In the upcoming federal budget, we'll hear a lot of discussion about "tax breaks for big business" and how we can't afford them. But as corporate taxes become a political hot potato, we risk losing sight of some pretty compelling facts.
For starters, since 2002 Canada has lost 500,000 manufacturing jobs. Yes, we've heard encouraging news about employment rebounding to pre-recession levels, but many of the jobs that Canada regained are in the service sector, are part-time, or both. Why does this matter? Because jobs in the manufacturing sector typically pay more than service-sector jobs, are full-time and create other jobs in the economy: twice as many as service-sector jobs. Take the chemistry sector for example: the average salary is over $70,000 and each job creates almost five other jobs. When a manufacturing plant opens in your area, making goods for Canadians and other customers, it also gives work to accountants, lawyers, restaurants, banks and so on. Manufacturing jobs are good jobs for Canada and for Canadians.
Nobody expects that we will manufacture everything that Canadians consume in Canada. We're accustomed to seeing "made in China" stamped on everything from cell phones to food products. But it's no coincidence that we've gone through the most significant recession since the Great Depression while witnessing the abrupt decline of Canada's manufacturing sector.
What does any of this have to do with "tax breaks for big business"? We live in an interconnected global economy. Investment decisions are made on the basis of many factors: access to markets, proximity to raw materials and the availability of skilled labour, to name a few. Not surprisingly, corporate tax rates rank high on the list of factors companies consider before making an investment because they need to be profitable. We want big companies to make investments here--to continue to make aircraft, cars and a host of other products in Canada. To say that we can't afford to be competitive on a tax basis is to completely miss the point: we must be competitive on a tax basis just to keep Canada's economy where it's at. If we want to succeed in the future and to see the kind of prosperity we've come to take for granted, we will have to do this and much more. We must encourage manufacturing. Otherwise, we are building a car without an engine.
Businesses want to invest in Canada, because we have a stable country with an educated workforce and access to one of the world's largest markets in the U.S. Instead of trying to make business out to be some kind of bad guy because they ask for ideal conditions to invest, we should instead be looking at how we can work as a nation to maintain and grow the key sectors of our economy. And that begins with a low corporate tax rate.
