Wednesday, February 2, 2011

Provincial Corporate Tax Rates - A Story of Policy and Media Indifference

The McGuinty move to lower corporate tax rates seems to have been done with very little public advertisement, looking at the 2009 and 2010 provincial budgets, announcements on corporate tax cuts are rare and buried within the documents. For an initiative that is estimated to cost around $2.4 billion annually in revenues, one would think that they would have attempted to receive more PR bang for their buck.

As a looming the federal election seems galvanized around the question of appropriate levels of corporate taxes in an era of record deficits, such a discussion has been muted in Ontario. Any opposition has been more or less marginalized to public sector unions and the odd media release from the NDP.

One would think that after having a corporate tax structure already significantly lower than the US would be sufficient for competitiveness. There is already a litany of data (from all over the ideological map) demonstrating how ineffective corporate tax cuts are as a stimulative measure.

Most troubling, is that the upcoming provincial budget seems to be framed around austerity measures, with minor departmental shuffling to shave off a few million dollars. Yet, the province is still planning on fulfilling multi-billion dollar corporate tax cuts.

As the Federal Conservative's are pressured from all sides to reverse the Corporate Tax Cuts, one wonders if there will be the same political momentum to reverse course in Ontario.

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