Fraser Institute Says 'Axe The Tax'

by Mike Godfrey, Tax-News.com, New York

16 May 2002

The Fraser Institute, an independent public policy organization based in Vancouver on Tuesday launched its 'Axe the Tax' campaign, aimed at persuading the provincial and federal authorities in Canada to remove corporate capital taxes, a move which the think-tank says will benefit companies and individual taxpayers alike.

According to Jason Clemens, Director of Fiscal Studies at the Institute, and co-author of 'The Corporate Capital Tax: Canada's Most Damaging Tax', which was released earlier this week, Canada is one of only three countries (the other two being Germany and Japan) which levies a direct tax on the capital of corporations at a federal level.

The report also points to the fact that the majority of the country's provincial authorities - with the exception of Alberta, which eliminated its corporate capital tax on financial institutions in 2001 - are also more than happy to increase the burden on businesses based within their jurisdiction unnecessarily:

'Canada's corporate capital tax is levied at the highest rates, extracted from the broadest bases, and administered with the greatest degree of complexity compared to the few other countries using corporate capital taxes,' Mr Clemens observed on Tuesday.

The Fraser Institute study shows that the tax fails tests of efficiency, fairness, and simplicity, and argues that in addition to adversely affecting corporate Canada, the additional burden imposed on companies by the tax is eventually passed on to the country's already over-burdened consumers.

The report also reveals that, in terms of corporate capital taxes levied by the provinces, businesses in Saskatchewan and Quebec suffer the most, with those in British Columbia and Manitoba following close behind.

Urging both federal and local authorities to follow Alberta's example on Tuesday, Mr Clemens warned that: 'Although few people know of this tax, it is easily the most detrimental tax in Canada because of its impact, both direct and indirect, on investment, productivity and economic growth.'

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