Please uphold your end of the bargain

by Aaron Wherry

Jim Flaherty again encourages the private sector to spend.

In his speech, the minister conceded that business investment had picked up of late, but “more needs to be done,” he told the audience.

He noted that government had done its part, slashing corporate taxes, eliminating tariffs, introducing monetary inducements to encourage the purchase of new technologies, reducing red tape and concluding some 20 free trade and investment protection agreements around the world. “The government cannot do this alone,” he said. “Private sector business investment must also help lay the foundation for a sustained, longer-run expansion of Canada’s economy and jobs growth.”

According to KPMG, Canada has the lowest corporate tax rate in the developed world.

Mr. Flaherty made similar comments last month.




Browse

Please uphold your end of the bargain

  1. “Thanks, suckers!” – Canadian Business community.

    • Except without the thanks part. Because they are entitled to their entitlements (roads, health care for employees, water and waste water, etc.).

      • “healthcare for employees”
        This is a very good point, because healthcare insurance is an significant cost of doing busines in the US and never seems to be included in the comparison of corporate taxation here and there.

  2. It is shocking to listen to a supposed Conservative admin talk like this – business are only ones creating wealth to pay for Flaherty and his ramped up spending over the past six years. Businesses would have significantly more to invest if they didn’t have to bankroll gazebo tony, for instance, as well as pay their own bills.

    Also, if companies are hoarding cash, which is far from being proven, maybe the are not spending because there is nothing to spend it on. Government taxes and regulation strangle much innovation, bureaucrats hate progress and change, it is very difficult indeed to spend money wisely in Canada.

    • what a pack of unsubstantiated myths

      • You should stay away from business commentary.

        Stick to what you know best—calling for more government spending and higher taxes and then whine about deficit budgets and unemployment.

        • See what the lowest corporate tax rate in the developed world [KPMG] has already given us – deficit budgets and unemployment.

          So, you would presumably argue that even lower taxes and less revenue from corporate freeloaders would balance government budgets.

          Brilliant.

    • So, in an article about how reducing taxes and government regulation has resulted in nothing from the business community, your argument is that the solution is obviously to reduce taxes and government regulation?

      Some say that the definition of insanity is when you try the same thing expecting different results. Personally, I suggest it’s the definition of stupidity.

  3. Flaherty’s corporate friends and enablers are putting the lie to trickle-down economics, revealing it as the self-serving myth that it always was.

  4. Businesses never made any ‘bargain’ with the govt. Nor do they intend to.

    This is a rightwing fantasy out of Ayn Rand. Cut taxes, cut regulations etc etc and all our businessmen, supposedly chomping at the bit,will burst forth in some kind of swash-buckling derring-do in the marketplace. We’ve heard this story all our lives.

    It’s just not true.

    Capitalism, outside fairy tales, is not some ‘clash of titans’ trying to improve life, moderize society, advance the world etc by inventing and selling great new things. Mostly they’re just people who want to make a buck, and without too much risk.

    Pierre Trudeau once mused about how badly the system was working, and businesses freaked and started a ‘Let’s free enterprise’ campaign. Gawd forbid anyone should criticize capitalism!

    But Jean Chretien once wrote that just days after this campaign, CEOs were in his office pushing for handouts. What they say, and what they do are two different things.

    The garment industry managed to stay out of NAFTA because they claimed they couldn’t moderize and get new equipment in time. Well, they never did.

    Potash wanted, and got, protectionism just recently.

    And today…the oil industry….OIL….is asking for govt protection from those mean ol’ foreigners.

    http://www.theglobeandmail.com/news/national/canadian-oil-patch-seeks-protection-from-foreign-investors/article4568562/

    So much for our businessmen eager to take on the world. They want a nice steady income, and weekends at the cottage. NO swashbuckling.

    If you want the true story of Canadian business then read ‘Why Mexicans Don’t Drink Molsons’ by Manel-Campbell. I believe Macleans has a review on it.

    It’s the book Flaherty and Harper should have read….instead of ‘Atlas Shrugged’

    • This is entirely exemplified by the price-gouging Canadians get when we
      buy books! The CAD has been at par with the USD for three or four years
      now which eliminates the whole ‘the CAD shifted so fast and we’ll lose
      money” argument. They’ve long-since rotated their stock and got new
      products in but there has been no price reduction – Canadians routinely
      pay $5 or more for a book than their American counterparts. It was only
      in March/April that it was proven that major US/Canadian book retailers
      were in collusion over e-book pricings!

  5. William G Sumner ~ The Forgotten Man:

    The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter …

    They are always under the dominion of the superstition of government, and, forgetting that a government produces nothing at all, they leave out of sight the first fact to be remembered in all social discussion — that the state cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it. This latter is the Forgotten Man.

