Mr. Speaker, I will be sharing my time this afternoon with the member for Algoma—Manitoulin—Kapuskasing.
I am delighted to rise in the House to speak to the Liberal motion calling on the government not to proceed with further corporate tax cuts and to restore the tax rate for large corporations to 2010 levels in the upcoming budget.
Canadians are absolutely astounded that the Liberals could bring this motion forward with a straight face. The Liberals supported the last round of corporate tax cuts that came into effect on January 1. Now they are bringing forward this motion and running ads against the very tax cuts they supported. It is enough to make anyone's head spin.
The Liberals have either proposed or supported every corporate tax cut over the past 15 years. It is hard for Canadians to take their sudden change of heart seriously.
Let us review where this ideological drive to lower corporate tax rates originated. It began in 2001 with Prime Minister Jean Chrétien. It was the Liberal Party that began the biggest snow job in Canadian history by telling Canadians that we needed to reduce corporate tax rates in order to be competitive with our biggest international competitors. The Liberals said that only then would companies stay in Canada, create jobs for Canadians and thereby make everyone better off. That is the classic theory of trickle-down economics and, frankly, Canadians are tired of being trickled on.
Since 2001, the value of the corporate income tax cuts under successive Liberal and Conservative governments is $120 billion. While the Conservatives have gifted corporate Canada with $8.6 billion in tax cuts to the end of last year, the Liberals actually implemented corporate tax cuts worth more than $110 billion during their terms in office. Now they want Canadians to believe that they are the ones who want to get tough on corporate welfare bums. It defies credibility.
The one and only time that the Liberals put the brakes on their own corporate largesse was when the government of Paul Martin was on the brink of defeat in 2005. It looked like the government's budget would be voted down, but then, as now, it was the NDP and its leader, the member for Toronto—Danforth, who put partisanship aside and made Parliament work for Canadians.
As a condition of supporting the budget, the NDP demanded that the Liberals not proceed with their planned corporate tax cuts of $4.6 billion and instead invest that money into lowering costs for education, cutting pollution, building affordable housing, more transit, increased foreign aid and new protection for pensions in the case of employer bankruptcies. It is just another example in the NDP's long history of getting results for Canadians.
For the Liberals to now claim that they believe corporate tax cuts are the wrong priority is more than passing strange. Frankly, the Liberals are trying to play voters for fools and Canadians are not having it.
As Angelo Persichilli put it in this weekend's Toronto Star:
For Liberals, stopping the scheduled corporate tax cuts is the mantra, and they are willing to vote against the budget. In doing so, [the Liberal leader] will vote against the budget over something—corporate tax cuts—that is not even in the budget. The tax cut was in a previous budget, which [the Liberal leader] supported. So this year he wants to vote against a budget he supported in the past.
The Liberal leader treats Canada like a Costco store where he shops for issues to defeat the government. In September 2009, he believed the make-or-break issue was employment insurance. “Your time is up”, he told [the Prime Minister], but then he dropped the topic. In March 2010, he voted for a Conservative budget he didn't like and in March 2011 he wants to change another budget he supported in the past. What kind of alternative can we expect from a party whose leader never ends a debate on the same side where he started?
Frankly, we cannot expect an alternative at all. Liberal, Tory, it is the same old story.
Only the NDP has consistently opposed blanket, untargetted corporate tax giveaways.
Blanket corporate tax cuts come with no strings attached and do not create jobs. All too often companies just pocket the money and continue to take jobs out of Canada. Let me give three quick examples.
Despite corporate tax cuts, U.S. Steel locked out its workers in Hamilton and is now shipping its work south of the border. In Quebec, Electrolux vacuumed up the corporate tax cuts before closing operations and relocating to a U.S. state with no minimum wage laws and no overtime standards. John Deere had just cashed its cheque from Canadian taxpayers when in 2008 it closed its profitable Welland plant, taking those jobs to Mexico.
Those are but three examples. There are many, many more. The costs to Canadians are jobs, growth in the economy and massive cuts to services.
