Corporate tax cuts not delivering on job creation—study

April 6, 2011

OTTAWA—After a decade of corporate tax cuts, the benefits to Canada’s largest corporations are clear but the job creation payoff for Canadians hasn’t materialized, says a study released today by the Canadian Centre for Policy Alternatives (CCPA).

The study, by CCPA Research Associate David Macdonald, tracked 198 of the 245 companies on the S&P/TSX composite that had year-end data from 2000 through 2009 and found those 198 companies are making 50% more profit and paying 20% less tax than they did a decade ago.

However, in terms of job creation, they did not keep up with the average growth of employment in the economy as a whole. From 2005 to 2010, the number of employed Canadians rose 6% while the number of jobs created by the companies in the study grew by only 5%.

“Despite their growing profits and massive tax savings, the number of jobs created by Canada’s largest corporations was lower than the average employment growth across all sectors of the economy,” says Macdonald. “In essence, the largest beneficiaries of corporate tax cuts are dragging down Canadian employment growth.”

According to the study, if those 198 companies paid the same tax rate as they had in 2000, federal and provincial governments would have collected an additional $12 billion in revenue in 2009. The loss in revenue from all Canadian corporations would be larger still.

“It’s hard to find so expensive a program with so few tangible benefits as corporate tax cuts,” Macdonald says. “Canadian governments are losing $12 billion a year to 198 of Canada’s biggest companies, who are making 50% more profit and paying 20% less in income tax while creating fewer jobs than the average.”


For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341.