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B.C. government pre '09 election HST discussion. #4 pgs 9-27

B.C. government pre '09 election HST discussion. #4 pgs 9-27

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Published by The Vancouver Sun
Freedom of information request documents relating to Campbell government HST discussions.
Freedom of information request documents relating to Campbell government HST discussions.

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05/25/2012

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GOING FOR GOLO

The Wesber"n C amll:lian !E.corlomy in th If! l.nterru'I1ional AreflaJ

GOING' FOFlGOLD

.. - . _ ... - ~

IBusiliness Taxati on in W'est'ern Canada:: Settlinlg for a Perse na I Best?

Jailulary 2009

Can,llda West

FOU NDATII ON

G 0 I N G

FOR

G 0 L D

We~lem G~lleda:s eCOl~lM1ic prilliperlty ts oot cmlo/ good for tn!: Wesl, bu~ f,'o, Carl~da liS a.wl'hol~. Sut the We~t CilJilllm fest 01'1 i~ :lm~I!'{!~s.. Uke ~Ite athliet~ l!o:!wli fl,9 for ~f;)e. (OlrU~coi1f1i!1g ~'u\lnter fllympiesln "ianot!wer, ~s:tem CallWldia neoo!t Ul be 'llt l~i\=!.Op ot ilS [I arne if it. Is OOoofithilue to oompete sliJcoossJullryui'l the ~ntomamiofl!'ll G~nQm~o <lre!lll!l, eSPleDi8JI~y' as [tsoompelitorsstep up ~h~!r

.. I

The HOi NG FOR GOLD Pfojil1lcl fs e~am~n~!19 ho ..... ~es~ .~ positioTl western Canada i!l1 the gloo~~ ecunomy lhrQU!Jlh 1)1 $erl!;ls Qf research papefS, consum:atjons and: .s, semloail eoot:1omit: COl:!fefjiff1;CO in Va'I1CQ~ril'l Itr€. full of 2009.

Westann Economio D~ElrsSllcanQn d.e :I'!liconoml(J

DlverSiJlir:g~ioJ'lGal'lru1:l da JI'OuestGarl{l:da .

Canada

A{i:{lillona~ rundihg ha~ bt:loo pro'O!\I(I.e<J by the; PrtlvirU;l8:l1 of 'Brilish Co[umbia (Economic D~:yer,o:pFllel'lltJ. Albeltll (EmplOYlnent, Imm~g rll~ion OlM l!lJdu~~,y), S@sk~tchc'M'!fI (£nterpriw O,llli(! ['f'!!nrntati:onJla:rId Mallli~[)btl (Com:pe~m!;!'ena~a. Traii~lrlQ @rlO Tr,af:l)~).

• ,'.~ _'. ',_ .,':. -~. ••••• • •• ' ~. •• •• • ••• :',. _. I, _. _ '. I • • I • I •• I •

:';~~~t!~t1~~;t::~~=~;I~~;~~Ei~~~:E::~~2e~::~f7~;,~~t,

•••• I.:; : ••••• ,' •••• :':.-:',: ~ -, ' -, ~.:'.:.~'.~" ~~.~:_~.'_' •• ~'::' .. :.:~:.': _.: ••• ,' •••• I'~ .,:" ••••• ::.<:.~.:.;:. ~ I _-'.~.' ~

