Canada’s Corporate Tax Cuts Are Safe, Claims Martin

by Mike Godfrey, Tax-News.com, Washinton

29 April 2005

Embattled Canadian Prime Minister Paul Martin remains convinced that proposed corporate tax cuts will go ahead as planned, despite being forced to drop tax cut measures from the budget to ensure the support of the National Democratic Party, which has demanded extra spending measures in their place.

Under the deal struck between the left-leaning NDP and Martin's minority Liberal government, it was agreed that corporate tax cuts proposed in this year's budget will be removed, whilst an extra C$4.6bn ($3.7bn) in spending on items such as low-income housing, the environment and foreign aid will be tacked on.

According to Martin, the initial pledges to cut corporate tax to 19% from 21% by 2010 and remove the corporate surtax by 2008 will now be spun off into a separate bill.

"We have pulled the large corporate tax cuts out of this budget to be pursued in a separate piece of legislation," Martin told The Canadian Press in an interview on Wednesday.

"The corporate tax cuts remain intact. It's going to be up to the Conservatives to tell us whether or not they will support them," he added.

The Conservatives, while supporting the corporate tax cut proposals, are opposed to the deal struck with the NDP.

The compromise has also angered Canadian business groups such as the Canadian Chamber of Commerce, whose President and CEO, Nancy Hughes Anthony, condemned the deal as "an egregious move on the part of the government".

“The government’s decision to rescind its commitment to tax relief for all businesses will threaten Canada’s credibility with business and with investors,” remarked Ms. Hughes Anthony.

“Canada’s reputation as a place to do business and invest will be tarnished by this decision," she warned.

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