Mr. Chairman, good evening.
Mesdames et messieurs, bonjour.
My organization is the national organization for franchised automobile dealerships that sell new cars and trucks. Our 3,300 dealers represent a vital sector of Canada's economy. They directly employ 140,000 Canadians in well-paying jobs from coast to coast and in every riding in the country. When you think of our members in your riding, visualize the Ford dealership or the local Honda store. Our members represent all 21 manufacturing brands available in Canada.
CADA acknowledges the extraordinary efforts made by governments of all levels in recent years to enact measures designed to stimulate a recessionary economy in general and to support the automotive industry in particular. Though these were very difficult steps to take at the time, the results we are now beginning to see demonstrate that it was necessary and the right thing to do.
In the context of an economic recovery that is still far from certain, particularly given our strong ties to the U.S. market, which still suffers from stubbornly high unemployment and a housing market still in chaos, our recommendations will focus on the need to restore economic growth that is both sustainable and self-fulfilling. Accordingly, our association has three recommendations to make to your committee today.
First, we recommend that the government establish fairness in the access to the small business deduction for automobile dealers. Most automobile dealers are small businesses run by entrepreneurs and family members. An automobile dealer begins to lose access to this deduction once his accumulated taxable capital exceeds $10 million, and it is completely eliminated at the $15 million threshold. We believe this is unfair to capital-intensive retail industries like automobile dealerships. Other less capital-intensive businesses of similar size and profits enjoy far greater access to the small business deduction. The technical aspects of this recommendation are addressed in our submission.
Second, we would recommend that the already announced corporate tax reductions be fully implemented in coming years. The best way for the federal government to spur investment in job creation is to allow businesses to reinvest more of their profits to fund self-sustaining private sector growth. Our members, and indeed all businesses, require a large degree of stability and certainty regarding tax policy in future years. To plan for one set of previously announced tax reductions while conducting medium- and long-term business planning only to learn down the road that they may not be implemented is the very opposite of the certainty businesses need to create self-sustaining economic recovery. In addition to the corporate tax cuts that have already been planned, we recommend that the government substantially reduce the federal corporate rate of income tax for all privately owned businesses with revenues under $50 million. Allowing thousands of small businesses to reinvest more money would be the one single most economically stimulative step the government could take.
Finally, it is of great importance to our members that there be a level playing field with regard to the application of sales taxes on all used vehicle transactions in Canada. At the current time, there is a significant inequity in this area. Currently, in non-harmonized provinces, dealers are required to charge GST on all vehicles sold, while private individuals can sell a used vehicle GST exempt. If a dealer buys a used car from an individual for resale, the full tax applies. If the individual, however, sells the car to another individual, no GST applies. Our recommendation here is simple: require that GST be applied on the sale of all used vehicles in non-harmonized provinces. In the harmonized provinces, this issue has already been addressed. In the rest of Canada, this would make level a playing field that has become seriously distorted in favour of private sellers of automobiles and at the expense of franchised new car dealers. In addition, we would highly recommend that the federal government work towards harmonization with all provinces currently not under an HST regime.
I thank you for your time, and I'll be happy to answer your questions later on. Thank you. Merci.