Th!il: ~piIlE~ns.!:«pfe~e~ ira tills (JOqYIlr1~~t~~.-tho·~e· oj the alJiil1or':8n~' ~~ ffiio:t.lleee·ss~~i~·t~·~~~·.~r;lh.e: C3 nadlBtWest' Fo u,nd~~~r(~ -::.,

~~~;~~,~;~;:~i'~;~:~~~'[:~!;:~~~li~#;;'~::j~~::~i:~j::l~::~#,=;~~,-

.; PQ!'l1Im~.ia·l·adVan~g!!, :"MqiiliUa\ftl'.t:oples.c:an .:be·cl.QWnloi'!de(H.(lnl.th~. Cafl9id:alNast IFQ~l1d~!jOF:J :~hsit"i! ~·w,ewf.c"l, : .

•• ".' : •••• ~ •••••• : •• : •• ·"r ••• • ..: : -, :.:. ••• '. :.:-:: ••• \.,.~ ••••••••• ." ." : ••••• ". ~ •••• ~.' • \ •• :. .:.:. :r ••• r ••• ' •••• :.:.. •• ••• ••• -, •

.. : .,. . .•. I .: -. >: :: :~~ .: :.:: .. ::. - i.. . :.;. ::,'~: '~r: ~.:. .. .. '.: -, ., ......•...

Lea cl ing the Way: The GO! Nfl FO Ii GOLD Project IResearch Pa per Sa ri es

Ttu:: grim8"1 ijGal or the. C:~nooa Wes~ fmmd1!tiDI1'S GOING!FDR. GOLD PfeJ>e~ Is kI afil6L!I'H that C~rmdl~:ma m~~li; thlll riiOlilt IPuotl(l ~ poHcy, decisions f:i;l;lmpnMng d1e ~h[lny IJr the OIJuntry :3!nd ita regiomS lcoompe~e in the uppal !3chElilon of the g~Qba! economy; The tiUimat.egaal,. howeveli. is to emHJre N18t Gem;l.da exPStfll1fL08"S the !OI!lg·,;~rm coo(I'(Im~o PrnlSpsrity ~h;;)lUi!ld!;trpi ns ~ I:JJgh qUElm~ of Ufie~uld <In ioouslvc!lnd c~lfi!"lO ~ociB!y In Wh!cll ail cflI12!eJlS cen pBrt[dp-al~ arm thrive.

The GOI NC, fOR GOLD PruJeet.'s lresearch Paper S&d~ help's :acl'!loWlIi'1as6 gu:atf! by prol,!j"dlIF~rn ~l;QuQ htfl.! I .~nd !imety In~C!lnf'!1j£lnOI] oomblllM wilh praotical options fur ~ililPJ'rr,,'f,n·fI p~b~iG 1)I;I~ic.y'$ rolo ~nroots rlntO Ce!l!!!!:Ia's ISconorrIJlc COI'l1:pC1lVlilrUlss. 1'ilee diversity of klPliCll C{I!o'ertH:i by the series is tru.errticltlml anu h~fihrlOhl;S I.IM, many f!lOl!l~ of p!!lb!l~ pooilicytliiat 'WlU ile£dlQ blilwrn'klrl{l in rono8rl if western Ca~1LdaJ-and1 by extension Canacla-alte to Bucooed in th'a gla'b-aleoorlQFI'IY ~n l!h~ diloodes ,ahead.

We C';E!nnat rest em (lurlaur~s a,Cid ~ ~~m]olll O!1; Ireacniv& \M:Imust take IProomwe step's tOday tn e['fi~lIfleEL pro~eroue lon10rro·w. nhe .coul"ltries nlZl,1. furmllle, the p!ubllc po1~t.)' barl will rail b~l!ld ~n lhe 9Io,t;.1)~e;oO!l(llllily ~!iiidwe ~l1e opporW,lliije$ llvalrable to Uleir Gilire~s snrTnk. ro.1uch 01 ~lIh!ilt m:u!llt be done is beyolila the scope of ;p(tblic :f.IOJiCY;: it isjusl. ClrlO ·fa.c~CiI.r, but ~t ii!\ a oriUC1ll~ faotolF, IB8decon{fm~1:: pl;lJi~ win han1!St~il1!l us just as G'tXId !'l[J~WIJ pfilicy will pfiO<pe~ iiB forward.

It ;is. impo.rt~nt to n;ole' ~hllt w~rI!iinQ i nth e global oI)COllr.;II:n), dOBS. not mean that O~h8[ r'e:[Iions and ether CIllllfiltric~ mU5~ I~~. Even ~ho~gh (If;1tiy O1!ecuFop!l!ti~or ·CO'lf! IrlInlk; !irs!, heal!h.y ,compen.UiOrl em] brillg wt!he best in all ~%wn-liie~. n~ere 1~ i1illlCh thAt D9ll,a>dlans eB'n .achieve !byWG~king with l.ntemllt~ona'i par-mer'S. 111:15. In hJFI'I. w,il:1 irnr>I'Qw ~~Qm~e ()'u:t~ome~ boU1 <I~ ho!li'l!! ,am:l1ltlroad. There is 3100 rr:luchnfuat Ca1fllB.da G8nIBilriffl from Iha t!\l:;Perien~s' of o~he; Ji.lrl$d~cijons <Lila this 1:& :a ke.y etememoJ ~hJe research ;papers.

Tth~re is much t.o disCLlES Ilnd Ihere [s muCh, ~D be ,clone. Ask any D:lymplcfJ(lhls[e' if the'ktrai~Ml~l ~~ WWCOlllf)1 e'l~ and they wiU $".:1 that diley are a:l~s t~jnililg, prepa.nng, and sesJcning rur the to~petltl\l(j cdi~t;:.The .. S;)Ime 1$ in.Jeor pllIblf,c poIJc;-y aPrrne;i:I ~URilpriCIV.ing our eoonOll'lic cOliTllilaUitiveness-it \Mi~1 al\Wly$ b~ !l ~rk. tn plXIgrest,

lhie aUiHml'S of Vhe papersweregi¥en the freedom til explorE! K'!lY 001)ics as thfzy S3\!iI m. IV; ~ re;s;L!It.~hc s,e~ie'S does not prQ1olki,e a compM~ $el of poll'Cy 'IllOQ!m'I"!1-a!ld~tlolls or a masref plan for Rlublll.ec.tm(lmic dominance'. Mor dces it represent UHiI "~~p w~ things ilt~t. must. be do:.n;a m OiIlikle weSler!) C~,n:a:de!moHi ~J~petltiw;l, Rather, jl pfO\lide~ a aer m I;l:l;~.ful ~p~1!; (l,f what a131le,nd :91hou!d be done oomlbillfe-d with prwocmtve recomrlten.da~ion$ aorroo:s a bread nBlnge oJ rele,\lsm polk1yfiles.

ful· th!il glolml{l'Con,omy c;on~lmJ19's to ~uffer ~romb.ad dQcMon~ :Elfld b~d p!;Ibllc po"c~.! III. ie ,r~(lrij ~i1tp"rta~l~~a~ e~e-r fcr ros'Oarell lilsUtu~sllkl! th@ CBi1Q;cI~ W.sst FQtlnd·alilB.fl W St~P' Ilalok flf"Om ·tIl~ups lind dmwfI$ of th!l: day-1.o(H1ay anI(! provijdlc polED)' SUIJijtl:sijons ~imedl8ttf1t~ 'i,I!~d~lyill1;fJ :&tru(nUI'13~ of our Ql;lQrlOillY !lrnllts lan;g -term ~[,l~~~~

The ~3per.s, are pIlrt or a lal"ger aansultatilon pr{];J;:ElSS dUll wi'l~ 1lU·lminate in Il semtl'lail ·tXIflfere;n~c on ,eOOflOl'Ilio Cc-mP,8ID1VerlCSS iF! the fij!1 of 2009 ~nVttnoco~ycr" Th~ ()o!ll~Gr~ wilf bring' rnWfn~tj:lln;ll, e:xp~ri~J\O~ 8.'S we1l QQ ~teFili "Can:adt~n klloWl~dg!;! to bea ron ~h~ ques~11l1il at comllelillvel1lgs~,

Robert Rt>~dh DireC!;or of R()s~r,ch

,·miS~~~4~E~;:~t~;~~.t1;:;,'~~1~t~~:rifl;!~::~~'::m.:·.

;.plscu.ssit:,m _fuY\1$eso~.mEi,~x·bul'd\Qli.lfI1P.i;i~Q ~;mJi')v.eslf!l_~ r . : ':.: h~rfl'lQ.l)ll:a~rOFl 0( P'foio'inaJI>!!' ~a1eslax~ with. ~l'1e G.S·T.'WOO~

':.:::~~:}'~~~~~':'.~!. '~~::':~~~~I. ;'~~~.~!~.~ j~~_::~til:J~t.~·T:~~~.:~ .. ·::::.·_:·.;~~\~. a>ig!lffl~~i._~~'fl;~~e·Q.l 't,~: hi~5:bfltenl f'~~~I\~g' fr~J~ .-:

·:.~~P.tt:!iJ .. · :Wlll'l.:.~U_.ClJ..·!'-1~, p'·r~n~.·:~rr~lo)iitJ{! ,~e.~mt~j!:¥,::·~lj~ :::::.".!h.~ ~~at[911 'Qf~P:y~I~Il_S.~ J~P.ll~ IUlfltif!,fthB ~e1i~1 !O)'S!Ilm_S. .

i~gim:e'~'tl;jrl~a!ronaIM'~~h :thlngs.·~~ .lr)rIP~0'lIi19 .. Irik,eep!_n.g.· -,." al~~!]oes •. ,less ~yalll~ pal~ to: thiI:Jl.C.~O\I,In. 'n ,g~ner,al '~i;!r:mSi .. ;with ~hril ~g~g'roir:g'cild' ihem~~r:tj.Js:$·~~~$ 'Pf iPaP.~~/ih~:cia~r. '. :·if19· ~v+ 'bas~ .:c;oi~' ·be··.Calc~l~th:~~ '~lmbiy .bY' :~cip:I~: 'b!llcii: thai . tt~t' C~:n;da'l~ 'g~~~~I~ 'll!~:~~:~~~~n ~'~ino~ lin ~(il~l~" "'jI~~~~~l~ '",~~;nts :6'f"~'t~~~Sl; ~~d"~~~ .~ the .cl,T.bEl'G~ '~s' :' .

.: a:~' ')0; :ciJm~"u~. w~~;·~ai.\.·thl,l.pod~:~·::.wh!i~ ~ome. p~¥.~.cii~. ::- "it .is ~;~D:Uy. ~~~~I~le~·.·· ':Th'l,! ~Vf' base .1S[fy~· ~rlSid,ef~bhl ':

S.~r2! ~~tqm'\S'Ih~t p~n ta~.,~l~·'·~.I~I~·:·Jh~.::OOI1~~·'Of ... ~"':.:'<::.' -_ ,::: :'.:.:._ ..... ,.', .:.',' .. .':.:"" ..

. ~ .~~.n~··~·.~'~SJi~e .~~.Wgg~~t~~,.·. Mos·t:~~arrl: -, ~~··~:... Impre~e.nl!n·g :'~' .~Vr·.";l,,~I;l·.·.proviQcl~1 'I~~~J In !h,e Wesbem' . _': ~84\1c&~::.·!n .fu;~"p.~i(iji;;~!cii~~rpom~jh~~·la~ ia~:s i'JnQ .~'~& . :'.:: ". Cil~~~l.i~· prO,"i~~ ~!:1iild ~'i~vlcr~'ty ~ ~ . slgntficant dJepanu reo ..

:a~s~~~~~~F~~~~~r~;~~'::~E.~~~~¥Ettlt::~:~ .

Canada W'r.st

