Harper Grilled On Canada's Corporate Tax

by Mike Godfrey, Tax-News.com, Washington

15 April 2011

Prime Minister Stephen Harper fought off accusations of corporate giveaways and corruption from opposition leaders during the first of Canada's election debates, and was grilled extensively about the justifiability of corporate tax reductions.

Two weeks into the campaign, the leaders of Canada's four main political parties came together for a two hour English language debate. Harper, as leader of the Conservative party, was joined by Liberal leader Michael Igantieff, Jack Layton, head of the New Democratic Party, and the Bloc Québécois's leader Gilles Duceppe.

Harper emphasized his desire for a majority with which to form a governemnt, having previously led a minority administration. He said that the continuous cycle of elections and minority governments was beginning to put some of the country's interests in jeopardy. He was, however, fiercly criticized by the other participants in the debate who focused, in particular, on the government's economic record and policies.

When asked by a member of the public as to how the government could justify cuts in corporate tax rates, Harper said his party's position was clear, arguing that the economy was recovering stronger and faster than in other countries, creating jobs in the process. According to Harper, the question presented by this election is whether taxes should be increased in the future, and his attitude is: were rates hiked, this would impose costs on consumers and employees, and deprive the economy of the jobs it requires.

When challenged still further on his position by his opponents, Harper stated that there were no new cuts on the horizon, but rather they had been agreed upon by parliament, in previous years. His desire, on the other hand, is to see rates stay where they are, which, he argues, will create jobs and grow the economy. Above all, his message was: "This party doesn't favour raising taxes".

Canada's headline rate of corporation tax was reduced to 16.5% in January this year, and is set to fall still further to 15% from January 2012. Both the Liberals and the NDP have pledged to reverse this process, to differing extents. The Liberal platform proposes to revert the rate to its 2010 level of 18%, whereas the NDP argues it should return to 19.5%, a rate last seen in 2008. Layton was particularly critical of the reduction process, quizzing Harper on why such taxes would be reduced when Canadian people were suffering, and arguing that the cuts were very costly. Layton also labelled Harper the "problem" with Canada's economy, and blamed his policies for hardship and unemployment.

Harper was also condemned during the debate on the same issues which had plagued his government during its final weeks, including failure to disclose information to parliament, his alleged contempt for parliament (for which he was dismissed in a vote of no confidence on March 25), and the corporate tax policies of the administration. In particular, he came under pressure from the other leaders to release the official version of a leaked auditor general report into government expenditure for last year's G8 summit, held in Canada.

Nonetheless, despite the barrage against him, a poll of 2,615 electors conducted by Ipsos Reid immediately following the debate shows that 42% felt Harper won the debate, with 25% choosing Layton, 23% Ignatieff and 2% Duceppe. 36% of those asked said their impression of Harper had improved, compared to 33% who felt it had worsened. Opinions on Ignatieff remained unchanged, but it was Layton who appears to have improved the most in this respect. 55% said their impression of Layton had improved, compared to a mere 14% whose impression worsened.

Canadians will take to the polls on May 2. At the last federal election, which took place in 2008, Harper's Conservative party received 37.63% of the vote, which, equating to 143 seats in parliament, put them in the position of being a minority government. The Liberal party held 77 seats, the Bloc Quebecois 49, and the NDP 37.

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