Canada's Liberals Pledge To Outdo Tories On Corporate Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

15 October 2007

Liberal Leader Stephane Dion has pledged to further reduce the Canadian federal corporate tax rate to better compete with other countries and strengthen Canada's economic sovereignty.

“A key competitive advantage for Canada used to be our weak currency. Now that our dollar is at par, and we have lost this weak currency advantage, a key advantage must be a competitive corporate tax rate,” Dion told the Economic Club of Toronto.

“A lower corporate tax rate is a powerful weapon in the federal government’s arsenal to generate more investment, higher living standards and better jobs.”

Dion said he made the commitment following a long process of consultation with parliamentary colleagues, workers, experts, business leaders and Canadians who “want better jobs for themselves and their children”.

The previous Liberal government reduced the federal corporate tax rate to 19% from 28%. Dion said he would go deeper than the Conservatives have done with their reduction to 18.5% in 2011.

“This was the so-called ‘bold step’ they boasted about, but I would go deeper than that because it is a good economic policy within the Canadian economy, it will help us compete with other countries and it will strengthen our economic sovereignty,” he announced.

“If you lower the corporate tax rate, you lower the cost of capital for Canadian companies. Therefore, these companies are induced to spend more on capital equipment. As for foreign investment, we need a big hook to snare investment, including Canadian investment, that might otherwise go south of the border. Finally, it would strengthen Canadian companies against foreign takeover," Dion concluded.

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