lfii's fJ~r ~m~ tire· oompelUlw;mess or !he lJu~ (W" regimes in ClJlwdo~ {(fjJj' weste.m provinces; The dl5wS5iO.tI fOctf$S'S on tlJe tax burden JmpnssaMfnveslmMt a;s metMilNlKi by tbe margimH ,effective tax rete (MEm) ail capiml.n if; oom;!w;ted fh-ai wMe~, oompffbWvetlf1S-$ of t/Jo b-!1smfMI;5 t;fJ)f $J'S-l-ems In westen;! ,ca,l'Iad'a fr-as fmprowd aver die ,pa.s! ~VCf8l years; sohlevfng"per.rolltJl fJ(!8tS~ in' fl1.fJS.( =es; it stllliias asfynlfJCilr1l'1!..ay ,to go' for tile re{JiOIJ to ,emlP[}e 8S a("m~J OO(j16net€:;~ In lm in~'ornl' GW1~t Se~' refwms wMhl fhe GanlfOXl of rhe 'OOI're[UW{$glil~ ijfB sl1g!Jesred. Those inclttdfj ('fK/uc(k)nslfJ' the provfnci111 COlpI)f'tJ~ liJcome 'Iax rate~ .. ilI Be. SaskfJtchewa/f "nO MarriWbB, die fem-()V<ih;;[ prwlflr::iiJ1 s-a'kl-s ta'res 00 bu$fness,i!rpll(S hy W8Ji' aft1)e fl'<trrmmfZO!IDn ofplO'fim;tr.Hrt:gimB>S willi~' federal G'S't klbie dffimWJo retW-flI, fllW (J sfgrJlfle<m! rOOocoolJ in me METJt co~ld be iJclJM:Jveti by way of tire fmplefJllJlWUion ,0111 Business ~,~o ~ .(BV7.i: TIle lIlI1 wotlld bloadi:n (he iJmirn:!!ttax haSG W ref1eDl tire vall!l)()(!ded by IfioriNf ood dapillJl; resu/lJi'IIJ in 8' S{lbsf.8n(M redu:C:lj~ if) the burdl]fl of the tax s-ytiem OM inllWmenl ·8nd the gprU'I1atioo OfB~rot dislfJrliom; 'lIiIhlti) t;'ri1~C'(etizD ;fIle current cwpQro!!iffroomfl t<I~.

i. 'ntroductioB

In IhB mrdi!>t of the curr,ellt ,economic malaise pFeoipil<llOO by a world wid,a Iln!lnciaJI cril>is. it isoos~ to lose sight of importan~ strtle1'ural p>!lllc)' -prio,rtll~s. WitJi ITIl.lcli of tlt(l P'[)l:icy attetlltloo fooy~ onnrmI1Gri'i! mar'kets and b-ailclits, 1lo-ifc;y issues of room fiuI'H;lamei'ita[, struchM:al lila l'U1'e haw been ~f.iLlt (Jill the bal':koumaf.,

WhFle thiBi~ uodorst'(lndabl!B, it could ba ·atgued tfJllt allellJ!lt I>QFIlC orllle blame (or Ihe el:'Ol'Iof1li~ dim~llle-s \'IC flml OL,rt;e[\I6~ In have their rooUl; I n structural Imbalenrc~$ In bo!!h the publl~ on(j prlwte sector. In the llIS fiSCill imll~laflQes M. the ieaeraf lieVl't'1 have been I!lrtl~ alld penoislenrt 'rur :several ye.oJS, The govemmerll spending spree h as been matched by hotrsellolds, lIS hrn-tSetlold SOlvlr1G:S [al,es have (3~len to new and persisten l JDV;15,

~iile ,he CIIIilB,oiarrfi!>C'al slWalion i's better-at Iboth ~he 1l{jljiernmGi'I~ !lind t1ou-sellilild la~er-lJy worl!:l wide sl:E1naards ~loo~eI1o'td snvin'Qs mlcs Il[€ qelte 10;,v, aF1dfQr tll~ firs< 'lime in sever~' real'S there ilsl.afck or the pos£ibi1lily or lhe 'f.s,d\eral and some pmv.inolellgo~e'mlillents aciin{jllntCl deficit

DjSCU~SICii1'S of busi ness tEIX mf'Om1 .are, perh!lps, 13 Ivw pi'iCtfiry in thls conlID::t. Wlille 11'I1s Is 'undeF.jlBIid!abie, ill ill also Q m~8 ke, The ~tf\!()Wml i:fllbalillnoes at the, macro I'~io'el:, a [](I our ,~bmily ro weatl1er a nd respond to ernmc)ll'I'(> sl'rocks are, to seme d!~,reet, d£;flermiJ'l'ed by miOfOOOOllllmic CCfliSideral'ions related 10 tni,l'l{Is stich as the d9SI~'f1 (If tax and expenditure programs. VL-'1iliie gmteFnli1'ieilts <11 the p'rovirrGi~11 and fedP.l'ai &evel will no dr:MJbl be preo.ccu f)ied with 1l1e cUJrmn~ 1.lCQ11 ornia rn essO'!,i'~r th,e il~ts~ral months o,r not y¢O!'3), they must not Im;-e ,rght of longer-tam underlying poll~ prioritleB,

ihisp~per hi!}liligllt:s sewral fKJlloy prlorlltles 00 the busllless wx front, prlmllrlly frprn the perspe<:me of Ihe lou.- west'em Cal'ladilall pro\i'ln~s._ The rOCl.:I& Ja 0111 taxes '[hat lmpO:S€r on b<us:ir~es~ ~E'lpit~l, arid !,hemrOfQ impinge upon inVeelnu;,n~ deol&ions,

Th e dtseusslon bagll'l~ with m desCfipH;oPl mllie cun~ nt state of oorpora'l@ t~tion ln dle w·asoom provinces, The b-a8fs fro-r co:mp{lriStJn will not emir be Ihl) ather Gallmikln provil1oos but,- more impOrll"!fI!ly. lime rest of tile wmid. r:(llrpQm te investme.not is i nCr'G8!>ll1gly mobile

3

CanadaW'e.$l

----------------------

lilterll<JJtlollaliy. ViJhlRe capital mark.e!s hBve heart partially pamf~d b~ the current ,o~dtlt 'CHIMJ1, wh6l1~hing$ ease UIlI lInt:lthElY will. rorporntiDlI!i will be l'ooJdl'l9 {or new lnvestmern OPlJort\lnj~ies arnlrndtlhe world. While tl'lesEi' t!lWeslment decisions ~re d'rlJJell by myriadl oonsider~tiafl!S. thecompetltivanoos of thel.a~ r'etI!lmo ~. importallt

This wUl b~ Iomo".'j\e(i by ~ d'isC\lssrool O"r severel ret(lmi pos~ibllitie~. It is arg ued '~h1li~ w'h,iie t'hirl.QS are inTlipruvll1t!'M life busllness till!( frarn in Canada In genoml" ur'ld Wf!$~~rn Ql:rmda i:n p@rtICl,llarj me iilttpriWem,oi"lts can :be Ul!Jught.ilf {IS m;hievtrlg 3 "p6I'ilan~1 b~~" raU~arth~n "90l119 f(lr gDld," !If western canadA III Qohog to erlll'itgo ss a worldecoflomio leatter, it ean only do 110 III the QOI1~eXl of a oompeti6...e corporate IlP; fleg.ime which does not disoouJllge i:!Bpliar invoalffiilnt Two "e!lsy" reforms Hmt.lmm tiiko pIaco \~Un!n lfite context of the currem Ilix system .aft.! Ng:h I!Ohted-£1 rOOWlotilJ1l Lrt proY~n'Cl:B~ GurrpOrnle tFilcome WX rates (m ost pa rticulafi¥ ~n Se$~lc1iIewlll1i aJnd M~n1J'II:oh~): and ~he removal of prmd~cial salle~ W>ws Of! C;lipltal, ~~roh is; besle.ooOft1p!Jlshed by hafmool~irng prll'lllrnc,i~J s~l~s ·tEl')( &ystM!>S with 'the federal GST. A more "ni:dicilll~ appro!l!~h III alw discusre{f, which WOlirldlabal1doFi U1e corporit'e iOOClme l'ax. ElllOgeltlor and tax blJslnesses by w.ay of iii BUisillGtlS \/RIU'Ei T!'lx (BVTl-

Several taxes levied by iJ(llh lhe fudemll and ImlVirlc!al {jovemmentg rmlliings llpun !he capital inv.estment deeisions of busille~ll\. The 'f1I1gg.~ !1'flp!llfteont ts tI1e oorpomle income 1Ilx. (eln. CO'iPOralS income tOXI!l.S In Cal'lada Im~ 1ie,\I11ed tJ.y b(l{l"i' fOOl!fe~ .flii"ld provincial 9oveFrlmelilti,Wilih the excapUotl or .Ailll:lleua. OnU!!rl.o ~Ild Quebec, tile federal 90'1h3mrncl'lr eolteets andadmillJism corp[~~~:ltj) incomo t@x.es on behalf or the provlncQs undar the "fa); ();i1!e>o~fmls Agreements, n~(l 'prQvh.'~$ party to the agreemenb must l~~~ th8 federal definition Dr m:lrpomle 'ta~abl ",. illCIl~IIe., Qlld ~!iU'11 U11!!refofle not deline their own deductions for the: determinfltlm; or tha tox bil~il, 1I1100gh tile)' may ;gr.ml hl:~ crs;dlrt$ ag<li.n.~t priQ\iinCrlli income tax payable lO ;p:ffil,lide irrr.el1llives forvarimJS Ilotrvitles (e4)" RSoD). While thfi,l three pro'linOEi~ oul~de of tl10 t~:~ OQ~lecUo:n ~greeme"~ can ijl'l priocip:le clarine tne!r QoWIl oorp;uate lacorne tax blUse, WriUl very h.'W ~Xct1'ptioM th:By f(}lrow the red,er'll:1 dJeftiniticlI1 of taxable-IncomE!. As such. fll'( 1111 ~nlents and p'11tl1o~ea thefec}~ra,l gO'lo!'eFl]Jnent se~ the corporatCi! lneorne tax OOSO., and cheeses Lts O'I'm tax rate 'Clrli this ba$e, Oi~'WC[l ~s any credits for pMlicttJs.r ~"'tivi~ie&' thnl. nlnybe ~lelrned ,against fed~1 tili)riCS. paya:bl.!!;;U1e pl"ovlnoos then choose their O'NfI tax ral.i!$ Oil Ultl Slime base; at-o.n;g with any tax crodltl! U't!lt ma,}' be clllimeGlIgainM prv'l'inOla:1 taxO'.~ payable,

