Flaherty steps up war over tax levels

TheStar.com – Canada – Flaherty steps up war over tax levels: Ontario businesses pay one of G-8’s highest rates, he says
March 04, 2008
Richard Brennan, OTTAWA BUREAU

OTTAWA–The federal Conservative government has stepped up its attack on Ontario just as Premier Dalton McGuinty called on Ottawa to work with him and stop undermining the province’s struggling economy.

After saying last week Ontario is the “last place” in Canada someone would start a new business, Federal Finance Minister Jim Flaherty yesterday expanded the unflattering comparison to say Ontario has one of the highest corporate tax rates among G-8 nations.

“We cannot ignore the facts. Mr. McGuinty’s own task force on competitiveness says that Ontario has the highest taxation on new business investment, not only in Canada and in North America, but among developed economies,” Flaherty told the House of Commons.

The Whitby-Oshawa MP accused the McGuinty government of driving investment away and responded in kind to a letter McGuinty sent on the weekend to Prime Minister Stephen Harper urging him to rein in his finance minister.

“Premier McGuinty, you may take offence to my comments, but I am stating an unequivocal fact: Ontario’s business taxes are currently the highest in Canada,” states Flaherty in a letter sent to McGuinty yesterday.

Flaherty later told reporters the provincial Liberal government “is discouraging investment. That’s bad for Ontario and it’s bad for Canada.”

Critics suggest Flaherty is waging a campaign to divert any blame for Ontario’s slowing economy and huge job losses in manufacturing and forestry.

McGuinty said the federal government is betraying the rest of Canada by undermining Ontario every chance it gets.

At a speech last week in Halifax, Flaherty said he wanted to “brand” Canada as a lower-tax jurisdiction and warned “if you’re going to make a new business investment in Canada, and you’re concerned about taxes, the last place you will go is the province of Ontario.”

McGuinty told reporters: “For the minister of finance of the federal government to travel around the country and seek to publicly undermine confidence in the Ontario economy is a betrayal of the responsibility of a federal government to champion the national economy.”

The Star tried to contact all 41 Ontario Conservative MPs, plus star candidate Peter Kent, to discuss the federal-provincial economic war of words.

The vast majority did not respond to interview requests.

Ottawa-area MP Pierre Poilievre was busy doing interviews on the libel threat Prime Minister Stephen Harper sent to the Liberal party, his office said. Foreign Affairs secretary of state Helena Guergis, from Simcoe, had a “packed” schedule. Some were legitimately occupied in committee meetings, but others simply refused comment.

Conservative MP David Tilson (Dufferin-Caledon), a former caucus mate of Flaherty when they were both Ontario MPPs, sided with Flaherty and agreed corporate taxes are strangling the province’s economy.

Ontario Finance Minister Dwight Duncan signalled he isn’t about to get into a verbal dust-up with Flaherty, saying, “If anybody’s waiting for blood on the floor, forget it.”

But he used a luncheon speech to “set the record straight” over Flaherty’s charges, noting the provincial Liberals are cutting corporate taxes by $3 billion by 2012, Ontario’ corporate tax rates are “middle of the pack” among the provinces and Ontario’s combined federal-provincial corporate tax rate is lower than those of all 50 U.S. states.

With files from Rob Ferguson and Allan Woods

Leave a Reply

Your email address will not be published. Required fields are marked *