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Let us settle this like gentlemen


 

On Monday, Perrin Beatty, president of the Canadian Chamber of Commerce, wrote Michael Ignatieff to express his concern with the Liberal leader’s vow to freeze corporate tax rates at their current level.

Today, the Liberal leader has written back to Mr. Beatty.


 

Let us settle this like gentlemen

  1. Settled? Not until the Boss, has spoken.
    The Boss being Canadians, given an election.

    • If you think Canadians are the boss then I suspect someone has played a terrible April Fools Day joke on you.

  2. Hey, considering how critics of assorted political parties have been treated recently, this is quite the pleasant surprise.

  3. That was the most gracious phrasing for "stop asking for handouts and shape up" that I've heard yet. I'd be interesting in hearing whether Mr. Beatty has any ideas for raising productivity and competitiveness other than shifting taxes to others or relying on subsidies.

  4. The Chamber of Commerce makes a good point about expectations from businesses, but it's one that – as Ignatieff points out himself, to an extent – should not be so narrowly applied to the Liberal's suggestion, and probably isn't the best place to apply it either.

    For one, potential changes in government always create uncertainty for business, partially because new governments always have new policies which will affect them, and more importantly because there's little indication as to when, if at all, such a change in government will occur (particularly with fixed election dates being just as non-existent as they were in the past).

    Secondly, we're facing a significant budget deficit that really isn't being addressed. The effect of structural deficits is a worry in itself for business, but the crux is that at some point, it will have to be dealt with and without any indication as to how, that is a rather large source of uncertainty.

    It would be helpful to see a more complete deficit reduction plan from the Liberals, and certainly a more complete plan from the current governing party.

  5. Looking forward to the next time foreign ownership is an issue and the Chamber claims profit shifting isn't a problem.

  6. Beatty writes

    "Business tax cuts allow businesses to lower prices for their goods and
    services, raise wages or hire more people, or to increase amounts paid to
    shareholders to the benefit of many Canadians, including those who own
    equity through pension plans, RRSPs and mutual funds."

    Well isn't that seeing the world through rose coloured glasses. He might as well suggest a free unregulated market is the way to solve the worlds financial crisis. Leaving the profits of corporations and banks in their own hands has proven to be disastrous. Perhaps if the government wasn't in the business of bailing these companies out they might still have a few dollars in the bank and be able to afford the tax cuts. I'm not suggesting the government has been a better steward of our finances but on some level we can hold them accountable. Gord Nixon, CEO of RBC as well as a member of several other boards took home bonuses exceeding 9 million dollars in 2009 while more Canadians than ever lined up to collect government assistance.

  7. Beatty's right. Iggy's wrong.

    Look to Quebec to see what happens when you refuse to make your economy competitive. Crushing debts and declining productivity resulting in higher taxes and fewer services.

  8. Clearly, with a decade of unbroken growth in corporate profits (included a several year run of double digit profit growth following Paul Martin's massive cuts to business taxation) and substantial profits even during and after the most recent financial downturn, Canada's business taxes are not the most pressing issue:

    http://www.statcan.gc.ca/daily-quotidien/100224/d

    A more sensible path would be to roll back the Conservatives increase to the payroll tax — which actively penalizes businesses … especially small businesses … for keeping staff and hiring more staff.

  9. but on some level we can hold them accountable

    What an absurd statement. It's easy to hold a business accountable. Don't buy their stuff. Done. Businesses come and go, all the time.

    On the flip side, try to see what happens when you refuse to pay your taxes.

    The biggest reason markets work better than government is because they are accountable. What we really needed to do was let all those companies go bankrupt so that they would remain accountable.

  10. Do you realize what corporate profits are like right now? Clearly you don't. They're very low. Haven't you noticed entire sectors disappearing because of no profits? Forestry? Auto? Manufacturing? Are you living under a rock?

    • I guess you missed the banks numbers??