IFlgmel dtisplll}'S Infonmali on Oil oorpol1'lte inooFne tax rjiltjlli& ftlF "Iarg;B'- COJpOrll;tioo:s in Canada. at ~XJah Ul@ fedeftlll a rtd ~:mwii'lcr.alle~e I, bolh curr'E!ntly iilnd to 2012 on (tie: bfleis of CUT rent budget annoueeernents, At ~he fedaraj level, ~jl,e· CQfPOrE!:I~ lF1amn~ tax. 'm~ has D_BleR deolillil1gror tile pastl>ar.rer\ll yoa:~. (llld willi conlf,iluu to d,Cl so rClr lite next few years" 'wilh it :5iCl'teclllled to rill'l tol5q·tJ by 2U 12. This Is a !liglli'fic~ml d!3cres~ in the fed~~1 Clf wilte; as 'FeOOnlly;ls 200.5 [he general fedarel DDl1Pmate income tax ftlW was2lU 2':1b, and has been mUlch higher In the !1ot~o dllS!ent p~~l. A'~ 'l.!JIII be' dlsau:ssed I~:ter. Ulis is 'in generBI BGoordlillOO mU, woFjd~~J{t lrl)nd~.

The provInces. have fQll()'J,l{eoIj sul~ though 001"110 IhllliO eeen Ilolallty more Rggr,essive IOlhis regard Ulan othSli'$, 111 terms 't;ilr the general (nOOHIUlrlufaclUring) oorpQral9 llncom@ ·ts,>:; rat·a, th ij rates illl the western Il'rovin:DeS t6i'id 1.0 iboe· :lo'Mlr than tho rsst of ~llB COliJlllry', I"1JngDliIg from a fow of T C~ Q\lll,erta) to a high of' ~b (S~sk~tchewafl 311d Mallttooa). (lofopail!d 1.0 a l!Wi or n .'B~!) {Queooo) alld Q high (!II' T'6% ~NQVa Sool1a ood New[o!.!rldfarld) i~~ lhre rest of Hie COImtf)'; lIhii~ is ,Bla!) the ca!Ss'in the 'l'rn'Iln~factu~f!!lI S~Dlm. where oome prcMncesimp~~ IOi;'llSr rll~S (Sask11(lheYl'afl~ On[erlo. !NewfaU1'1rlland), with Newf.uUli1dlt'uH:J:'8 very klW ,'5[j.b ra~olln m9t1LI~~I.UOng w()!1hy of pllrtlcuf.lir rneiltiOI1.

AI!i. 'Indlcm,sd 8t1OVe, the f~,d'ernl corpomte ijl1oomlll:ax. rate is slated to f.l'I~1 hy 4 rm!!rc~'I'I'Iage points ove:r the next ({] uryeats, Some or lihe provlnoos h~- also sn nounced r,e\dII,lCIJons in tll€..1r c~rpora~e income tax rates. ~mporMmtlYi alii of time ennuunead mdU(];'lione \!ViII tako place in Ute we~Wo p(o"'i.ftC~9I-Brtll$h Columbi!!, $~skatdhe'N8n and Manitoba. Ihav~::ln announced rate feductions· over this Iperlo"d- The

Ca~ada IVest

--,-~--_,..:::=------

Aside from thl:! eerperme income ffi>:. DOlh tile fl{:!ae[:tl,1 g~vemm~[lull1d ~he provinces, im;po:Sla, exptJicil texes on CDr'P~ralEl &ipiilal, Thm.4Q h the details differ across provi noes, gellels It)' spca!klng, these t!IXIlS are levied all line stack of [)apitlll (debt pfus eq~ilyJ 1'1'1 CiIlOess of II thresliold. The rates d,iff'¢1" b~t~!lien filila~iall lind ,[iO'nIinam;Eal Inslitutiufi,s, w,llh the rale3 on liflam:ial ,instiMiOmi imposed at muclil hig,he;r rates, Tlte capita.! t:i!x Flltes fOIf" llofll·fl[Jan(:ill~ O!]rpOfEll~OflS are 8hO'\i\,'n .in HgI;JH~ 3 and for fine,neial, in~tiM.lons 1n Rgurell. The federul goorornmGirH ell(l11mHee! U~ CEllliCllI tal[ oOfllloo-fillii>nci,al

corpomUoru. lnt(JO Ii, MallY of lf1e prcl'liifloes ha\l~ ~Incfl' roil!:lWE:d ~uit tn weo~erfl Gal'l~d'<ll. currently ot'tly-S~~k<I!.chowan ana MernlWba ihil'1' taxes on the capital, of TiQi'i-finf!;ncj!i!~,c'Orpor~tloi!ls, wiblil S~~tcrhe.wan slated to e~mi!nate' its cap~t!;!11 tax, by 200'!1 lind ManllDba by 201 t The other l~rQ ... ii!lc:es a~e scheduled to phase-cut ca plta~ taxes 00 I'IDn~frrl-!mci!l1 cOFpoo.raHcms over the next siK yealrS; by 2013 therre wl~1 be nn feder-all or provi:rt'Di,BI eapitaJ. tB:( le~iBd an rtClrHIIl{ma;al

Figure 1: Gell,eral' arid Mantlh.lCluri'fll(1 (I" blTalck~ts) CorprDrnhl lI'iG;{in,u! Tax Hates illICBII:ijda, Large Gorpl.lr.ltll;llls" 21l08-,2{)1:2, %

H.:.1 11.0 10_5 10.1l li1l,Q
'HLQ 111.'0 10 .. 0 10_0 1M
'I~.O (10.0), 12:,0 Cill.O)
'I~,-O l:Z,D 12,,0-
14,OOi.O} 1,1"') (12.0) I Q,JO Lt2Jl) lUI (12,0} I
IU U.9 11.9 11.9 11.9
1~.o HU '13,0 iso 1S,.JJ
re.o lA.~ liU 1'6.0 1&,0'
16.D 16 .. 11 16,1l 1,6..0 1M
I",O(~ I lM r.; .. O) ~ •. 0 (5.11) lot.IJ(!jJ:!) 14.0 (;;'00 F$Bure ~: Cgrpu~,le Income Tal!: Rates oud T1hni~h,~lIf:$ On brockern" lhollsa,nds ,of $) in Cal1!1d'8,Sm.a1l (Cepe) BUiSlncss IIHelllme, 20108-2012,!It!

as ($l!9:l)
:to ($5000 itil (:5500) 3..0 ($500)
,IJ.~ (:$500) ,11._!> 1(SI:i I)(i) 4._5[$roG~
'1.0 ($,(lOll) li~ f,$'lOOJ to ,[:S_(j~)
.5,5 (.%00) .!i~ (SliGO) M ,($!j,OO)
8.0 .('S4(0) M($~(llij I 8.0 ($41JO)
M($~ilO) 5,11 (S~OO) M (S40~J.)
M($~M ~,a ($I!!OO) 5.0 [$~OO,}
1,(1 (S~OO} 1_0 (SM:lO) 1.(1 ($~aa)
M(S~IJQ} 5.0 (SltOIJ) fi.CI ($400) <:~~,§~'~ _- ~,,:-,:,: :U ($~OO) 2, 1 ($~OO)

:_;i- tiiWiii-&,diia'ild-:t::_:::_:-;{·,:;:' $',0 [$~i)m !i.1!I ($1\.00')

_:.':'_ - .. __ ... - ..... _ ..... - .... ~-

general oombi ne:d 'redemal ~ 00 (i:ulll1'm~tlc} aVef9fJ~ provin~ial corplllille i'lworml tax r'fl~'B IIl1 Cal'llldo In 2.000 \-'i'l3S 32.691111; blised 0fI mrrrol'bl budg!tt. aJ1!lO!ilflioernenls on the ~n of ~he redBrnl and wWinclei goveml:llI;m'ls: ~his is ~paCl1.eu tlil ~'Cilne te 2'6.39'!11), by 2(112.

F~ ur(Ji 2 gl!lpl~YS federal, 8ild provincial corpotUlC in~me lax raM8 fqr "smalll" CDMdiBI'I Cl[)fitr,mled Pri"'~.l:6' Corpoftdlons (POPCs). Agai'n. we see Il'liil CCJl;C Mtes are reJanvelyllowin ~hl;iWlllllem provinces; A!SQ disp!QYlld !!fl th~ figure.are the inoo'!'f10 hesholQIJ: below whicli Ihe cepc rates apply. MQ-Srt p[Th'f.noes ultill'l6 Hte fecl'erol threshold: of $400',000. wiith tlH~ exceptlolil o·f AJber\!I,SaskiiMlew.m aile! Ontari-o" which hm.r'es~19hl~y n~~he<r:Srtta~1 business threshQlds.

AlnoUler pot(:)fItiilJlly ~mp;of\EI'f)t Ulx. th:l!It OI.lrl impil1lge upon C:8pltal in\<ll}~mellt are sales taxes, In canada, thtl<rn arebesicaruy fDur types: Df {Iemleral s~llell t!JlltBS:L ihe federat ,Goods alld S{lrvl(,"e~ Ia'x (GS1],tl:ie Quebec S~:les, TOit to,S1),

tt~e H~rrnol'l~!ld Sa'l~ Tex i(l-iSl) imposed in New BnlflSw,iol!, N~oOuml!Bm;l 11.00 Nova SC[ltija, £lild :j)mvim:ia I ,Balles t;!x.eo~(PS1J Imposed in all ,ur Elm 1},1iher pmvil'1lccs e~cepl AJoorte., whict11mpo.res nil} :s;~leslaJ(,2

n!ll.lre 3;~pi~.a1 Tlax ha~es fill Canada, NO!l~Fh'!il!l1chd lu,emu~ID.IIS. 200'IHi!tU 2. %

(U20

1);225

,,100 (0 in :ina)

3.25

J,O 9.0
4.0 .... ,0
M M
4.~ 4,ll ~,o

HI

'\-,0

.1i.D

",0

CanadaWeS!

.~.---

This is not th e case for !iinanCI!l~ In<StiwtiQ~~_ AB: mdleated in Fi'{lure 4, capllaltaxoo on fj_'anc!;l'1 ,1r1~ti1utions are exp eet,ad to contlllml,ill most prOillJnoes i(1lt.o liI1e foreseeable flUwre. Mor,eovor. oornpared to 1I1e raees on Ultl nt:m~ fitlafl~i@~ sector, the cllpiitaJ fa·x raieS ~it1ipo,<:ed Oft the finon(;illl sec!.llr lire very hi.gh, Theiederal QitI\1emmant e~lli'IlFla:ted its capita' tax (lfi 'rinar~clal 3f1s~U.!lIiDnS Ii n 2D07; Albert.a did eo in :ilOO5.Tlile a1her province!!, pre" to oonlimjij te 'impose capital taxes onJ IiItBooial Ifl.stIliUtlons. with \I'le I1Ot~tije eJ:ceptlollS of Ontario Qn d QUleticc who have !lnrm!Jll~":eU ll1.eir ~nten1ig~-~ te phase ~hem out: by 201 1 1 •

