The one thing you can say about the Harper Conservatives and their plan for an additional $6 billion in corporate tax cuts is that they’ve probably been in government for too long.
Or, more to the point, they’ve probably been away from the real world of business for too long.
Why? Because the Tories seem to think that cutting corporate taxes magically means that the companies involved will start hiring more employees with the extra money.
Anyone who’s worked in business will tell you that the only thing that really increases jobs is an increase in the demand for the product you’re selling.
For most companies, an increase in post-tax profit is really only gravy for owners and shareholders.
What corporate tax cuts lead to, first and foremost, is larger corporate profits.
Corporate taxes, after all, are levied not on revenues, but profits themselves.
And while a move towards cutting tax levies might convince some companies that they have room to expand, it’s hard to see what else there is in the Canadian economy right now that would lead them to take that route.
After all, as a country, we’re just coming off two years of federal government stimulus to — wait for it — create employment, and we’ve got a two-year combined $101-billion deficit to show for it.
The Harper government has said it plans to shrink the deficit by limiting spending but not by cutting services.
That’s hard enough as it is, but start knocking off corporate taxes as well, and you’ve got to wonder where the money is supposed to be coming from.
Consumers aren’t in the jolliest of moods, and neither are the country’s provincial governments, many of them facing substantial deficits of their own.
The federal government has already warned the provinces that transfer payments for health and education won’t increase at the rate that health and education costs are growing.
All in all, not the kind of atmosphere that’s likely to make a board of directors say, “Let’s hire more people because we’ve gotten a tax cut.”
It’s an interesting route for the feds to take, especially when the Harper Conservatives want to make up a majority government.
As the polling’s going right now, 52 per cent of Canadians are against additional tax breaks for business, especially corporations that have already gobbled up a round of tax cuts under this administration.
Many of Canada’s largest corporations — banks, oil companies and mining firms among them — have been doing quite well, thank you, and in the process, have been shedding jobs.
That’s hardly an advertisement for the trickle-down benefit of adding more cash to companies’ bottom line, especially when that bottom line ends up being drawn in head offices far from this country.
A more sensible approach might be to hold the line on corporate taxes and apply that $6 billion to the deficit or to services for Canadians who are still hurting from the effects of the financial downturn.
A cut to corporate taxes is only handing over more of what profitable companies already have.
From the St. John’s Telegram.