Parliamentary Committee Calls for Cuts In Canadian Corporate Tax

by Mike Godfrey, Tax-News.com, Washington

22 December 2004

A Canadian parliamentary committee has called upon the government to continue cutting corporate taxes to allow the country to compete effectively with the United States in attracting international business.

In its pre-budget report, the House of Commons Finance Committee recommended a number of changes to the Canadian system of business taxation, including a review of the timetable for the elimination of the federal large corporation tax.

Also included among the 33 recommendations proposed by the 12 member committee (which comprises five lawmakers from the Liberal minority government and seven opposition members) were reviews of the tax treatment of dividend income, non-resident withholding taxes, taxation of the resources sector and a general review of the corporate taxation system.

Moreover, the committee urged the government to annually review capital cost allowances for business to ensure they remain broadly in line with those in the US, and recommended the abolition of the corporate surtax paid by companies.

The report also called for a review of capital gains tax rules to ensure that technology start-ups and other small firms have ready access to private equity capital.

"Like a number of our witnesses, the Committee believes that our tax environment should be competitive with that of the US, recognizing that competitive does not mean identical,” the committee report stated. It went on to add that:

“Otherwise, there is a danger that Canadian businesses will not prosper to the extent that they can, and to the extent that they should."

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