The Canadian Labour Congress says tax freedom day is coming earlier for the country's corporations, thanks to aggressive government tax cuts.
While most Canadians don't earn enough to pay off their taxes until sometime in late June, the labour group says Canada's businesses will have reaped sufficient revenue to pay their year's share by Jan. 30.
The calculation is for 2011, but the CLC says that was two days earlier than in 2010 when it came on Feb. 1 and notes that it was not long ago when so-called "corporate tax freedom day" came much later in February.
Cash hoarding
The new report, being released later this morning, attempts to make the case that Canadian firms have benefited greatly over the years from both Conservative and Liberal government tax policies, which have reduced levies on firms more aggressively than personal taxes.
In a new analysis, the labour group says business taxes represent only 8.3 per cent of the federal and provincial haul in 2011, down from 8.8 per cent in 2010 and around 11 per cent in the 1960s and 1970s.
It attributes most of the change to a steady reduction in the federal corporate tax rate, from 28 per cent in 2000 to 15 per cent today, brought on under both Liberal and Conservative governments. Provincial rates have also declined, but not as dramatically.
But while the rationale for taxing corporations less is to encourage investment and job creation, the CLC says most of the money has gone to fatten corporate bank accounts and to pay the high salaries of executives.
Quoting Statistics Canada data, the labour group notes that cash reserves held by private non-financial corporations in Canada ballooned from $187 billion in the first quarter of 2001 to $575 billion in the last quarter of 2011, a staggering increase given that three of those years included a deep recession and slow growth.
Between 2010 and 2011, cash reserves grew an extra $72 billion, while the federal government was reporting a $33 billion deficit.
Executive compensation
As well, compensation to chief executives in Canada's top 10 non-financial firms averaged $11.9 million in 2011, the CLC says.
"Corporations in Canada are taking advantage of corporate tax cuts, but they are not necessarily using them to invest in productivity and jobs," the report argues.
"Instead, they have accumulated billions of dollars in cash reserves."
The CLC notes that Bank of Canada governor Mark Carney has also lamented the "dead money" phenomenon, but business groups dismiss the criticism, saying firms have increased levels of investment since the recession. They add firms will invest more once there is less uncertainty about the direction of the global and Canadian economies.
The CLC report also names names, giving the top prize for corporate hoarding to Teck Resources Ltd. with $4.3 billion, followed by Suncor Energy Inc. with $3.8 billion, and by Bombardier Inc. with $3.3 billion.
Others in the Top 10 included George Weston Ltd., Barrick Gold Corp., Research In Motion Ltd., Husky Energy Inc, Goldcorp Inc., Kinross Gold Corp. and Magna International Inc.
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