Dear editor,
I am writing in response to a previous letter from Justin Rigsby, suggesting that we should keep the HST because of the so-called trickle-down benefits of the HST.
I hope that my fellow citizens will not believe this fairy tale that the savings to big business will result in more investment in equipment, hire unionized labour and create a demand for more goods and services. This is the make-belief mantra of conservatives who support corporate tax cuts.
The record shows the exact opposite.
In spite of record corporate tax cuts, the statistics show that this has not resulted in more investment in equipment and more jobs. Even Finance Minister Flaherty is troubled by the private sectors reluctance to invest, as he recently asked them to “step up to the plate.”
A recent report — Having Their Cake and Eating It Too — by Jim Stanford, an economist for the Canadian Auto Workers, says Canadian companies have received $745 billion in extra after-tax cash flow since 2001. The study shows that cash has not been reinvested in capital projects.
Figures from the federal government’s own finance department, show that cutting taxes is one of the poorest ways to create jobs, giving 20 cents growth for every dollar of taxes cut. Spending on infrastructure, on the other hand, gives $1.40 per dollar spent, and supports for the unemployed and the poor also around $1.40.
According to the Canadian Centre for Policy Alternatives, corporate taxes have dropped from 28 per cent in 2000 to 18 per cent 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 investment were recorded, when the federal corporate tax rate was 36 per cent.
In the 1960s — prime time for industrial expansion in Canada — the rate was 40 per cent!
The rate is due to drop to 16.5 per cent this year and 15 per cent next. Measured from 2007, when the rate was 22.12 per cent, the loss annually by next year to the Canadian treasury will be $13.7 billion.
So where are the jobs? Where is the reinvestment?
The HST is a tax shift from big business to consumers. It will negatively impact people on limited incomes and small businesses.
Many small businesses are already suffering revenue losses.
I have chosen to vote YES to reject the HST tax.
David Stevenson,
Comox