. lIsklo: ~((!Im !he oorpomte income tail( end pmrlm;llal c.aplt<'l~ t:ax.es., OIher tll~e.S Impoooedl (In cap~t81 ean p>'Jrenjj~flly impinge ~pOIil Irwe-stmeflt Municipal property and bU9in~' ta;o;sa, fOF example. ,am Il narrowfy target,eeI captl~al t!m( imp0800 (In rEl'.a1 propi!lrty. uFlro~na[,erll'. ast\Jdy of IlWparly~:a~es Is very wmpJlcaled 91i'lll'ln tlle wide ril'n!l!l' oJ jurlsdlctlofls nnd property tal( s~'sl.ems imKlllved" They :1m~ net jnollJd!lld in this dti~cuesio!ll.

I I di:!tilJgulsil betlli'!l>en Seill(!r.;ll s:!li.<l.!l.1llllcs levii'd on ~ brand 1ll!nf;t Q·f Slimls lin~l lel:\'ices ;;;I)I! exCi~B I:Dx~I~,'~ed, Chi jllili~'!Ilar, nm-(}wly defined

~(l(r' The rocu~ II(I'C -is OJ! 11m fmmet.

~ T!J~ provi~= u:M1lh.r: 1~~c-r,uJ t{)~'eJil~!l~1lt ~!~f1 irnl~~ 1{(IriDO~ ·e.lo.-tist li1!x~~ en spe-ci'ne eon!lI1Iooi~:iN. s~~h :~~ ·~·lc~h~·I, WibaCCD prod~CI5, ga&~·

line, etc T~?'5~ !a~~ db nan., fDr ~ m{!!!,tlNll\ ~m1ltl~J'i.~ '~JX)n ~~j1dtBI, .

Callt!da WflS!

------_. -.--- -~-.--------

Figure 5: StatUlury IPnd EffllCUv.e S~I~e~ Tax R!ltos Of! Caplml Pr!i¥lm:~~. :2lIH:l8. ~b

"The OS!,. I!-IST lind ,aST liir>e al! credit and invo~ce type value added t.IIi;;)ll',s (VAn !l:n:d are iFil;PO~d on a v,el)l similar b1Ise_lJJl1.d~r 8 cradrt tl!1ld In','"Ofce VA>.T, the lS'I( is lexpllcllily reflloved (,rom capil.al ll'1pults by ~rl1ll.!e of U-.e input 'tax croolt A'S ~U(lh, the rederEl'J GST dces 1I0t8p.pl,)' to cLlrpjtallnpult!lsml do~ FiO~ impifl.9B upon cElpila~ ~r¥l!ie~tillentdecl$jOl'is, lind In th(!l h~!Jr prO'oifrUles lhBt 'Impose their ,owr\ VCrsiO:n1S or the VAl (Quftbec" N~ l3mnmiGk, !NGWifulJlf1d!anod and Nova 8cCllla), as' Wlln !Jill Alberti! (\~\hich nell> nil provinciaI' sales tal!; and tllerof,oro' DIlly the GST ap;Jles;),s~lles tex.es do !1!ol in general Imr>O's~ upon cap'lwl rnptJ!s~ The rernahlirlg live provinw:es (BC.SaskalChs,\Y,BfI, Maoitill>a, Ontario, Prin~e iEdward :151 Bind) lrnpose difJeren t · ... a,ri~~lolls of lho J'lST..

111w PST 1S lJeiiigned to be illl'lpoSe(j1 on CO'[mlnlers BII. the retaIl IlIMlt,. wiU, buslneas ,inrnrts sueh as os rJil~J ma-chin~ry ~.m:l equlpfrlOnl larll'el.,!, exempt rrom U1e t0lC How8ver, d'i,W ~illlllrlml~ deslign UllWi'l and holes In ll1e exomf'!lon systems. s()m~ porllon oflhe til!}; ends up falling ,em ell.pital Inputs, 8M .i.he:rel'ore impl:n~e9, ull(1ni ca:f}il.al [rnvtl:stmel'l't" Ana'lrsls done byU1e C;D_ H:Q.w.e I Fl:stlwt.e sUOOC"Gts~ll[. depel1.dlng onU,le pro'i'ince., tt~e proporllllll ur {he PST that Illiis 011 capirol rar,,,,es r:rom abot.ll4Ji'llb liri Ofl~!!:rio 10 7ml. i[l Saslundh~wall: Figu~e 5 mllOiU bo~h bi tl.taUitory sales tax rates Brad the atl'f:octw,e sales 18~ raws I~ed on ca.pltal in lite ten !lrO'i1nces, Of p~ rtlCUllmr nme is 'tl1e f'act tnmthree oJ the fiW pro~i.n.ces I.h:et Impose SignlHr:am PST OJHlapftai Inputs are v,'f!stem provlncesi(BC:, Saskawl1,S:W!l1l and M,mttdba).

With all af the prllllltlCeS £l'mj}loyll"g essel'llia 1I)'!he- Sllil'tl6 oorporate VOCOi'M til}( base, determined iby ,the feclemJ {FG¥emmsl'lit, dlffc,en.ces In the h»I~~[(ln. of cap:itBI aermS the p.l"QvlllooS can a'rI$a f,(bj" (Ive1J.3sic r~S{llns.. Ths firSt, and tilOSt o:bvlcms, is dlr1'ererices 1'1] p:j'O\ifndal .Dor:[lo:[iiW Income tax noles. The SOOOj'ld i!I aiHer'B noes inC'iipllallID: rales aCiro~S !he prmrinc.es.. The IIllr,d Is difterenDB9 ill the ell'ectlve E-ale:i"I~x ra~·I~led on business tnj)lit.®. 'The fOLl:r~h i,.~ diUerences in froeHlI tax CjlsdiUncenfiws for targetedl i.lW~tmelilt:s 'Wliich may d Irfer a~t;S fhe P.FOo\!\lflO£ls.. The fifth iis (lrffenences lin prtJ'lJliiiCi8r tS!lIlcredit Incentives ror targeted aCih.rilies,

Differ'en ces irr C'ofporat-C'l lneome, eepltal and $al(:s lm:. nHes luwe been diSCLJss€:d, Here I briefly adldrass Ihe mere ImporUtnt Federal and pra'>'iflcial ia~ orecUts_

At the f"ctlei1l;1 la~e,1 ,tho Mil most impoFt1fFlt tax creclitiJ are tlle AHarHii); Canada lnvestment Tax. Credit, (AGI'TC) ami lhe S'cienl.i!k: <Rese~roh and E~pe,flmen'laID~elj[]pmalnt lS H.M.D) credU. 'l"hs ACrrc [,s ur;antei:! at. a ] ~,~ r;a~~ on new buildinQ~ and -mlOichirun¥ !lno .equipment lit;~d primarily.ill the man.ufacturing, p[ocesSing" mining, oii~'l'icl gas; Ii;'I,rming.laggiilQ cr nsh;ll1gll1(1ustrl~s in ~he Atlantic 'f.HFO'ofinC"es., the AUElfilrAi:: ofrshom fllglOIll! and the ,Gaep6 ~~gioFl1 ill QLIif:bec:. 'The AClfCthus appllies tIl cap:ilal e:qJe'IldiWfI}s In Mew Brul'!so;oiir;k, Nova Scotia, Newfoundland, Prince f:dw:aro Mand and 'Pans oj' Qt~Bbec. ,OBpltallll'!leSlmel"lli> ii1lhe 1'0$1 of the 'OOll'llfy recei1,ifl\ flofedernl InV>estrnent t8:~ crOOU.

The t¢dernl SFI&EIO tIDI; cre(Jit 'Is' Impooeol @t a 20% ra'te 'OI~ qtl~ltf)'ln!;l research and! difNdapment (R&D) ~~p6I'1cll~u~e~; ltiis of·edit is ll'lYI'b fi:lf!,ln.dIEIble, FOr cepe"", 'tho SR&ED tax. credit r.ale i'fi 35~b up to $3 minion lin ~xpel'ldiWr,es. !I nd Is rtiny r,ofl.lmlable. W'hils' t!he· e'lig111:l111ty rule§·llre OOnilple~,as ~ gerlflM I rule otllITHI)'l R&D ,~~~n ditures (iIfilCluuing ';II~iles. sal.3rtes, mat.eri8J~ l;Illd .$l,Jpp~[es),~nd Ga,p"ii:~~ expeMitu res 01' machinery arrd eqIJipm6lit (but nat. buildings aJld SirlJc:t'u'i'iis), am elig Ible fer "th~ le'h~i~1 Sfl&fD tax Cfflgi~

-------_.--_ .. _-----------_.-------

$~ral pr,O'Io11i11008 offer 'r,l';lriations 'M thtl fedcrBl SR&ED 'rIDlCHldit. Fi!jure e cOiltatrlS s,eme cfthe ml(tval'it Informauoo for tf'l!:l flr10Mlncilll R&D tax credits, As cal!) ba: seen kOIlil !he ligurs. with th e~c.epl!'O<I1 o,f Dnl8rlc lind !Quebec, most of the proYincets offening R&D crooils sl mp Iy rnlrFQr ~he fedeml SMEll credil In terms o-r ellg~btlily ~!1d!, witlil tlilf.j: exeeplkm of AlbiSrlEl, do not P:11l[;.e B. cap on U1C sil'e or tile credit. Ont'arl!t's InllOVlltiOin Tal( Credit 1S:largflted lOsmaller rlrms, ami a,ppliestho ,creaillo 100% of Cllmmt ,R&D expenditures, but onty 40'11l of cap<it@1 A&De.xpendiHArfJ'S. Ol1ttl rio ilfoo 119S <l hi;9 her cre~tt fOr RiS_D ~enu!if~\lreS rnad{l W Fesearl1;!h ~ilstiHn.86, Q;uebeo alro hats ac:redit ,geared to R&D 'e-xpeooillUJeS to U{I!lvarslllies ami ni5earch InsUMes, as wa[lllS Iii 'C~edft for R&D wagcs whlcllis phllstid:"'!iJut M liIrfl'lls get lIIrg~~

,2tI~b aysf n~ ResllaroliJ InllliU!te il1'x Credit

~S;;b" 1i:5Qt, R&D' w~li(JeB

3~ I,;iniil.r$l'I;j[ics .aJ1ld Re&e;(I'r,dl:! Instlllt1:e~

Apl»ii~bJ i!!Ilg ible Ri&D rellUed l'i>;pend 1~!lJ.re!l fifl~I\I(lBS cUl'rejlt expemliturEll1 ~lRd m,~clii iM!)' and equlpmo.Rt;I; oepc f~le tl:i~ld i:J S~rn f'l e1<.:jl~[lI.i~S.; f;:CPC ~rOOit I~ Mly ~yndilblc; I·~rgc· ~!'edlt l~ 400 rCI'und~,J:jIe-..

