Sunday, January 9, 2011

Conservatives Consistently Reduce Share of Income Tax Paid by Corporations vs Individuals

The corporate tax rate in Canada is expected to be reduced in the upcoming budget as per previously scheduled reductions by the Harper government. This may seem like a random news byte. In fact, it is just another episode in the clear Conservative mission to enrich their wealthiest supporters at the expense of average Canadians.

However, as pointed out by Liberal finance critic Scott Brison and others, now is hardly the time for further tax reductions, especially for the corporate sector. The deficit situation is precarious. Interest rates sit with nowhere to go but up, meaning that the likelihood is high they will increase soon, (even if hopefully not as soon as rumoured) sending our country's finances into a near-irreversible downward spiral.

Nevertheless, Harper and stooge Flaherty appear determined to hand over this gift to their corporate cronies, benefiting corporate execs, officers and large shareholders exponentially more than average Canadians.

Furthermore, the Conservative penchant for secrecy, has led to statistics about corporate income tax rates vs. personal income tax rates that were once readily available on the internet, to be hidden from easy access.

So, here is a chart to shed some light on this:

Corporate Income Tax vs Personal Income Tax in Canada (Historical)

             C% C$       P% P$

2000      24  24        76  76
2001      23  24        77  80
2002      21  22        79  82
2003      24  27        76  85
2004      23  30        77  98
2005      24  32        76  104
2006      27  38        73  110
2007      26  40        74  113
2008      21  32        79  117
2009      17  22        83  108
2010      18  25        82  117

($ = in billions) (% = of total income tax revenue)
(C = corp. income tax) (P = pers. income tax)

These statistics are taken from a Globe and Mail article from this past March presented in a graphic, therefore not too readily searchable.

The new round of corporate tax cuts planned by Harper will bring the corporate share of income taxes in this country into line with the 13% or so that existed under Mulroney. Meanwhile, going back as far as Trudeau, Liberal governments have maintained corporate income taxes in the range of 20-25% of total income tax collected.

At the same time, by implementing such measures as the HST and GST, the Conservatives have hammered individual Canadians repeatedly, with non-progressive taxes that only serve to increase the gap between rich and poor over the long run, as has been the case.


Anonymous said...

There is an election coming, fuck everything else. Fill the election coffers. Clear as ice.

Toe said...

Good post. An additional argument is that decreasing the diversity of taxation and taxing one segment heavily can lead to an "all eggs in one basket" scenerio which will be damaging to government coffers if for some reason ordinary Canadians' incomes drop suddenly.

Most economists agree that you don't want to focus taxes just on one segment of society, it must be spread out to moderate any risk of decreases in government revenue.