Canada Corporation Tax Rate Is Going Down

There is a campaign going on right now, that will decrease the corporation income tax rate further from the 15% tax rate that will hit in 2012.

The idea behind reduction of corporation tax rate is that these tax cuts will create more jobs in the economy in the time of recession.

It turns out the people who are looking for jobs or work in the corporation are not in favour of corporate income tax rate cut.

In 2007, the House of Commons approved a series on annual income tax rate cuts starting 2011. On New Year’s day, the corporate tax rate dropped by 1.5% from 18% of income to 16.5%. Next year the final tax rate will come into place and reduce the corporate income tax rate to 15%. It is hoped that with the additional money saved from the tax cuts, corporation will expand their operation and hire more employees.

There is not a measured indicator that corporation tax cut will help job creation. Canada is still trying to get out of the recession. Additional consumer tax has been imposed on people to reduce federal government budget deficit. Who will pay for the gap created by the corporation tax cuts in federal revenue? It will be you and me. While businesses will enjoy extra ordinary tax holiday, general public will be burdened with additional taxes to cover the budget deficit.

Corporations already have resources for big time tax planning with all the tax experts they can employ. I bet with innovative tax planning and usage of Tax Loopholes, most of the corporations are already paying much less tax than they should have been paying.

On the other hand, people are being duped by the government and tax software companies, by hammering the message that doing tax is easy. Just tell me how much your income and I will tell you if you have to pay 40 or 50% of your income in taxes.

Corporations do not just use Tax Software…. and I have not noticed and Tax software companies trying to market their product to corporations. Corporations use many expert resources to pay their tax. If corporations have to pay 30% tax, they work on bringing it down to 15% without any incentive from the Federal government.

Canada is running on a deficit right now. There is no room for any tax cuts, if you do not want to send the economy further into oblivion.