The donut speech, fact checked (III)

Back, once more, to the matter of the Prime Minister, Tim Hortons and the donut speech. Here is how an item posted on the Conservative party’s website described the news.

As a direct result of Conservative action to cut corporate taxes, Tim Hortons — perhaps Canada’s best known coffee shop — is announcing that they will be moving their head office to Canada. Tim Hortons’ choice to make Canada their new  base of operations will not only create new jobs and generate economic activity, but it also sends a clear message to other companies around the globe: Canada is a great place to do business.

As noted previously, economist Erin Weir has posed two questions about the move. First, will it mean any additional tax revenue for the country? Second, will it mean any additional jobs in this country?

So I asked. And here, via email, are the answers from Tim Hortons’ head office.

1. Will the shift in ownership result in any additional taxes being paid to the Canadian government?

Yes, initially, Tim Hortons will pay more taxes to the Canadian government. Over the next few years, as the effective corporate tax rate decreases, the amount of taxes we pay will then decrease. But over the long term, as we hope the company and our income continue to grow, we expect to pay more taxes here in Canada.

2. Will the shift in ownership result in any additional jobs in Canada?

Operationally, the reorganization will not result in any immediate new jobs. However, the reorganization made Canada a more attractive location than before when considering future manufacturing growth or acquisitions, making long-term additional jobs a greater possibility.

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