Don Drummond, chief economist, Toronto-Dominion Bank:
“I think the corporate [tax cut] is good, although it's heavily backloaded ... there's only one [percentage] point cut off each year for the first several years.
“I think on the corporate tax side, the ball's in the provinces' court ... we've got a lot of provinces with a high statutory rate, still have capital taxes and still tax capital under their retail sales taxes.
“If we could get that combined 25 per cent that [Finance Minister Jim Flaherty] talks about in his documents, so 15 from the federal and an average of 10 from the provinces and no capital taxes and no retail sales taxes, we would be one competitive machine on the corporate tax side.
“With the existing provincial system, we're a little bit above the average [of the Group of Seven countries]. To my mind, that's all coming from the provincial side...
“Right now there's a cluster of countries that are around that 30 per cent total government rate ... but then we also have capital taxes and provincial sales taxes that other jurisdictions don't have, and that's why I say, on balance at the moment, we're a little bit on the wrong side of average. We're much lower than the U.S., but the U.S. is going to have to respond.
“I thought it was interesting and sad that the one potential silver lining to cutting the GST is that that could have been used to facilitate the harmonization of the provincial sales taxes, but they had two cards to play with that, and they've both been dealt now.”
Nancy Hughes Anthony, president and chief executive officer of the Canadian Bankers Association:
“We're absolutely delighted and obviously congratulate [Mr. Flaherty] for doing what he's done. [On the corporate side] he surpassed our request, so we're very happy about that, and also action on the lowest income tax bracket, so on that one as well, not only moving the lowest tax bracket back to 15 [per cent] but also raising the basic personal amount, which obviously affects every taxpayer.
“So, he received the message about making these reductions broad-based and helping Canadian corporations be competitive and also give some relief to Canadian families, so I think the whole package was very good.
“It remains to be seen whether this can be turned into a reality, we hope it will be. And obviously that's a political question, I hope the other political parties are going to rally on this. But clearly, the surplus is money from Canadians' pockets and it has to go back to Canadians' pockets, so I think it's a very good announcement and a very well-balanced package.
“A number of the countries, particularly in Europe, are not standing still, they are in the process of reducing corporate taxes. So I think we'll all want to take out our pencils and see exactly how we stand in comparison, but obviously we're better off when these tax cuts come into effect than we were yesterday.
Craig Alexander, vice-president and deputy chief economist, Toronto-Dominion Bank:
“[The corporate tax cut is] a very positive thing from an economic point of view. I mean, Canadian businesses are facing a very competitive global marketplace and the reality is that around the world there's been a general trend towards declining corporate tax rates.
“So, it's not a static playing field, Canada has competitive corporate tax rates at the moment but if you look forward and you consider what other countries have announced in terms of tax cuts that are coming, from a competitive point of view, Canada was eventually going to have start lowering their corporate taxes as well.
“It was widely expected that [the GST cut] was going to be likely announced. It was part of [the Conservatives'] campaign promises, so they're delivering on what they promised the electorate. As an economist, there's always a preference for cutting income taxes rather than consumption taxes because you want to encourage people to save and invest. Having said that, I do think that from a political point of view, the GST probably garners greater support.”
Jayson Myers, president of the Canadian Manufacturers and Exporters:
“Canada is going to have a very attractive tax environment to retain and attract business investment.
“But you have to put it into context that every other jurisdiction in the world is looking at reducing business taxes, too. I just think that this keeps us in the game of international investment.”
– Canadian Press
Ted Carmichael, chief Canadian economist, JPMorgan Chase:
“With the leaks that we've heard in the last few days, it wasn't that much of a surprise, given the size of the budget surplus that was looming for the government and given the pressure, particularly on Canadian manufacturers from the strong Canadian dollar, some corporate tax relief was, I think, to be anticipated.
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