Cut Corporate Income Taxes massively to increase growth, prosperity

From the Frontier Centre for Public Policy

The federal Liberal government’s current budget proposal to increase the inclusion rate for capital gains tax was met with justifiable criticism and opposition – primarily from business groups. There is another corporate income tax increase looming. A 2018 corporate tax reduction, intended to make Canada less uncompetitive versus the 2017-enacted tax reform and cut in the United States (which came into effect fully in 2018), is set to expire starting this year.

According to a study by University of Calgary’s School of Public Policy’s Trevor Tombe, Canada’s corporate income tax rate on new investments will jump from 13.7% to 17% by 2027. Even worse, for Canada’s high-value-added manufacturing sector, taxation will triple. For a nation that is having a hard time, encouraging both domestic or foreign investors to invest in new plant, equipment and related goods and services, to reverse meagre productivity growth – as noted by the Bank of Canada – this development is beyond questionable.

This rise will hinder future improvement in incomes and the standard of living – making it a serious issue. It should be obvious to policymakers that increasing income tax on businesses and investment should be avoided. The legislation to make the 2018 provisions permanent is, alarmingly, not urgent to politicians seeking to appease certain types of class warfare-cheering voters.

There is at least one policy that could make Canada more attractive to business, investors, and hard-pressed ordinary citizens. It would be, dramatically and substantially, slash corporate income taxes – plus make paying taxes easier, as Magna Corporation founder Frank Stronach has suggested. It may surprise some Canadians, but, Ottawa’s take from corporate income taxes is a relatively small, but fast rising proportion of federal overall revenue: 21%, in fiscal 2022-23, according to Ottawa, up from 13% in fiscal 2000-21 notes the OECD.

This may seem ‘just fine’: let companies pay the taxes and reduce the tax burden on ordinary people. However, what actually happens is that every corporate expense, including taxes, reduces cash flow. The money remaining could either be reinvested or paid out as dividends to owners. A reminder: owners are founding families; pension fund beneficiaries (employees, citizens); and ordinary individuals.

As to reinvesting available funds, the less there are, the less capital investment can occur. Investment is required to replace existing equipment, or add new equipment, devices, software and vehicles for businesses. This not only keeps companies competitive, but also makes employees more productive. This, in turn, makes the whole economy more profitable, thereby increasing taxes paid to governments.

As for the dubious reason for the tax hike, gaining more revenue – recent experience in the United States is instructive. The 2017 Tax Cut and Jobs Act reduced corporate income tax from 39% of pre-tax income to 21%. The result: U.S. federal corporate income tax revenue rose 25% from 2017 to fiscal 2021. Capital investment rose dramatically too, by 20%, a key goal of many Canadian policymakers.

Taxes should be cut, enabling productivity improvement and bringing a future prosperity that we all yearn for. It would also keep us internationally competitive. We are currently mediocre, being around a 25% rate (OECD).

Canada has a hard time attracting investors. Now, our trading partners are leaving us in the dust.

Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy

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Business

Molson Coors beer company walks back DEI policy after being exposed on X

Published on September 6, 2024

Todayville

From LifeSiteNews

By Anthony Murdoch

An internal memo from brewing giant Molson Coors Beverage Co. reveals that the company is abandoning its DEI hiring and promotion processes, meaning it will no longer be making decisions based on race, sexuality or other categories.

Brewing giant Molson Coors Beverage Co., a large Canadian-American multinational company, will be dropping its woke corporate diversity, equity, and inclusion (DEI) policies after it received backlash online following an exposé by a popular conservative activist.

A recently revealed internal memo says that the company’s DEI employee training process has been discontinued, and as such it will no longer have specific “representation goals” in how it hires new people.

The company, as per a Canadian Press report, will also no longer be participating in the Human Rights Campaign ranking program. The Human Rights Campaign is an LGBT advocacy group that ranks companies based on how “inclusive” their workplaces are.

According to Molson Coors, it will now follow its own internal metrics to develop a “strong workplace where everyone can thrive.”

Robby Starbuck, a conservative activist and filmmaker, had earlier called out Molson Coors for its woke DEI policies, noting on X on September 3 that he recently “let them know that I planned to expose their woke policies.”

Big news: Last week I messaged executives from @CoorsLight @MolsonCoors to let them know that I planned to expose their woke policies. Today they’re preemptively making changes.