    Capital, however, as we have seen, is the force by which civilization is maintained and carried on. The same piece of capital cannot be used in two ways. Every bit of capital, therefore, which is given to a shiftless and inefficient member of society, who makes no return for it, is diverted from a reproductive use; but if it was put into reproductive use, it would have to be granted in wages to an efficient and productive laborer.

    http://mises.org/daily/2485

    • There’s two key points in that article which are missed.

      First, economies of scale mean that government can do more with all that money when it’s pooled than the individuals can on their own.

      Second, there’s nothing that says those we take the money from would have put it to reproductive use — a lesson Mr. Flaherty is now learning, and a lesson which it seems you haven’t figured out yet.

    • I thought you were against the social sciences?

  6. I’m at the point now where I feel sorry for poor Flaherty. He believes his ideology to the tips of his toes. It just doesn’t seem to WORK! It didn’t work when he tried it in Ontario (although he was fortunately saved from having to admit to the deficit by being kicked out of office) and it doesn’t work Canada-wide. It seems his ideology doesn’t have a section about the human nature of greed. Maybe rats or swans could make it work. I just wish Flaherty wasn’t such a slow learner.

    • I see it more as Flaherty doesn’t understand the nature of demand, and the fact it doesn’t grow on trees. You can prime the corporate tax pump all you want it seems but you can’t make them spend on jobs for non existant demand. We would have been better off taking that tax cut and using it to up grade infrastructure and fix some of the problems on reserves all across the country.

    • No, it’s got greed down just fine. It doesn’t have risk.

      It assumes that the “productive man” (to be distinguished from the rest of us who don’t own businesses) will use all the resources he has available to him in the quest for ever more profits. It doesn’t understand that the businessman isn’t going to risk those resources unless there’s good odds on actually getting those profits.

    • Canada is doing better than the US, Europe, Japan, and pretty well every developed country. Anyone and everyone who pays any attention to the news would know this. And then you say “It just doesn’t seem to WORK!” And then you have the temerity to claim “He believes his ideology to the tips of his toes”. Pot calling the kettle black.
      The commenters here are like a cult.

      • Read the blog post. Then get to the comments. EVERY TIME!

        • I did read the blog post, then I read your comment, then I wrote my response to your comment.

  7. ….

    Does this really surprise *anyone*? the Conservative Party of Canada has been saying for years now that if we cut corporate tax rates it’ll keep business in Canada and that they’d be putting more money back into the economy/jobs with the windfall. We’re the lowest tax jurisdiction in the world now and companies did was companies do – they took the windfall and kept a massive cash reserve for themselves. Now they’re cushioned by stockpiles of cash while we stare at a wooden chair.

    This is entirely exemplified by the price-gouging Canadians get when we buy books! The CAD has been at par with the USD for three or four years now which eliminates the whole ‘the CAD shifted so fast and we’ll lose money” argument. They’ve long-since rotated their stock and got new products in but there has been no price reduction – Canadians routinely pay $5 or more for a book than their American counterparts. It was only in March/April that it was proven that major US/Canadian book retailers were in collusion over e-book pricings!

    • “We’re the lowest tax jurisdiction in the world now”

      No, not even close.

      According to this page out of nearly 200 countries in the world, we’d be around number 150. So we’re not even in the top half. And we’re also not in front in the developed world, with countries like Japan, South Korea, Australia, Ireland and the USA with lower tax revenues as a percentage of GDP.

      Your comment has not a grain of truth.

  8. The biggest a$$kissers of modern neo-capitalism, whose dictum mantra motto dogma is “Profit for me and nobody else!” asking the very best practitioners of Rand for charity. What an idiot.

  9. This is a slightly different context, but it reminded me of something I saw someone post on Facebook recently:

    “You’ll forgive me for pointing out that conservatives seem to believe that rich people will work harder if we give them more, and poor people will work harder if we give them less”.

  10. Wherry, as your colleague at Maclean’s recently pointed out, the relation between what a corporation is spending, and how the corporation finances spending (such as with after-tax profits), is non-existent. There is no relationship.

    • You need to take this up with Flaherty, not Wherry.

      • Wherry is relating corporate tax levels to corporate spending, not Flaherty.

        • Learn to read.

          Specifically, “He noted that government had done its part, slashing corporate taxes, eliminating tariffs, introducing monetary inducements to encourage the purchase of new technologies, reducing red tape and concluding some 20 free trade and investment protection agreements around the world.”

          • Learn to read.
            Nowhere did he say that slashing taxes will increase corporate spending, or should increase corporate spending. There is no relationship.
            He is saying the government has done its part to spur the economy, and the corporate sector needs to do its part as well.

          • You’ve forgotten the original point already. If Flaherty isn’t saying anything about it, then Wherry certainly isn’t, either.

Your email address will not be published. Required fields are marked *