rederal e1!glhil'ity '[uiles;,: (1111), 'remn;tI~bli: fllJr CC:fliCs; nqrn-refllnda-biil for largt!

'nnm$, .

for 1'ir~. \ ... lih .t~;;;able, illoon~e under S400K SIIil(r O!lt:illil L100er S~m ~ha' orad'lt is AVl'lii~ble tip te ~m &r! E:-XP'!=,oor;ture~: 'Olr 1i:rrfis wiU1 lll:imll[e i~ccms ji'lilllli S~~(JK 10 $7001< end C';]lplt~1 unde.F $~.(I11 R i!l'tlrtl~~ credit 1:$ 8~all'$ilil!l; 100Th 0'1 r::unreot exj:)elmdjl.ti~ umf ~~ t)(' .CEipiUsl' e~pend!l!J'fI;)$ ~re ~Iig~I'C; MI}' Irl!:rUoo~bIe.

IFor Iillg'Jlill: ellpendlluJes to an eligible re~I)I!lr¢h i!lSiil.ute 111 Onlll,ltllIlp 1:c;J $~Om _'n ~:qJ~mdIIUf'e!l; flJli!), Rlfcun.cJab(e,

fO~ CCPCl! w,lth ll<3ooCS up to $Wm aSt n!iili,ar~l. 011 R&D 'f'ollQ'~ up to '$3,j'l; p!1~&~d :[iolNfi lu 0.5% for Ilfr1l5 with assets from ~1)1l' IrJ $7Sm: §O'lfl of \ ... ~gcs 'fJDr 'unr,eIEi~Bd :51uruWIW1!Ct;;)f.!I ~rB~i~Ui'I~; iiJftlr ~i~.!flcI~bl~,.

Creell. Il.pplle~ !o- .81lA'o of ~1~lble ~~D e:.cp~i'ld'itLIiesoo tl!1fvcn;ijie,B. jl1!1bUa

nl~ilrd'i (\ei'lle~, ~se'.llfoch 'oonSlDrtiU!11$, . ~,~ fl:ll~ f~(j\wooab.le, .

'Ca:nada IR'S!

<--------

-------- -----,.---

3. Anal'ysiis ~nd Evah~jtiofl:: MaruimH~ Hfedive Tax: 'Rates

Th@ v;;lrip~iDn In pro\i\lndf1l tao! pDm~les ,relat~ to IC8plt~1 i!'fv~stlllent makes II dUfle:q,!jtto cDlmpare tax regjmcs 9CiffiSil the prD'i!:int:es if I termB or IlhIelr net fmpll.'t11: on Ule incef!l!1'ite to I.l:rulerl.ake LINes.tmOl'll The tOilC~pt ar the illiluglns'l ellecti",ei.!lx rB:le (MfTro on capital allows us 1,'(), addw(l;~s Illis lssae In a oor~ceptY91,lf s~l~ple BOO stmigtU1u-fWL'!i!'d mlllnner,

The M erR ,0111 c~pU,a-l p~des iI summary rnC<I.G1,J1l'e ofihe ,extant to which WlrfmJs t~es limpirlgc on Im.estifrlen'lt deciili,onS', \Nhilc wliilflwhat det!lllBd In its detennlnati 00, th~ lJ;a$ia idea lJahind U10 MlEllR nn !l8Jilltar is quite; ~rnll_l.htfOlward. III iii n1(t8suret:il by !lalou'lating the amount.of ta!l!:t'ls paid as a poo;roentB{le (JUne pre-tru<. Il'9lmn Qnll'le rna.rglinal(break even) unil ot capital tiMel would be required to cover Nm taxes !lnCl the financing ()~ t.hat c:ap'lla~ with debt and eq~Pt.y.

Fo~ exampllo, ~t iI busin8<S'S ln~esls lin nJ:l II1Cr~me1llt81 urmit, {If C!lp~tllJr t.ne,t, yleld~ II rm~·ta);. fll't(i.l O'f return equal ro 1 (Xhl 8i"Jd, aflef, title imposltlon of V,lilriOruS iaxe,S on tile ooplrol and IIHill Income- that i~ gellcmres, the rare of ostium IS t1qual to 6Qb, thO' METflis 4Ulf.b {lr~ rrlIFril~~ ~ dMdeti by I 0%'],. m1~~; I rr this example, ~ID~t 'of thi:i pre-tax rate of 'relrum r,m ~ ma'rglll!lIIHlil or c~pil:a~ ~ rcq;llired to p-EI)" the l:oxt!sassoGia:tetl t1l¥91ii!i i1'9' 10 the capit.al'. The; hlahcr !tI!e MElFI on c8pit~ll, !he tlireat.er the extent (0 wh'lch tile business ~ii'.;I; sys:t~1'I1 d[GOOUI'Wi:aS~ru:I (lisOOI'l$ ,llnveS!1l1€)nl. Moreover,ltsrialions In the MHH 8Cr~ dlfforenl types or capital end bt;. ... '1ween eector can dislQft the ili1otlBli(1rI oj CNllpiltal alDngillea'e diiinefls10ns as weiI'..

Thl(: main seurues of M Em co leuletions In lEi C1:lF!~dlie,n, CQfIlex!:. !I)liJd lndaed the; world, Is worik. underla~fI by the F'fl-den!l~ DepartJ'rlfl.!'!t o:F Pi!1!llloe (l;ndU1e C,D. How~ Ins()UUle. In tllis di5CU~IJ'Il,. J I,I!tilille ,~ne CJl How!\} [ll1istlMe MElRs.,whlth hove recently' peen i.Jpdated.s

Flgure ., presents ME1IRs on cepltal for 200'8 Md Iproj~Cf.etI to 2012 ror all of the p'rovlllc~s 300 ioi C~nachil as a whale-The ra~tM ere W';;IighleclllV£l'ages ifI!ligteg<lWd ,o-...-e<'F bom mlli'!uracturing alld llon"'lrn:llInufaaurin.g $sCi.Q(S, and ov.er four t~ es oJ ,oopit!ll-mBdhi [1;81)' snd flquJpmenl, oo:iI'd'lngs ,~nd ~\Ill,:Ictlmes, i'n'renoo;r~es" and lO!i'lli. R&D capil.llJl liS ner Illcluded; It will be, dJscu~scd 5!~pamt~ below:'! Tihl.1i first thil1gll1l1~ is, evld'oii:lt from lila fiig:ur!l is ,J18l the M'ElRs ln ia!l. of the pf'{i'Iiinoos ere e:x:pecled Iii) deool'ln~ ,OV{lr tile n:exl 'Fou r ywrs. This i;s J8rg:clr~ bef.9USe or ~e ertnouneed reouctlons ln lheredC'l'sJ t)!)~ponue i!'lClOOie lax. ram. frem ~Ul currenl I'Bvel Oir 'Ul,'5Qt to U:ilft!,tJ by 20'l2, l~ discussed aboW;!, and shmvn in Figure: 'I. SOllie 'l)f tho

Fi{ju(e 7: A99ftl'{laW Ma:rgbiJiHI Effective, ~ Ra,te;s on Oapillll,

L.a"fgil ClllJllIlmtlDn9l, 2008 and 2012, % -

lS,S

1:'i,O

1.11l

H,6

2DJ

tpro~[nces (notably Be, &rnslq!tchewa n and MlIlnitobA) w111:abo l~rthGI r COfpoJl!le lncome ta~ raleS over lhi~ period_ .Anmher conlributor 10 UH;! reduQ~iM :In METHs fiver lhl~ perioo is lila e:lf.mim~Uon of p FO\lfTioiai capital taxes: on l'1on4lnallcial I nstitutilJflS; by 20 l:l (2013 10 NoW! Soolia) 1'10 p~ovl1f1Qes wJl1 lellY ge;nf~BI ootpofa'~'e

j, Tb~ main mllr~~ rnCfl) ~'(_'1I~nil.llcl M~r.tl (2IH)~ ~nd 2Ji1!:)$b), J 'O';'(I'I1Id, H~~ to lIl~![k l}uP"rl!~ CIK:n and J~ll'j{- Mij~l:i: rt!rll'~I~Juu$ly jiC'~widi~g

same c,f Ih~ro1w nllll1b!.>f~ ~ d~1l! [I,1Hizro in these jl;l~~[s. -

4 R&D c~pr1Ltliulr~ 1!le II ~'h'lIillill-fOpo.r1jDm OHgLC ,~p:iMq ~tool:, Their il!du9Lqn hi!liic \\'C:[gb~1I ~,'t;~~ wt:m(d h~¥u O'Jbly il 'SinlllllrnpaeL O~ 'Ih~

(IV~rrin 'MEIR

c!Lpital tIDiJeS on OOI1·~I[j(lfld31 ri1StituUons, :Bec:EllliS€ of t~ il'lllliali1res" by 2012 tho welghloo 81.IBI1'I{I,e M:ElfR In C8iOOd~ I~ ~~pec:tl~d to rail [rom its ()l.!~II1tI~ I 01 29.1 q'b to 21lJl%,

Comparing MErRs El!ctOSll provinces, and (ucuslli1gon thiS' rates for 20 12~ lAAlSee that wWi'I the ex.captkm of Alb~rta'. the M n~ on: ca,plte'l I'n tl't~ fi[)ij r western jJroviiiiCOS iIlfO higher than UtS O,madian average, This O~iliY be sur~prnsino tn ~ghl of ttle fact thatpt'cwincl,al crr lrates If! ~h~ W(lsrern pro~inm .. 'Sar'O g.cl1(l~@11y lower U1an ~m rstes In the ~til1ill' pr'~;,JlflCes, The h~gher (:',apilal M EllAs In ilie wa~ll!m COrl!ti:lflm provinces 9!'ilse rOf twa basic raase I1So The fiIst is!J1e fecle;ml ilWeslment I8x ~rndt! 'ofi'eredlor liiV6Stmtmlt tn AIJ:lI'Iti:c Cllnada and paris of Qlume'(), ll11ls Is e.xpficiinly des'lgnool.o bwer Ille cost of capilal. ilml the MET1R, 'In th~se ;prwJloos in ordler W encourage il'lveslJii)'O,lIl (l!lI a, regtllnal basls,

The secDni;l. end IiTIOJll ~elo~~m reason 'rrom a pfO\!'lncl!lI18~,pollcy point d".~ew!.lsthe imp'()s~tkm ,or p'ro;,;incra~ saF:~ l@~ElS on capi~al In puts, I\s di!>cussed :mhnve. in AUaf'l~ic Cllrmda and Quebec prcMJlI:lial salas are rem"ved from caplt!ll inputs by \~rtiile eltne Imposltioll of:lll ~redit arid l~n,\l'lDice VAT ~~m'J(miredwttll the nsT. 1Il!i~' Is 1l0'l the cmS8 in ~11nl~! of thewe$!'llrn pro¥f.ncei-Bc, Saskilltchewan end Ma!l'itoliJa"""nor in Om1l00 or PEl. Ihi~ sJgllfficanlly inCfeasss l!he cost of ca pital and the M OR ()O c8llit<t1 tnlilese provi nees, OtU,\o,\!l<lgning ~e hdluMce of rJlWi,ler CIT rates, or C()Uf,$1l' AitJerta, WitllOUl Q PST. hss a relutivoCl)' Ilow MHRcompllred ~o the of her provinoos.