Here are the changes:

• Ending participation in the @HRC’s woke Corporate Equality Index social… pic.twitter.com/RuOVb1IuNU

— Robby Starbuck (@robbystarbuck) September 3, 2024

“Today they’re preemptively making changes,” he wrote.

Starbuck said that the coming changes include, “Ending participation in the @HRC’s woke Corporate Equality Index social credit system,” as well as “No more DEI based training programs.”

Also gone will be donations to “divisive events.” There will also be no more “supplier diversity goals” as well as “executive/employee compensation tied to DEI hiring goals.”

As reported by LifeSiteNews, over the past decade left-wing activists have used DEI dogma as well as “environmental, social, & governance” (ESG) standards to encourage major Canadian and U.S. corporations to take particular stands when it comes to both political and cultural issues, notably in promotion of homosexuality, transgenderism, race relations, the environment, and abortion. 

Agriculture

P&H Group building $241-million flour milling facility in Red Deer County.

Published on September 6, 2024

Government of Alberta

P&H Milling Group has qualified for the Agri-Processing Investment Tax Credit program

Alberta’s food processing sector is the second-largest manufacturing industry in the province and the flour milling industry plays an important role within the sector, generating millions in annual economic impact and creating thousands of jobs. As Canada’s population continues to increase, demand for high-quality wheat flour products is expected to rise. With Alberta farmers growing about one-third of Canada’s wheat crops, the province is well-positioned to help meet this demand.

Alberta’s Agri-Processing Investment Tax Credit program is supporting this growing sector by helping to attract a new wheat flour milling business to Red Deer County. P&H Milling Group, a division of Parrish & Heimbecker, Limited, is constructing a $241-million facility in the hamlet of Springbrook to mill about 750 metric tonnes of wheat from western Canadian farmers into flour, every single day. The new facility will complement the company’s wheat and durum milling operation in Lethbridge.

“P&H Milling Group’s new flour mill project is proof our Agri-Processing Investment Tax Credit program is doing its job to attract large-scale investments in value-added agricultural manufacturing. With incentives like the ag tax credit, we’re providing the right conditions for processors to invest in Alberta, expand their business and help stimulate our economy.”

RJ Sigurdson, Minister of Agriculture and Irrigation

P&H Milling Group’s project is expected to create about 27 permanent and 200 temporary jobs. Byproducts from the milling process will be sold to the livestock feed industry across Canada to create products for cattle, poultry, swine, bison, goats and fish. The new facility will also have capacity to add two more flour mills as demand for product increases in the future.

“This new facility not only strengthens our position in the Canadian milling industry, but also boostsAlberta’s baking industry by supplying high-quality flour to a diverse range of customers. We are proud to contribute to the local economy and support the agricultural community by sourcing 230,000 metric tonnes of locally grown wheat each year.”

John Heimbecker, CEO, Parrish & Heimbecker, Limited

To be considered for the tax credit program, corporations must invest at least $10 million in a project to build or expand a value-added agri-processing facility in Alberta. The program offers a 12 per cent non-refundable tax credit based on eligible capital expenditures. Through this program, Alberta’s government has granted P&H Milling Group conditional approval for a tax credit estimated at $27.3 million.

“We are grateful P&H Milling Group chose to build here in Red Deer County. This partnership willbolster our local economy and showcase our prime centralized location in Alberta, an advantage that facilitates efficient operations and distribution.”

Jim Wood, mayor, Red Deer County

Quick facts

In 2023, Alberta’s food processing sector generated $24.3 billion in sales, making it the province’s second-largest manufacturing industry, behind petroleum and coal.
That same year, just over three million metric tonnes of milled wheat and more than 2.3 million metric tonnes of wheat flour was manufactured in Canada.
Alberta’s milled wheat and meslin flour exports increased from $8.6 million in 2019 to $19.8 million in 2023, a 130.2 per cent increase.
Demand for flour products rose in Alberta from 2019 to 2022, with retail sales increasing by 24 per cent during that period.
Alberta’s flour milling industry generated about $840.7 million in economic impact and created more than 2,200 jobs on average between 2018 and 2021.
Alberta farmers produced 9.3 million metric tonnes of wheat in 2023, representing 29.2 per cent of total Canadian production.