Canada's business community launched a full-scale lobbying effort Monday urging MPs to support corporate tax cuts, which runs contrary to Liberal leader Michael Ignatieff's plan to cancel them if he wins the next election.
Perrin Beatty, president of the Canadian Chamber of Commerce, says there is concern Parliament might block the next cut to the corporate tax rate — scheduled to take effect Jan. 1 — and such a move would stifle Canada's economic recovery.
"Parliament voted for this," he said. "Some people are proposing they reverse course and rescind it; we're saying it's the wrong thing to do if you want to create jobs and growth in the economy and that Parliament should keep its word."
The Conservative government is on track to continue with the cuts promised in 2007 that are being phased in over five years. But Ignatieff has said he would freeze the rate at its current level of 18 per cent. The NDP is also opposed to lowering the corporate tax rate.
The Canadian Chamber of Commerce, along with its provincial counterparts, began running ads Monday that say cancelling the cuts is "a disastrous idea" that would "put the brakes on" job growth and investment by businesses.
The Liberals got wind of the campaign before the ads were released and clearly felt they were the prime target.
"It has come to our attention that the Chamber of Commerce will initiate a new advertising campaign opposing policies that are advocated by the Liberal Party of Canada. Specifically, our plan to cancel the Conservative government's tax breaks for large corporations, in order to reduce the deficit and relieve the economic pressures facing Canadian families," Liberal finance critic Scott Brison wrote in a letter to Beatty last week.
The Liberals say the corporate tax rate is already competitive and that it isn't responsible to reduce it further when the country is facing a $56-billion deficit. (More recent projections by Finance Minister Jim Flaherty put the current fiscal year's deficit at $45 billion.)
Cancelling the tax cut would add about $6 billion to the country's revenues and the party says that extra cash would partly fund some of its platform promises, including the recently announced Family Care Plan.
However, a spokeswoman for Flaherty said later Monday that the $6 billion the Liberals claim will be saved through reversing the planned cuts is wrong. Annette Robertson, Flaherty's press secretary, said in an email that "once fully implemented, the value of the business tax cut amounts to $4.5 billion."
By taking a policy position in direct opposition to the country's biggest business groups, the Liberals run the risk of opening themselves up to criticism that they are anti-business. Brison argued in his letter, however, that the party would do more than the Conservatives to help business productivity by "making investments in learning, innovation, families and clean energy," while fighting the deficit.
Beatty denies the campaign is directed solely at the Liberals and said he doesn't want to be drawn into a political debate.
"They hadn't seen the ad, they're not mentioned in the ad, the ad is addressed to all parties, all MPs. Yet they decided it was aimed exclusively at them," he said. "It wasn't; it's aimed at all members of parliament to say 'keep your word.'"
Beatty will be pushing that message when he appears at the House of Commons finance committee Tuesday as part of pre-budget consultations.
He said businesses have been planning on the upcoming tax cuts when making decisions about hiring and spending accordingly, and need to feel confident while continuing to grow their operations, thereby stimulating the economic recovery.
Ken Kobly, president and CEO of Alberta Chamber of Commerce and another scheduled witness, said the government is going to be facing some tough budget decisions and he hopes it will resist any pressure to change its mind on the tax cut.
He also wants the opposition parties to support the measure, saying "every vote counts" on the budget during a minority Parliament.
"The message to Mr. Ignatieff is that we're coming out of a major downturn in the economy," he said. "There are some trends in the economy that are showing that it's going up and the best way to stimulate an economy that is coming out of a recession, in our opinion, is the reduction of corporate taxes."
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