PSAC welcomes the range of corporate tax reform initiatives being proposed by federal parties ahead of elections. Increasing corporate taxes and closing corporate tax loopholes would help raise funds for more ambitious social programs — such as universal pharmacare and a national child care plan — and it would allow for greater investments in the green economy as part of the fight against climate change.
The NDP and Greens have each vowed to substantially raise taxes on large corporations, in addition to addressing lucrative loopholes and tax avoidance schemes, while the Liberals have focused on the latter. All three parties have also committed to taxing large internet companies for revenues generated in Canada.
Andrew Scheer’s Conservatives, however, have no plans to increase corporate taxes or close loopholes beyond their limited proposal to tax large internet companies. This means individual Canadians will continue to pay a disproportionate share of the cost of social programs.
Currently, corporate taxes account for only 15% of all government revenues while personal income taxes make up about 49%.
Corporate tax rates dropped substantially since 2000 — going from 28% to 15% — which resulted in record profits for Canadian companies over the last two decades. But corporations just hoarded a massive portion of these new profits instead of investing them back into the Canadian economy through innovation, robust hiring, and higher wages.
Mark Carney, the former governor of the Bank of Canada and the current governor of the Bank of England, famously referred to this as “dead money.” Approximately $680 billion had been accumulated by 2015, much of it piled-up in offshore tax havens.
The time has come to put corporate profits to use for the benefit of Canadians. Corporate tax increases and other reforms aimed at closing loopholes and preventing tax avoidance can help fund the much-needed services we all depend on. These programs would make life better, more affordable, and contribute to a strong and sustainable economy.