AUllOUg It expenditur,ee (litR$ID O[)I1Sti!JlItB only f! sl'Ilall pernen of capt'tal' I)xp!lnditu:res. g;iven fhee p~r!ceiiV'ed ilmpOrUince oJ ill110valil'lfl in pmmotil"l~ .eeol'lamio growth, the tID: trellirnen~ of R&D menrs II apeclallook. Flgum S prwidel!i: METR8 oI1R&O C1lpltill. lh~ in~thoooloO'.l" follows McKenZie 2005 inld :ZOO!}, and me fig!1r~~ reported in tn6 rrgl.ml are en IJpcia,te of Ih9Calc\.lI'atillfls !presented 111 lh~e. papers; r~deTs are re'rem~d to too p~~ers- for ill dela~locl discusSion or the varioq,Js R&D ~ax Il'1iItes d Isp.:layed 'irn the figura, TIl e d~sc1J:s&!on heoe focuses on the last rrJ\.'i 1ft Ihe figure. which reports the 8ggregate M ETR 00 R&D CBIPit'el. Ths Im~rpretationtjr ~lwse nambere is identical to the MH~"Ot1 other lYiJes of 'Cllp.il81 dil~clJssetl ab(Jl{tl-ti'i9&@ are !he propmlon of the berore-llll~ r<lt~ of rotum[)1'11 11 n tr~lI·BSllflilen't in R&D c~pll.al reqtriredw pay texo's.

lilm::e thl nl;llS are r'IOtab~e trOt!'! the calcuIBtjon~, The firllt is that '!lie METR CIFI R&D o8:p;ilel i~, lOle'f!atlve for arl (]if the pro';,ij!'lc:es,. HllS reft€ots· the fi!ctlhat. ,uie tax $~tem in Canada, at both the Jeoffillancl provlnoiallevels. Subsidiles JlUl'1er than lll:tes irw~5tmel1llf\ R&D at the

::'}5 ,~,~~~ :~c~~' :;}~~:~~L:;;'~~~;} /i~t!.*~:~.:'~~"

,-~.9~b -lUllib

·"'\3iH'q~ -7J~'b

.SJI.3~~ .9.0.991; ·~.3~b -'lll..m -l!:4.Mb -S4-Mb -ln~2% ·3~.llq~
-]9,1~n -lU~b
---
<~~~ -27.0q~ ,-3.~mb 1- ·~b~'I:I -~i.1!i'1Ib -:ll1Wt! -11;;1.7% -2g,.al)ti
-1O.,6~b -<17cMb'
-~~ -.S~,9qb -Z6mb .;>,z"o'Itib -Sl3'lIb ..a1.:'\O.b -2$.7% ·3Mq~
~21,l3f;b ·n,~~
!laMb 39\il·Qi;! 3~,:l'!~, 37.1~b 1I7.7>lti 42,Mi1 qO.~b J7~
·2\l,B"ib ->l7.t% J2~!~qjJ ·2,9,O~ -n,q~ .,'l7.lMl .n,t}% -$Aq~
-11,~qb -'la,'.il%
·5,11lll .5.,rnrb -~..wb .SA% ,-5. t~~ -6..~q~ -~;1% -~1Iq~,
·~.I~ -.$,,~b
-l5a.M~ ·WI_7q~ -UO:.9Q' ·In.4~ -t:l:li6~ -147.13<1l -33114b -191U~b
-33 . .5'fb -n~b -29,3%

-19,2%·

-111.1%

·13,O'Ib -13.O'~b

<l3,~~b -.33,2Qb

-2S,,?,!Ib-'--1 __ ~+~ __ +- __ -+~=;';;:"+-===--l--_~~ +- __ ---1I -I

3'II.IJ~

·21,61l~ -13,~iM;,

'~,'lrIb ~M%!

~iI; F!ir Alb~fll\, Q!lIarl'~ ~n!H.QirelJec', tl'lll 'nn;t n~nl~et I~ l~~ i:iiill~ 1Jm I'Glc-n,,"~, ~e till< f3'!~ RBSu:mJi:lg thot none or ~I'!t: nrom(:llSl e~,~ Bmd ",~II:$1it>i, Il~O ttl;!; ~:1i~ 81e blf1dlf'ltl; 1MB second I!rulllbot' iI1ll1!:'~lI assume s 1hBl alll1ir 1~~ c~ps and ilmlt~ B'fe blndillig>.

10

[)lllrgh Thus.. UtHi a~a:r-tex rm-o ,111" reu.Jm 0111 ~l mm:girml irm;:5~fiIi:.ellt In R&D ~Ii ~Cl:LtaH~ tJ.l9h~J tha n Ul161 bwfllrEl~tIDi I>BtB of ~eltlrn. 'I'l1ia sLlitmldy Is typlcall'y jum.IReti en Ule basts of k!lfi'i,vledgw ~"Jillo~er:s lIlrolllghout the eCUl1ll1l'l1l( .8TlSlng tram Iprivalc ~l\1eS,tmenl i!'l R&Dc The£!e ~iII0\letB mean 'that the ·6;()cial rate m reUJrn (i,n R&D Is hi!)ll1S'f then: the pri~nte mOO af return, whIch 8uggestl! ~lle fieoo lor ~he government iOO subsidize R&D 9C n'llIt prtvale ,comp!lnfes ,IJomlLJct mure 0,1 It

FlnUNi 9'~ ,Collfblned (Fodernll PWII.llllci:al/llJDci'liI) Statlltory C!U1PQmt9 I:ncllme lax nates, orECD c<n!l'ntrie&, 2(10'11, 'It'!)

25.0

26.0

au

30.2

'" N.~~·~~M~~~~;:·<·,~.·f. :~;::t:-~\:, ~~,·~.~~i.:

26.5

3M

Tile secolildlhil'l!llha~ is n.Qtable from Iflelfgure lis thal the METRs ,are r'eally neglltive. For examplE!. [Ita R&O ~1ElR In QuehBc, ~UiSi:imfliG lhal none or th~H)~PS ~!ld lilnits on R&D expellhdiUJraa are bllFld,lng, fill ~ 172'A%. This Is a SllabTfJ sl.Ib:s"ldy, Amrme" for e:l!lIJrnlple, thIDl. me requi~ed af'ilar-t~x ~9te 'ot rewm OF! an nncrementalliWe!StFllelrt In R&D is 'I~. Pi META fj'f ~ rn.ii% I1'leQI'IS tI1;ml the investm:enU In R&D carl eil!m :a bf)1ioI'C tall( rote of return. es low as :3.7% and Si.m 0(1 p~ornQble r~Otn ~m eoollol!lflfc. point of view. 111e comblnall()'n oiflJie fet:ieF!llI 8ml prOVin~ja:1 R&D credits: give" rise W perhaps the IiTIDSt. '(Jtmer'tllJS R&D tal( ~l.ibsldy r'!!:9'fmc- III the Ii'Klirld.

The Ibird !11iJ[e'!MJ:1tlly aspect 'D'I l1igtlnl e ~s !hal while ail of Ihe provillces pro~id'e slJlJ~la.l1tlilI8!.1bst<floa to R&D, ~here Is qukea '!.'lids \!\srr,mtion in the s[Jb:9ldy screes tile provlf1= White it is possible ~11 IlrinclfJ<le U1!lt the ta:l!sLlcsi:dy to FI.:&D ~hourd vary across the provlncos to r~flool different spEiliQvers 8ssoolated wm~ d'Jff'ereoc!ls in the illdu~\risJ strtlC!Ufe, II' is ul'Il~k.ely that tilis is the dri'i'ing force behjndlne p~lnciilr varialicm. M al!emlli!iv.e explanatlon ls tha'! the pro,\!iflces may tle involved in subsidy competition, r.md am seel<irlg to (lffco!;"'~y ~teoll R&D ,acU!Jily foom each other. niis Is,. ~C1 be Cletlf. a speoolatwe, l1y~htl'~i$ 011 my pa'rt.

sorar 'we hwe focused (.ji't' Q .oompsmon 0'[ Ibu.s!iness Uixtitloo ln 8 e:anadi~,n con~c~t. But o,f C-Ql.lr:S8 DElntldlitln (!oolp!lniJe:9. compete 1ntem~trlJiI1a~ly. Nolwillilst~lnc:Rn9~1l;e cl.lrmn1 fi~ml~~ in ifl\l'astmenl mIlr'k..ets, corporate ilWO'$lmoot Is l:ner~srl1gly nlobitB Inta.m~tIofla]~.. \hi'hllo th(:St9' lilVOS~FIlflf1t dsclslons a re driven by myriad COl!lsld8f!!.UCl'1S, too competitiveness Ilf UJe tax. regime .is 'Imporl.pl!)l..

Fiigl,l re 9 presents the 'slaltlto.ry ·coJ]JoI1He ~nCOri! e la~ raleS iii tt]EI 30' GECD [XU.!Iltries for .211()8;~ FigIJreUI presents ilnt6'm!!t~cm~r MUflli on capital for 80 cmJIlI~rues for :moe. Also I(lC-IU(Jed In th:~ t~blearo too MiE11Rs for 'C'~I'I!l!d!l111 2.01.'.2. and me' fuu,r wl3m>erl'l 'P'rovillc!1ls (or 200S and Z!)112.

11

[(~n~1I1 J. M~Kc~e::...le _~ _

-~- --_._----- ~--------.--.----

Camada l~es{

, 7f~.ia.·'.·,::':/;,::::-·::,·:·;::·::·,'i ':.:: '.'!.i Slim

D'~~~~:i:':S':,~~:·.J~_{:~2''"'-: :·""{I----~-ll-%-_ --!...:.'-'

a7.o%

14,~

.' i'l' 'Ui~, oonlJ.S iM!~r,mlilllIM ~ 'in~Jd~, 1he 21}L~ '1Nt'!llrull' ~If~~ !g~ I~te·~~ ~B~itBI r~r IhB' LIS i!1 ~e_m'.l. ,. 'Wlii~hltcd Ii')! (;01' in "'On~len~' 1;lOOD' US di!41111B fllO' 1IlB pllfil:;d ~IliOO-21iOO, Soo=; qh~~';)M M!~1l: ~OD~

From Fi{iure fI il is tNkte.rlt that the 'DlIrirMl (comcrliloo (ederaVprOlJinclal) Eiallit-Ory t~~ ret,!:) in csns daJ is 'qu~le higt1 by OEC[)~and;'lrd$.. AI i~fst, '!Jove' 3H~ ill 2®(l:S it Is the !lrth hi(lhesl: fn th e llsl, W1i~le the sG11~dlJle:t$ r(!~luc~lon~ thaI wtll Ile~·url! . .,. ilfTip1eill€fll-ed by :2012 wi]! reduce the fare to just over 26%. 'Ulis is ,aWl only aboot equal to the cummt DECD 3liemge,

