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Education creates more jobs than corporate tax cuts, Ignatieff argues Add to ...

Liberal Leader Michael Ignatieff is firing back at critics who say he's on the wrong side of the corporate tax cut debate, insisting there are better ways for the federal government to create jobs.

During a scrum with reporters in which he all but ruled out his party's support for the Conservative government's March budget, Mr. Ignatieff said spending on education will create more jobs than another cut in the corporate tax rate.

"If we're going to have a big argument here about how to create jobs, how to create a future for the Canadian economy, this is a debate that we welcome," he said. "You can cut corporate taxes when you're in a surplus. Cutting it in a deficit adds to Canada's financial woes and we think the way to create jobs is invest in post-secondary education and help small and medium enterprises to become more competitive and take on more workers.

"We think the evidence is clear on this matter. We welcome a debate on job creation."

Mr. Ignatieff's comments - which he delivered in Ottawa after a caucus meeting with Liberal MPs and candidates - came shortly after Canadian Chamber of Commerce president Perrin Beatty warned the opposition's plans for corporate taxes would deliver a "blind side hit" to the economy.

The Chamber issued its statement Wednesday morning as federal cabinet ministers fanned out across the country in defence of lower business taxes. In it, Mr. Beatty - a former Progressive Conservative cabinet minister - urged political parties not to reverse the planned decreases in corporate taxes.

Parliament has already approved a plan to reduce the tax rate on corporate profits to 15 per cent from the current 16.5 per cent. The Liberals argue the extra reduction is unaffordable at this time and promise to revert to the 2010 level of 18 per cent.

The Conservatives insist the lower federal rate - combined with cuts in provincial business taxes - will help Canada market itself abroad to foreign investors as a place where combined corporate taxes are about 25 per cent.

"This rate would make Canada a very competitive environment in which to do business and benefit us in every sector and region," Mr. Beatty says. "The alternative is an increase in taxes. No one believes raising taxes would be good for growth or employment. It would be like giving the economy a blind side hit."

The Chamber's view is similar to the conclusions put forward this month in a research report co-authored by Jack Mintz of the University of Calgary's School of Public Policy. He argues the planned cuts are good for investment and job creation and will have a minimal impact on Ottawa's bottom line.

However economists tied to labour organizations question the job claims, arguing Canada's tax rates are already competitive internationally. They argue the cuts bring a heavy fiscal cost without producing clear benefits.

Recent Liberal ads highlighted the government's planned corporate tax cuts in an attempt to portray the Conservatives as out of touch with the priorities of Canadians.

In response, the Conservatives tend to avoid using the phrase "corporate" tax cuts. Instead, Tory ministers at various events Wednesday are promoting how the "Harper government is keeping taxes low for Canada's job creators."

At an event in Oshawa, Finance Minister Jim Flaherty stressed the government's cuts to the goods and services tax and corporate taxes. He also said the government would like to cut personal income taxes, but did not provide a timeline.

"We've done some tax reductions on personal income tax. Quite frankly, we'd like to do more over time, so that's the direction we want to go," he said. "What we're seeing in the economy is modest growth. It's not dramatic, but it is steady and we expect that to continue over the medium term."

American President Barrack Obama also raised the issue of corporate taxes in his State of the Union address Tuesday evening. The U.S. corporate tax rate is currently 35 per cent and each percentage point reduction is estimated to cost the Treasury $8-billion in revenue. The President's comments did not spell out how far he would like to reduce business taxes, but stressed he does not want cuts to increase the federal deficit.

"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world," he said. It makes no sense, and it has to change," he said. "I'm asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years - without adding to our deficit."

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