  11. "Now Ontario has crushing deficits, lower productivity, numerous ailing industries, a declining health system and less services."

    You know, I was with you until I re-read the sentence, and realized you'd cleverly substituted the word "Ontario" for "Canada"…

  12. Easy to hold a business accountable?

    Like Nortel? Or (insert name of insurance company/bank here)?

    The companies may go bankrupt, but the guys who own/run the ship walk away unharmed, with bonuses and perks, while pensions go unpaid. So, yeah, accountable maybe isn't the word you're looking for…

  13. Mr Ignatieff and the federal Liberals are proposing an approach to economic and social development followed by the Ontario Liberals over the last several years. The approach of higher taxes and more "government services" (we should recall that Mr McGuinty was determined to be the "learning premier") has driven Ontario into an economic ditch. Why would Canadians want to pursue the failed policies of Ontario's current government?

  14. Yeah, like Nortel. Look what happened to them. Every cent they earned was handed to them voluntarily. The company nearly supported the entire Ottawa economy for a decade. Yet they were still held accountable regardless. Thousands of middle class Canadians made a very good living from them for a very long time. But of course you're completely ignorant of that.

  15. Beg to differ. We suffered 3 consecutive quarters of declining growth in profits (Q4 2008, Q1 2009, Q2, 2009). Note this was a decline in how profitable companies were — they remained very profitable, just not at the torrid pace of years prior. Positive growth returned in Q3 of 2009 and continues unabated (and at times, at a record pace) through to March 2010.

    Your last item, record unemployment, actually buttresses my argument that corporate tax rate cuts are not a priority. Massive cuts to corporate taxation did NOTHING to stop profitable businesses from shedding workers in the 1990s or in the 2000s. Time and again, large businesses say, "cut our taxes and we'll create jobs." Taxes are cut, and jobs are not created. Most jobs in Canada today are created by small and medium sized companies. These are exactly the types of businesses being disadvantaged by the Harper government's increases to EI premiums.

  16. It wasn't clever. Take any speech from Mcguinty up til 2009, and it's a duplicate of Iggy's speech. Yet Mcguinty stopped giving those speeches.

    Ontario and Quebec's fiscal position is much worse than Canada's. Much worse, but of course your ideological blinders prevents you from seeing that.

  17. So the socialists at KPMG are just Liberal shills?

  18. So you're suggesting that we should replace one set of failed policies with another? Your argument is weirder.

  19. My goodness. Last time I checked, both Ontario and Quebec were part of Canada.

    Just maybe not the "well loved" parts, seemingly.

    And how come nobody mentions the hige defecit in Alberta?

    • Alberta had a balanced budget til just recently. They even managed to eliminate their debt at the time. They have the lowest deficits in Canada. Quebec and Ontario can only dream to have the fiscal position that Alberta has.

      • If only Alberta had the benefit of some much-desired natural resource…think of the great financial shape they'd be in.

        • Yeah, those are the weasel words of many, completely ignore Alberta's fiscal responsibility. Quebec has a gazillion hydro resources but strangely that hasn't made a difference.

          It doesn't matter how much money you bring in when it comes to balancing a budget, what matters is the desire to resist spending beyond your means. That's why rich folks like Michael Jackson can find themselves bankrupt while people with small incomes often have no debts at all.

          That is the difference between Quebec and Alberta.

  20. Canada's projected deficit is $56B, Ontario's is $21B. 21/56 = 37.5%

    Canada's population is 33 million, Ontario's is 33 million, 13/33 = 39%.

    A crude but effective metric. This despite Ontario's manufacturing sector being crushed by slumping auto demand, which will recover (likely not completely). Further, Ontario's HST will, as the critics point out, increase tax revenue but also create jobs, whereas the Federal government has no real plan for the deficit other than to "wait it out."

    On what basis do you argue Ontario's fiscal position is worse than Canada's?

