immigration Minister Jason Kenney in Calgary.
  • Fisheries Minister Gail Shea in Summerside, P.E.I.
  • Justice Minister Rob Nicholson in London, Ont.
  • Revenue Minister Keith Ashfield in Dartmouth, N.S.
  • Natural Resources Minister Christian Paradis in Montreal.


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The Liberals have said the latest round of cuts are unaffordable at a time when Ottawa holds a record deficit, and argued some of the revenue from rolling them back to 2010 levels could pay for programs to help Canadians hardest hit by the global recession.

But in a message to his organization's members on Wednesday, Canadian Chamber of Commerce president Perrin Beatty said that taking away the corporate tax cut would be like "giving the economy a blind-side hit" and urged political leaders to stop "squabbling" over the issue.

Ignatieff 'open' to arena partnerships

The finance minister revealed little when asked about reports the Prime Minister's Office is still considering funding arenas in Quebec City and Regina through a little-used federal corporation called PPP Canada, which invests in projects with the private sector.

Responding in French, Flaherty confirmed PPP Canada has received a "few applications" relating to arenas and stadiums in Canada, but would only say it is the corporation's responsibility "to do their work on this topic."

Bloc Québécois Leader Gilles Duceppe has asked Ottawa to earmark $175 million for an NHL arena in Quebec City that opponents have said does not warrant federal funding. It is believed the Bloc could support Flaherty's budget and prevent a spring election if its demands on the arena and other funds are earmarked for Quebec's capital region.

Quebecor CEO Pierre Karl Peladeau has already pledged millions of dollars in a bid to bolster efforts to resurrect an NHL franchise in the city.

Ignatieff said a Liberal government would rule out public subsidies or grants for NHL teams, but at the same time added his party would be "open" to a well-drafted proposal for public-private partnerships, provided they are delivered on a national scale.

"Let's not give a gift here and nothing there," he said in French.  "Mr. Peladeau said he would spend millions of dollars, but we need a plan. I cannot do anything, as a lawmaker who is responsible, just with promises from millionaires."