Next NDP Leader Needs Strong Corporate Tax Plan
September 9th, 2016
Ahead of next week’s federal NDP caucus retreat, Regina–Lewvan MP Erin Weir is asking prospective leadership candidates to commit to restoring a federal corporate tax rate of at least 19.5% and preventing high-income professionals from avoiding personal tax through incorporation.
“Rather than speculate about when Tom Mulcair will stop serving as leader, New Democrats must focus on electing our new permanent leader and articulating a progressive vision that distinguishes us from the government,” said Weir. “In particular, we need a solid revenue plan to fund important public services and social programs as well as targeted incentives for investment and jobs.”
Liberal and Conservative governments slashed the federal corporate tax rate in half, from 29% in 2000 to 15% today. This giveaway has facilitated corporate Canada’s unprecedented accumulation of cash, but has not prompted any apparent boost in business investment.
Jack Layton’s 2011 federal NDP platform proposed restoring a 19.5% federal corporate tax rate. However, the 2015 platform proposed only 17%, a timid increase of just two points from 15%. The Parliamentary Budget Officer estimates that each point of corporate tax collects $1.9 billion.
“It’s widely recognized that doubling-down on a pledge to immediately balance the budget was a mistake in the last election campaign,” observed Weir. “This pledge was untenable because two points of corporate tax were clearly insufficient to fund our platform’s progressive expenditure proposals.”
“The next NDP leader must be confident about going further to reverse corporate tax cuts,” said Weir. “Our next election campaign should highlight, rather than downplay, corporate taxes as an issue that sets New Democrats apart from Liberals and Conservatives.”
A federal corporate tax rate of 19.5% is ambitious but realistic. With an average provincial rate of 12%, it would produce a combined rate of 31.5% - leaving Canada well below the United States (40%) and in line with other G-7 countries such as France (33.3%), Japan (32.3%), Italy (31.4%) and Germany (29.7%).
Weir has an extensive track record of research, writing and advocacy on corporate taxes. For example, in Question Period on Nov. 3, 2009, Layton referenced a study on corporate taxes authored by Weir through the Canadian Centre for Policy Alternatives.
“NDP leadership candidates should discuss measures to prevent wealthy incorporated professionals from taking advantage of the lower ‘small business’ corporate tax rate to dodge personal taxes,” added Weir.
In a member’s statement in the House of Commons on June 10, 2016, and in a subsequent letter to the Standing Committee on Finance, Weir asked it to study such measures. For example, starting next year, the Quebec government will make its provincial ‘small business’ rate available only to corporations with at least three employees.