Canadian Opposition Unites Against Corporate Tax Cut

by Mike Godfrey, Tax-News.com, Washington

10 February 2011

Opposition parties in Canada have voted in support of a motion that will partially reverse the programme of corporate tax cuts taking place in Canada.

A Liberal Party motion to restore the corporate tax rate to its 2010 level was backed by Bloc Quebecois and the New Democratic Party and passed by 149 votes to 134 on Wednesday (February 10).

While the motion is not binding, it is an indication that the minority Conservative government may struggle to force through the upcoming budget unless concessions are made to opposition parties.

The corporate tax rate was reduced by 1.5% to 16% on January 1 this year, and is due to fall again to 15% in January 2012. Ironically, this rolling programme of corporate tax cuts was initiated by the Liberals when in office, and the Party oversaw a 9% reduction in the tax between 2000 and 2004.

The Liberals now argue that tax cuts for individuals and increased social spending are the priority rather than tax cuts for business.

The Conservatives counter, however, that the best way to boost wealth is to allow companies to keep more of their money to invest in growth and job creation.

"Canada's competitive taxes helped create over 460,000 jobs since the end of the recession, since July 2009," Finance Minister Jim Flaherty said on Tuesday. "We are on the right track."

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