    • You're saying a new tax will create jobs? On what planet is it better to have more bean collectors as a job-creating measure? Jobs are actually supposed to raise our collective standard of living, not lower it.

      Your calculations are the worst fuzzy math I've ever seen.

      To measure the impact of debt, you either use debt per capita or debt in relation to GDP.

      Here is the calculation you should have done:
      debt per capita 21/13 = 1615 per person
      56/33=1697

      However, Ontario's GDP per capita is 45K compared to Canada's 48K.
      Ontario's GDP is 587B compared to Canada's 1,600B

      So the real measurement is for Ontario 21B / 587B = 3.6 %
      Canada is 56B / 1600B = 3.5%

      So, you're right there, it's close.

      HOWEVER, what really matters is not the deficit, but accumulated debt.

      Ontario's debt is 212B. Canada's is 517B.
      ont debt per gdp: 36%
      can debt per gdp: 32%

      http://www.ofina.on.ca/borrowing_debt/debt.htm

      So, Ontario is in worse shape for sure but the difference is not as large as I thought.

      I won't bother to do Quebec but I can assure you all the numbers are much worse.

    • You're saying a new tax will create jobs? On what planet is it better to have more bean collectors as a job-creating measure? Jobs are actually supposed to raise our collective standard of living, not lower it.

      Your calculations are the worst fuzzy math I've ever seen.

      To measure the impact of debt, you either use debt per capita or debt in relation to GDP.

      Here is the calculation you should have done:
      debt per capita 21/13 = 1615 per person
      56/33=1697

      However, Ontario's GDP per capita is 45K compared to Canada's 48K.
      Ontario's GDP is 587B compared to Canada's 1,600B

      So the real measurement is for Ontario 21B / 587B = 3.6 %
      Canada is 56B / 1600B = 3.5%

      So, you're right there, it's close.

      HOWEVER, what really matters is not the deficit, but accumulated debt.

      Ontario's debt is 212B. Canada's is 517B.
      ont debt per gdp: 36%
      can debt per gdp: 32%

      http://www.ofina.on.ca/borrowing_debt/debt.htm

      So, Ontario is in worse shape for sure but the difference is not as large as I thought.

      I won't bother to do Quebec but I can assure you all the numbers are much worse.

  21. For simplicity, I will only attack your weakest argument, although it is the underlying factor.

    "Throughout history, it has been shown time and time again, that it is no simple matter to hold governments accountable. "

    ever heard of an election? We have them at least every 5 years, and in the recent past quite more often.

  22. No, I'm suggesting your argument is simplistic (let me be clear, I'm NOT saying you or your thinking is simplistic) … If one were to use the measures of total cost of doing business, Ontario is near the top of all jurisdictions in the OECD. Cost competitiveness alone, however, has not been sufficient to staunch the decline of auto, parts and other manufacturing jobs in the province, as you indicate.

    The Ontario Liberals were late out of the gate in trying to attract investment in new sectors — focussing on preserving and reforming old ones. They remain very weak, for instance, on promoting growth in biotech and other venture-capital intensive businesses. They have it right on longer-term investments in education … but need to match that with support for businesses that require very short-term start-up cycles. Harper is doing little on either front, aside from investment in the actual buildings in which education and research might take place. Moreover, we're playing small ball with an eye towards consumer markets in the US and China. Despite our stable banks, we are at the bottom of the barrel in the export of professional services. I don't agree with everything the Federal Liberals are contemplating .. but they are, thus far, the fastest turtles in the race. We just need to champion a few rabbits, too.

  23. Ontario has cut corporate taxes and is planning to continue to do so.

  24. Further, Ontario has cut and is planning to continue cutting corporate taxes.

    • After Flaherty spent 2006-2008 telling them too. At least McGuinty finally admitted that Flaherty was right all along.

    • Yes, and Canada will too if Iggy does not have his way, which was my point in the first place.

