Canada

Winnipeg Free Press - PRINT EDITION

Pre-election battle joined on jobs, tax cuts

Ignatieff slams Tory plan to slash corporate rate

By: Joan Bryden

Posted: 01/27/2011 1:00 AM | Comments: 0 (including replies)

Michael Ignatieff wants to keep the corporate tax rate at 18 per cent, not cut it to 15 per cent, and put the $6-billion difference into social programs. (PAWEL DWULIT / THE CANADIAN PRESS)

Enlarge Image

Jim Flaherty: low business taxes encourage investment, create jobs (THE CANADIAN PRESS ARCHIVES)

OTTAWA -- Job creation appears to be shaping up as a pivotal issue in the next federal election campaign, which could begin as early as March.

The battle lines were drawn Wednesday as Conservatives and Liberals jousted over the benefits of corporate tax cuts and who has the best plan to create jobs.

The business community echoed Tory support for the tax cuts and labour backed Liberal calls to reverse them.

The pre-election jockeying took place amid mounting speculation that the minority Conservative government could be defeated over its budget in March.

Finance Minister Jim Flaherty and other federal ministers fanned out across the country Wednesday, touting the benefits of what they called "tax relief for job creators."

"Low taxes are encouraging businesses to invest more in the Canadian economy, which is stimulating job creation and economic growth," Flaherty said in Toronto.

He and his colleagues slammed Liberal Leader Michael Ignatieff's vow to roll back corporate tax breaks, saying that would kill jobs.

But Ignatieff insisted more jobs would be created by following his plan: keep corporate taxes at the 2010 rate of 18 per cent and plow the estimated $6 billion savings into things like post-secondary education, skills training, family care and retirement security.

"The Conservatives' proposal is to cut tax on the richest and most powerful corporations in the country," Ignatieff said as he wrapped up a three-day Liberal caucus retreat.

"What we say is we need to give a break to ordinary Canadian families."

The Liberals initially supported the Tories' multi-year plan to reduce the corporate tax rate to 15 per cent by 2012. But Ignatieff said that only made sense when the federal government was running a surplus. With the country now wallowing in red ink, he said the government can't afford to give a "gift" to profitable corporations that already enjoy one of the lowest tax rates in the developed world.

Ignatieff argued that small- and medium-size businesses create more jobs than large corporations. He said the Harper government is raising payroll taxes for these real job creators and refusing to give them incentives for hiring and training young people.

"So, 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."

That argument got some support from the Canadian Auto Workers union, which issued a statement arguing there are much better ways to create jobs than to give corporations more tax relief.

"All that cutting the corporate tax rate will do is drain money from government coffers," said CAW president Ken Lewenza.

CAW economist Jim Stanford said federal statistics show a $3-billion reduction in corporate taxes generates less than $1 billion in economic growth and fewer than 10,000 jobs. But a $3-billion boost to Employment Insurance benefits would generate $5 billion in growth and 56,000 jobs, he said.

Perrin Beatty, president of the Canadian Chamber of Commerce and a former Tory cabinet minister in the Mulroney government, warned that reversing the tax cuts would deliver a "blind-side hit" to the economy.

"No one believes raising taxes would be good for growth or employment," Beatty wrote on the chamber's website.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition January 27, 2011 A8

(You must be logged in to post your reaction)

Your reaction?

More Canada

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010; View the changes. New to commenting? Check out our Frequently Asked Questions.