CLC attacks companies for holding cash, while union pension funds invest hundreds of millions in the same companies
OTTAWA, ON: Canada’s union movement is talking out of both sides of its mouth, according to the Canadian Taxpayers Federation (CTF), when it attacks Canadian businesses for holding too much cash on their balance sheets.
“On the one hand, the Canadian Labour Congress (CLC) is attacking Canadian businesses for managing their cash prudently in tough times,” said CTF Federal Director Gregory Thomas. “On the other hand, union pension funds are investing hundreds of millions of dollars in the same companies, and using the dividends to cover union pension cheques.”
“Maybe the unions should put their money where their mouth is and stop investing their pension funds into some of these highly profitable businesses that they seem to despise,” continued Thomas.
The Ontario Teachers’ Pension Plan alone owns a total $741 million of shares in Barrick Gold, Suncor and Goldcorp – three of the so-called worst “hoarders” according to the CLC.
Thomas called it ‘laughable’ that the union movement would portray Canadian technology champion Research in Motion of Waterloo as a pig, racing to get its snout in a trough of tax money.
“If Research in Motion didn’t have a substantial cash reserve, they would be out of business right now, or they would have been taken over by a foreign competitor,” said Thomas. “Does the CLC want Canadian businesses to end up with as much cash in the bank as Nortel has now? That’s one Canadian company that could have managed its cash a lot more prudently, saving tens of thousands of Canadian jobs and Canadian pensions.”
Thomas also labelled the CLC’s attack on Canadian mining companies as misguided.
“The union movement is attacking Barrick Gold for having $2.7 billion in cash on hand, and for not paying enough tax,” said Thomas.
Here you have a global leader with its head office in Canada with $49 billion in assets, with 3 per cent of its operations in Canada,” said Thomas. “They paid $1.9 billion in income tax last year, and they had $2.7 billion in cash.”
“The CLC’s proposed tax grab on business would simply encourage global businesses such as Barrick, Goldcorp, Kinross and Teck to move to London, Sydney, or Zurich in search of lower tax rates,” said Thomas.
Reduced business taxes have often resulted in higher revenues for government. In 1999-00, the federal government raised $23 billion in corporate income taxes at a rate of 28 per cent. In 2011-12, despite cutting business tax rates nearly in half to 15 per cent, federal corporate income tax revenue was $31.7 billion. Corporate income tax revenues are up an additional 5.4 per cent in first eight months of the current fiscal year.
In Saskatchewan in 2006, the province collected $394 million in corporate taxes with a 17 per cent corporate tax rate. After reducing the rate to 12 per cent, the Saskatchewan government collected $1.15 billion in corporate taxes in 2011. A five-point reduction in taxes netted the Saskatchewan government a nearly three-fold increase in revenue.
“Canada’s approach to business taxes makes sense in a world where we’re competing for every dollar and every job,” said Thomas.
Gregory Thomas, CTF Federal Director
