Canadian Manufacturers & Exporters

Canadian Manufacturers & Exporters

January 26, 2011 09:30 ET

Manufacturers Rally Behind Importance of Business Tax Cuts

CME members reinforce significance to their operations at seven economic roundtables across Canada

OTTAWA, ONTARIO--(Marketwire - Jan. 26, 2011) - Reducing business taxes creates jobs, boosts investment, makes Canada more competitive and puts more money in the pockets of the Canadians, members of Canadian Manufacturers & Exporters told federal Cabinet ministers at seven cross-country economic roundtables today.

"Our analysis demonstrates that business tax cuts are critical drivers of the Canadian economy," CME President & CEO, Jayson Myers told Finance Minister Jim Flaherty at an Oshawa round table in reference to the association's report on the impact of corporate tax cuts. "The question is not if we can afford corporate tax cuts; it's can we afford not to make tax rates in Canada competitive with the rest of the world. The answer is simple – corporate tax cuts are good for Canada and Canadians."

CME members lauded the federal government's reduction of the business tax rate from 18% to 16.5% on January 1 this year as well as the plans to lower it to 15% of business profits as of January 1, 2012. With provincial governments also reducing their tax rates on general corporate income over the next two years, Canada's average combined statutory corporate tax rate is slated to fall to 25% by 2012.

"During these times of economic stress and extreme currency exchange pressures, like most Canadian manufacturers, we have struggled to compete with foreign suppliers in our home and export markets. The much welcomed reduction in the federal business tax rate has helped all of us at Standen's compete on the global stage," said Mel Svendsen, CEO of Standen's Ltd., at a roundtable held at the company's Calgary-based operations.

According to CME, profits for all business sectors can be expected to grow by 10% this year and next. Based on that assumption, federal and provincial tax rate reductions in 2011 and 2012 can be expected to:

  • Increase after-tax business profits by $12.4 billion or 10.6%;
  • Lower Canada's unemployment rate by 0.52 percentage points and boost employment by 98,800 net jobs;
  • Increase total business investment by $6.2 billion or 4.4%. (Investment in new facilities can be expected to rise by $3.0 billion and investment in machinery and equipment by $3.2 billion.);
  • Increase business spending on research and development by $546 million or 4.4%;
  • Boost nominal GDP by $51.6 billion or 3.2%;
  • Increase personal incomes of Canadians by $30.4 billion or 2.4%;
  • Increase per capita personal income by $880; and,
  • Contribute $2.6 billion to $3.7 billion in additional net revenues for all levels of government.

Canada's business tax system is vital to our country's overall competitiveness which leads to economic growth and job creation". said Winston, Woo, Chair of CME's National Taxation Committee and Director of Taxation and Pensions for AGS Automotive Systems. "Aligning the corporate income tax rate to the OECD average, providing an accelerated write-off for manufacturing equipment and harmonized sales tax collectively lower the after tax cost of business investment and serve to improve Canada's business tax structure to become one of the most competitive jurisdictions globally."

Canadian Manufacturers & Exporters (CME) is Canada's leading trade and industry association.

CME represents businesses that employ over two million Canadians in all sectors of manufacturing as well as in Canada's resource, technology, and services exporting sectors. Our mission is to build a better business environment for Canadian manufacturers and exporters and help our members compete and grow in Canada and around the world.

CME focuses on the issues that are critical for our members – manufacturing competitiveness and innovation, business opportunities in the United States and other international markets, people and skills, energy and the environment. We provide solutions through our leadership in:

  • CME Advocacy
  • CME Intelligence
  • CME Business Opportunities
  • CME Best Practices
  • CME Networking

Since 1871, CME has made a difference for Canada's manufacturers and exporters. Fighting for their future. Saving them money. Helping them grow.

www.cme-mec.ca

Contact Information

  • Canadian Manufacturers & Exporters
    Jeff Brownlee
    Vice President, Public Affairs
    613-238-8888 ext. 4231