When they were in power, Canada’s left‐wing party reduced the corporate tax rate from 28 percent to 19 percent. Now they are proposing to reduce the rate even more (and by more than the trivial 0.5 percentage point reduction proposed by the incumbent Conservative Party). As reported by Tax-news.com, the leader of the Liberal Party makes a very strong supply‐side/tax competition argument for the lower rate:
Liberal Leader Stephane Dion has pledged to further reduce the Canadian federal corporate tax rate to better compete with other countries and strengthen Canada’s economic sovereignty. …Dion told the Economic Club of Toronto…“A lower corporate tax rate is a powerful weapon in the federal government’s arsenal to generate more investment, higher living standards and better jobs.” …The previous Liberal government reduced the federal corporate tax rate to 19% from 28%. Dion said he would go deeper than the Conservatives have done with their reduction to 18.5% in 2011. …“If you lower the corporate tax rate, you lower the cost of capital for Canadian companies. Therefore, these companies are induced to spend more on capital equipment. As for foreign investment, we need a big hook to snare investment, including Canadian investment, that might otherwise go south of the border. Finally, it would strengthen Canadian companies against foreign takeover,” Dion concluded.