OTTAWA (Reuters) - Canada’s Conservative government said on Monday it will go ahead with planned corporate tax cuts, rebuffing an opposition Liberal call to shelve the tax cuts for the time being.
The Conservatives reaffirmed plans to drop the corporate income tax rate to 15 percent in 2012 from 18 percent at present, rejecting a call made at a weekend Liberal conference to postpone the cuts until Canada can better afford them.
Liberal leader Michael Ignatieff told Parliament on Monday that the money devoted to corporate tax cuts, about C$5 billion ($4.9 billion) to C$6 billion annually, was needed for social spending and deficit reduction.
“We need to make some targeted investments to help our families, give our kids the skills they need and pay down the deficit,” Ignatieff said. “Given all these challenges, why is the prime minister rushing ahead with corporate tax cuts this country cannot afford?”
The Liberals have until now roughly paralleled the Conservatives in their fiscal proposals, given the tight economic climate, presenting them with few distinctive policies to run on if an election were called soon.
“The Liberals want to raise taxes on everything,” Transport Minister John Baird said, responding to Ignatieff. “Now they have come out and want to raise taxes on job creators and raise taxes on investment. That will not help job creation in Canada.”
Ignatieff retorted: “Only a Conservative would call pushing the pause button on corporate tax breaks a tax hike. It is just not so. Already, Canada’s corporate tax rate is exceedingly competitive.”
Outside the House of Commons, Finance Minister Jim Flaherty was asked if he would consider delaying the tax cuts.
“Absolutely not. Absolutely not,” he said.
“We want to create jobs in Canada. My goodness, I mean this is Economics 101. If you want to create jobs, you leave more money with businesses. And you listen to the Economist today, you listen to the Canadian Chamber of Commerce today, everyone is saying no, keep those business reductions coming. Let’s not have new taxes in Canada.”
The Liberals also pledged on Sunday to reduce Canada’s budget deficit to the equivalent of 1 percent of gross domestic product within two years of taking office, but Flaherty said the government had already budgeted to do that.
Reporting by Randall Palmer; editing by Rob Wilson