The NDP has also been at the forefront of opposing the continued tax cuts that benefit Canada's big banks.
The very banks that posted profits in excess of $15 billion in the first three-quarters of last year, received an additional tax cut of $645 million from their Conservative friends. Surely that money would have been better spent on supporting decent family sustaining jobs, investing in blue-green industries and extending the stimulus commitments that were made to cities so that desperately needed urban infrastructure renewal would not end up on property tax bills. That would require the Conservatives to choose people over profits and that just is not in their DNA.
Do taxpayers really need to keep subsidizing big oil and gas? While the Americans have moved to end oil industry tax breaks, the Conservatives continue to dish out $2.5 billion to oil and gas every year. Other jurisdictions are beginning to take seriously their responsibility to fight global warming. The government, instead, continues to subsidize some of the world's biggest and richest polluters.
Clearly, corporate tax cuts are exacerbating the problems confronting Canadians today. One of the most succinct expressions of that was in Ralph Surette's superb column in The Chronicle Herald this past weekend. Like the Liberals before them, the Conservatives want to believe that corporate tax cuts are essential for stimulating the economy, but, frankly, that is nonsense. Properly translated, what they are really saying is that they will deepen the deficit and deprive the country of infrastructure and social spending in order to advance the worldwide cult of billionaires ascendant in the hope that they will leave us a few crumbs.
The nonsense runs deep and persists, despite being thoroughly debunked. One of the debunking forces is the government's own finance department, which figures show that cutting taxes is one of the poorest ways to create jobs, giving 20¢ growth for every dollar of taxes cut. Spending on infrastructure, on the other hand, gives $1.40 per dollar spent and support for the unemployed and the poor is also around $1.40.
In addition, the Canadian Centre for Policy Alternatives has shown that corporate taxes dropped from 28% in 2000 to 18% in 2010, while business investment per GDP has stayed exactly the same. In fact, it has hardly budged since 1981, the first year data on business investments were recorded when the federal corporate tax rate was 36%. In the 1960s, a prime time for industrial expansion in Canada, the rate was 40%. The rate is due to drop to 16.5% this year and 15% next. Measured from 2007, when the rate was 22.12%, the annual loss to the Canadian treasury will be $13.7 billion by next year. Meanwhile, it has also been pointed out that since a large part of Canada is foreign owned, a Canadian cut in their taxes is just a minor bit of bookkeeping for corporations that see this as their due, and hardly worth sending a note of appreciation to the Canadian taxpayer who will pick up the tab.
As is also known, tax is just one of the many factors that lead corporations to invest or not. Many a credulous, manipulated or ideologically driven government has ruined its public finances by chowing down on neo-con propaganda about tax cuts that date back to the Reagan–Thatcher era. New Brunswick is one, as are the U.S. and Ireland, to name a few. Need we all go over the cliff?
This is not just about the best way to stimulate the economy. It is about whom our governments serve, the public interest of democratic nations or that of a swiftly rising global aristocracy of money. The stock markets are booming again and Wall Street, fresh from sinking the world economy, is back to giving itself billions of dollars in bonuses, as is Bay Street, while the real economy does not move and in fact the signs are still that more and more people are falling into poverty.
An article in the current The Atlantic entitled “The Rise of the New Ruling Class: How the Global Elite is Leaving You Behind”, reports that there is a strong sentiment among that class that if the middle class is falling behind, ”Tough. I made billions, why can't they”. We call this the Marie Antoinette school of economics.
Many among this growing legion of billionaires are new money. The founder of Facebook, a 26-year-old worth nearly $30 billion overnight, is held up as an example. A small idea that went viral created nothing economically. It just sucked it out of somewhere else. The question is whether guys like him need a tax cut. Granted that some in the hyper-rich set are seeing the dangers and, as in the 1920s, are turning to philanthropy. at least in the United States, led by Bill Gates and Warren Buffett of course. Philanthropy takes the edge off but it is no substitute for sound public finance.
The question before us today is what we will do as Canadian legislators to protect the Canadian public interest.