Corporate Tax Cuts Work: revenues higher despite lower r

[Corp. Taxes Suck]

Corporate tax revenues coming in to Ottawa were up slightly last year, even as the Conservative government was in the midst of an aggressive plan to lower the corporate tax rate.



The federal government raised $31.7-billion from corporate taxes in the fiscal year that ended March 31, up from $30-billion in 2010-11.



The new data on corporate tax revenues will be examined closely in Ottawa, where debate over the appropriate rate has been a dominant theme of recent election campaigns. The NDP built its election platform on the assumption that a higher corporate tax rate would bring in billions in additional revenue. Advocates of the Conservative tax cuts argued that there would be little to no impact on federal revenues because the lower rate would attract foreign investment and increase the number of corporate taxpayers.



Both sides will find numbers that support their view. Looking over the last four years of data, advocates of the tax cut could argue that cutting the rate has had virtually no impact on federal revenues. Critics of the tax cut could compare the latest numbers to the 2007-08 fiscal year and argue that revenues are down $8.9-billion.



CIBC World Markets chief economist Avery Shenfeld said it was always assumed that there would be some decline in corporate tax revenue in exchange for improvements in areas such as capital spending due to a lower rate.



"Given the weakness of the global economy, and the impact on capital spending, it's too soon to judge how much of a boost we've seen from the lower corporate rates," Mr. Shenfeld said.



The revenue figures, released by Finance Canada, also showed the overall deficit at $26.2-billion for 2011-12, $1.3-billion more than Ottawa had forecast in its March budget.



When Prime Minister Stephen Harper came to power in 2006, the federal corporate tax rate was 21 per cent. That was down from 24.5 per cent in 1990 and 30 per cent in 1980.



Ottawa reduced it to 19 per cent in 2009, 18 per cent in 2010, 16.5 per cent in 2011 and 15 per cent in 2012.



NDP finance critic Peggy Nash said it's clear revenue is down from pre-recession levels and pointed to recent criticisms by the Bank of Canada that corporate Canada is sitting on piles of cash.



"Overall, we've not seen the increase in investment and job creation," she said.



Even though the corporate tax rate is now half of what it was three decades ago, the amount of revenue from the tax has largely remained steady over the years.



Finance Canada numbers show that as a percentage of GDP, corporate tax revenues have averaged 2.2 per cent over the years 1966-67 to 2011-12. That places the current levels at slightly below average.



Corporate tax revenues are well below what they were during the first two years of the Harper government, a period that featured a blip of higher-than-average revenue. In 2006-07 they were 2.6 per cent of GDP, or $37.7-billion, and in 2007-08 they were 2.7 per cent of GDP, or $40.6-billion.



Separate Finance Canada reporting on monthly tracking of revenues for the first four months of the current fiscal year indicate that corporate revenues continue to rise. For April through July, Ottawa brought in $10-billion in corporate tax revenue, a 4-per-cent increase over the $9.6-billion for the same period the year before.

http://www.theglobeandmail.com/news/politics/corporate-tax-revenues-higher-despite-lower-rate/article4597437/?cmpid=rss1">http://www.theglobeandmail.com/news/pol ... cmpid=rss1">http://www.theglobeandmail.com/news/politics/corporate-tax-revenues-higher-despite-lower-rate/article4597437/?cmpid=rss1

[Obvious Li]

corporate taxes should be zero...period, end of story.......personal taxes should be zero....period, end of story...property taxes should be zero...period, end of story...



across the board consumption taxes on goods (only) should be 15%....period, end of story....that is enough

[Corp. Taxes Suck]

http://t2.gstatic.com/images?q=tbn:ANd9GcRVcDbpvG8hLP4DbS_l8oOu6WG2QUrB97aGVP-8FB6eQI1GzDrR">

[Anonymous]

corporate taxes should be zero...period, end of story.......personal taxes should be zero....period, end of story...property taxes should be zero...period, end of story...



across the board consumption taxes on goods (only) should be 15%....period, end of story....that is enough

I favour a flatter, simpler tax code. Consumption taxes are the way to go and every other tax isn't.

[EU]

Yes why should a bank whose profits are a billion dollars a year have to pay corporate taxes? Corporate welfare yes that's what we need...more tax breaks for the biggest profiteers. You're out of you fckin mind Shin Li.



CIBC, which is focused almost exclusively on Canada, posted a profit of $852-million for the three months ending Oct 31, up about 13% from last year.



By far the biggest driver was the retail bank, with income of $569-million, down 5%. Given that the Commerce recently shuttered its FirstLine mortgage brokerage business, that's not a bad result. Consider also that return on equity came in at a whopping 57%, down from 65% last year.



To put these numbers in context, it's helpful to remember that many U.S. and European banks boast ROEs barely into the double digits.



CIBC's other businesses such as capital markets and wealth management generated less impressive results but on a company-wide basis it still managed an ROE of 22%.



TD had a profit of $1.6-billion, up from $1.59-billion.



Once again the main driver was the domestic retail operation, with income of $806-million, up 7% on higher mortgages. ROE is at nearly 42%, up from 36% last year.



That's a marked contrast to the bank's U.S. retail arm, which continues to generate lacklustre results despite billions of dollars in investment, including the recent US$8.5-billion acquisition of New Jersey-based Commerce Bancorp.



Fourth-quarter profit was $316-million, up 7%.

[cc]

Aw, Gay Boy always was just a right wing hack



lol



Anyhow, Corp tax is the worse possible as it ups selling prices (and yes, inflation which hurts workers) and slows down exports (which means less workers) ... discourages hiring etc etc. Seems so many have trouble with what is obvious

[Anonymous]

Aw, Gay Boy always was just a right wing hack



lol



Anyhow, Corp tax is the worse possible as it ups selling prices (and yes, inflation which hurts workers) and slows down exports (which means less workers) ... discourages hiring etc etc. Seems so many have trouble with what is obvious

Most economists do not like corporate taxation for the reasons you mentioned.

[Anonymous]

Aw, Gay Boy always was just a right wing hack



lol



Anyhow, Corp tax is the worse possible as it ups selling prices (and yes, inflation which hurts workers) and slows down exports (which means less workers) ... discourages hiring etc etc. Seems so many have trouble with what is obvious

We own stock through our mutual funds, but other than that I don't pay much attention to corporations. I have never thought about whether taxing them helps or hurts Canadians either. Good to know cc, thank you.

 :)