  25. Ignatieff may be on to something. The openness and candour of his response is certainly refreshing.

    There is a real distaste out there for more corporate welfare, especially given the events of the last 18 months. The challenges ahead are very real, probably greater than anything we've seen in a century. A huge swath of our population is shifting into retirement, which will have the combined effect of depressing our already-lagging productivity and sucking up our health dollars. Never mind our ballooning deficit and debt. Lowering business taxes, a big handout to those making money, is not going to meet these challenges and will leave us worse-off. Our corporate taxes are already the lowest in the developed world. Big business doesn't need another hand-out.

  26. Yes! A thousand times, YES!

  27. It's a terrible thing when the economy dries up all your profit, isn't it? Not making any money at all, some businesses are, and many are suffering losses right now. Those who were prudent with the profits of the past can ride out this period and come back to profitability. Fortunately, if you don't make any money you don't pay any taxes. But you know what would be really silly during this time of hanging on? Having to pay MORE to keep your employees!

  28. I agree that Ontario was late to the game of tax effectiveness. You need the income from business growth to fund the social infrastructure- it's okay to prime the pump with education and health funding- but you can't ignore direct business development policies as long as the Ontario government did. Better late than never however.

    The feds don't have a senior role in education and health- their job is to deliver the funds to the provinces to do the job. Their tools are tax and investment rules which the current government is using to great effect. Their transfers to the provinces to do the things you believe add value to the business environment have been dramatically increased. The Ontario government has finally gotten in synch with a federal government that is using its fiscal and monetary powers efficiently. Let's not start mixing responsibilities and fighting for the glory as the "Old Liberals" did. It may have been a winner for Chretien but the Canadian public is wiser

  29. From Ignatieff's letterIn particular, I look forward to hearing your views on the present government's decision to increase (rather than freeze) payroll taxes by 35% over the next five years.

    I expect silence from Beatty on this point. Increasing productivity will be a illusive and unreachable goal as long as the Beatty's of Canada expect the minions to work harder for less.

  30. Hands up anyone remembers the last time the CoC didn't think lower business taxes WASN'T the solution.

    anyone?

  31. Iggy's right on this one. The Canadian business community has to stop whining about taxes, and start investing more of its' profits in research and development, so that we can better compete in the global economy with the more innovative countries. Businesses grow by innovation not because of taxation rates.

    • I don't disagree, but the ability to invest in R&D and low corporate taxes are not unrelated.

      • Telling that you used the phrase not unrelated instead of related.

  32. OK letter I guess, but a bit dry. Where are the slander, personal attacks and accusations? Where is the defense of our soldiers, who this guy obviously doesn't care to pay to protect?
    Seems to me a letter written with brain, but not heart. Oh Iggy, why don't you care, I mean, really care?

  33. No disagreement from me on that point.

  34. finally… unfortunately, from my elected leaders I don't appreciate them to be figuring things out halfway through their second term, they should know the facts when they get elected.

  35. You're saying a new tax will create jobs?

    On your job creation point – the consensus of everyone EXCEPT Hudak is that it will create jobs. For many small business owners, like my Dad, he will now be eligible for a 13% rebate instead of a 5% rebate.

    Your calculations are the worst fuzzy math I've ever seen. OK.

    All this debt accumulation that has supposedly financially crippled Ontario's fiscal situation has come as we've shelled out billions in transfer payments to other provinces. I'm not challenging you on Quebec…but Ontario's fiscal shape is either not or just barely worse than Canada's overall position, and if Ontario hadn't spent the last two decades funding other provinces, it would be better.

    • Yes, I agree, Ontario's fiscal position is worse in part thanks to the ongoing handouts to the maritimes and Quebec for decades. Not only that, Ontario's health systems and other public services are in worse shape than that of the maritimes and Quebec.

  36. Any more so than the failed policies of Canada's Conservative Government? Your argument is weird.

  37. And I'm with you and camp harper on this one.

  38. Hmm….Chamber of Commerce is just a lobby group.

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