TlIFfli'il'lg t.o the, Qllpital METRe ,sported in Fi(lu,e 1 a,ill 200il Canada has th,a ] 21th hiOhest MHR of U1C 80 cm:.mtrif)'s ~ISlecl LI11 the tab~e, or the ~'W amI) Countries, only 13 !,US, FrllnCle, A!Jstrakia, Jepan 1iL1ld Kurea,) have 8 ME]iF\ oil ca;pttal higher than Canada, or the four W"eiitern f.lf'Ol!il'lre~, AlllIefla t~flk$: tho bCslil'lt.l;:matlD:rlill,ly, with! a rank oJ ~'611'1,

Vlihlle the clr fate reductfollS sclleduled over the next. four yean;; would move Canada ttl 22'1'10 Dnlho 200S META list, anI:! similarly imlimVll the Fa fT.k.ii'lg of ttlQ w-es~om provlaces (All:n1!Jl.il" for exa mplo,. \liQUid mow from 2iDth to 4211dj, this of 'i}Ollffie 'p"~sume-s 111 atthe o~h(i1' COlJfI~riil'-S m~k.0 no ,charlges' to !heir bl!lslnesS '8~ ~e{J~n'les.

12

The inffilj~0ble cam::luaiolill ill DUll C!lrwda mil S, w:holel lind the WlBs,tem ;prnvlnoos in pa~UctJ!ij~! do not have '8 parth::ullllliy competitive bUsiness ta:ueg:i me IntemBllonal1y; thoogh tllings are improYing. If! ke;epili{l with ~he "g~1l1l fOf gold" theme, it iii cl9ilf (h~l Canada ill generet and tlllO We'stern pmvim::m; in panl'ol;illa~, are [totcurren~' !fI(lln' ~an 1iMpooilJlm.~ lNhilc same proiiiim:U$ a,,~, Ilcme .. Jnl,l "p~rson81 bests,''' in £In inteTI'!(Itloil1lElc:o:nIB':¢ W(I am foiling $i)!'IiH~M .. tJat smrt. Whill:c scheduled redlJc~kloo In UTIli reder8'1 ana some p:ro",ilit:iill 'OOrpo:rai.e ilfl'oom,e I,Bi rates wiU move Iheoountry, am! Ihe provlnGes, closer to Ihe ,POcSIUlll, th-ere is stiIl5ubst~n~lalraom ror imllHlvement. ~HI1I~ wastern p!'Qvilll(:eS ilr,a trul¥ golli(;l 1£1 '19'[1 klr (!O~(t,~ tll~Y WI~I h@'!j\em be more ,Ilggr~i~ii! 1n a>(Jdrc8ssing &Orne aHhe current diffirullies with tllerr b{!!si ness tax regimes. Some ptJiSSible strategies in 'Ihi!l regard are dls.cl!lSSed nex.!.

4. Going f-mr Gold: Cl}:rpmnr~e. Tax :Refoun in Wosbuin CiHUtda:

lNiithi'fll t~~e ool1te"l\ of the eurrent bli:&iness 'tax reg[,lne, there are tw-o relaUvely "'simpI1e" things tJ1(it 'the western ,mwinoss C!i!1'I do wltlllil tlile COflle~ of th-"HJUrrelv't. t~ I'egl me lO !rnpro're tile ta~Mion ~f business inoome ii!i1tl th~ ct)mll:letitil!en.e'SlB of th~ur~m: regime~ ~5' measured by tJ'm METR). The' (imt is 'to' red~!I~ corpornte jooomel\1lx rates, The second is totJ;armQl1ize proyiroc;ial sa~e~ ta,~ systems v;~lh tim red~ral nsf.

~!'l limns of en rates, boU. Albi/lrta l!flId Be Iilwe prO'\ilnoll!l corpoFlltle income l.ex ralil:s of 10% (Be by 2,1)10), W!lih Il 15% federal elr rill£: slate!:! for 2'0" 2:, the resultIng 25% ell Imt~ \vlli DB. re,latli\!,eiy COrrip6'~tiVfl b~ QEeD s18ndards,tho!.llOh S!in just be [{I Vi' the z{)CllJ. OECD sverli{lS oJ Z~-~ (see FiglJre ~n, M(m~ :importaril if! this l'@gard are SaSkatchewan arid Munlwba. with CIT r!iltel:l'of 1~1L floouein:g Iha~e r~ tes to t O~~ duml¢! b!3 lOp priiol'ily ~~ these 'tMl provll1(le;s.,

GCI\I1irmrrn~ntl'i typiC8!f¥ e::ot:p'Fe~ eencem aboUll!l'!HeFinll CIT rates for reV!:flue' ~i'll>rm;s.. There life sti'l"€Jal respenses to mis, The 'n[.s~ i~, thet gover.MlGr'ttS should lie ooI1CS1i'fI@daibr:l<UIt lhlngs oUlar th~IFI CQrpornte It!~ revenues. CllrporutG lncom a taxes On cmpital are 011 e O'f the FlIDSt OOO(wmlc:plll,'f lnefficief1t taxes :11'1 a goverlIr'nen't's !is cal arsenal and are l,lllfJlioodlYIClllWeSlment 8nd l!;jrl;l\o;th. Mllst $tJ!.Jd1es' cl:!ow tha'l corpor'.r!te [np'ome tB~es inhibn bo:tn tile st1md,ard of 11l/ln9 and BCIllnoniiC: {rro\IVIIJI1~G "(lrr ex~m;ple, a rece;nt ~I'I] pirtmril

. investiigoa{lion oHlle impaot of (lor;porale 1~ltl9IHI€' amwlh ina Cllfladlan provlm:iall L'OllIe;;i. WIIS Ul1drl!lftaken by DlIhlby and F~rede 2(1ll1l. They show that hig,hefm~rp.crflt£ in,eorne til); mtes :In C0llm:l.iBrn pTOYill~6S l1av~led' to t[}Wer .p,niy,ate il!WO&tn].lllflt rlml s:1ower ~ f'(I\'i'1Jh. TheIr ernpirioa~ estlrnates s,ugge.~t that a 10 peroenUlgl'l polIn rer:fu:otion in U,e corp'O'ffl~e income tax ratc Is reMcd re a , to 2: perco,f1tEltl(l poll1~ merease in the anlilrJ91 flrow.th rate, 'They LJ,OO 'lI1obr ,~s!mnllres to anely,r,e ml.loorpocate income tax 'cut in Be ir1200'l. They find tl'Let ~he 4,5 peroeo1£L,[l8, point CIT nale out in Be willi lead tesn 1 UD;~ i!~ease [ill reel per capita (lLbtp~l 'irru the proyir:lGe in U1elong-run.

111is 1:O<ild~ ro the second t'B<sponae, which nddressea th e, r&veFlua eencem father more directiy. B<eca use cerporete immne taxes I nhibil ;I1\1~me.nt '~Ildgrow!h (albsit p(.wharps tempo1rnfily), cutting oorpOfaJtelncomelBxes promotes investment, Higher rlwe$~ntenlll1.e!ln.s hi{l,her irocoFIlil,'Wl'rlcl1 mC1ilns hl,gher gov1Ilrnment re.o.~lue-Mall~kiwandWeinrera20OlGcliO.SW!.lmlcalou.la!ionsoftood~namlore .. fllni.le reediba:ck from ~pl}rl3te lneome tax. cuts within Uta oonlex1 of s,tan,gllrn growth models, They ~IIDW that Bt leaet GO%! Or tho sklliclass 111 FeVetiue ijs [ClurrOOd over time lhroli:gh hiQhor lnv>sSlmenl-

A thkdrespoflSe 81,1)1'!(I lhasa lines is pr[)'!;llded by an IUlelysls of Oanadal.mdertulll.\lrl by Mintz!lfid Smart ZOOl. Ihs,y focu'S on iflooililie shininl{l l:JetwOO'l'l 0041'lp.eI1~'~~r~tt(]ons ~ocalilig ln drrflWel1tpro ... hm:~s.Will1ollt riilovil19 me.Chril{:~: or p~li'ple, II ,o~mp~lmy can reduce lis Imal tax burden through a ~trate!llY {Ii bOrIc:Mrino qy' subllii:!li.aries: in hin1ir-tax pl'mIlllces and reducing (JioltJll If) Imv-tax pro~lnce5. NUnlZ and ,Slnart :::;003 estim~~ lhillt a CUt or one 'j:l(ll'OOl1tn,g,e pol[lt in the oo_'1lo'rnte irlcomjH~~ rste lJy 1:1 *Ingle 'Pf\O",im:e D3IIolSeS 8111 ,so/!:! increase in the corporate til~ bese; due iprima,ri~' to lneorne ~iftlng.

6 MIlII'i' gro~""o'lh r.lwel~ ~Mw Ibw:, wllllot.h~~'~y ~im!~ l1i'I~o:f~wjb ri~ 'i~~p'md~1lt of'fh;:: C1T r!lte,,'~IC':~~nC!ard afliYil:(g (~S ,j~~~IU'C>:l U>' ~r

capiiIl GOP) b ne!lllAi~!~ ~lfoc~riI by toe en: IL1 i.Mw l!ro~l~, mli~ grm\;ilm .:fI'~cM OI'I<is! only in til;:; ~f!msilitlil ttl qbc n~w thig!l.~r) !~~I of GDP ~~ C'li~[lllJ, L~ tr.oll:5l.LllDA pL"I'iiild \Y.PLcall)' 1alls fQr n 'I,f,IIlg .!IIM, nus. !lie grO .... 1R i:flc{;t~ of clr .~flI~ c!!!4S ~a:!t lie Yi~\\'<lIl es ICIIlp(ll'lry, bUI.!ong I<iSI;:ifIg. 'IIt1i1e cll'e 111~ (~tp;lI4PJ:Od or I ivijng) ~i1ie13 ,3~~ rpcrnno;in~nri,

13

CanaJdaW!i;.\.f

-- ..........

All o,f 'this i3uggasts th~t red'Llolng CIT Me:'> in th~ ~s,tem p ro~iflc!l'S would II1'Cf6i1!Se irwestment.gw"'i',bh and m,e ~t8miard of livJng.a nd W(lulcd I'Il;It" jn the liJllg.run, have' !I substanli~Jty f16l)alilve; Imp'~ct on gil'!lefnmentrevefH.lo. A f'lrlll, s~ep S~s~at~bewBIi'1 and Mant~j)ba &!mu!d lower thelr CIT rates te 1 O%. '1.0 be Otlnsirlellt with Be and Albena.

Th'B seilona ~gimple·ltling on UH3 oorpora~ tax fro;m that U~ western pmllincs$ call (lIo t(ll(l1,ll,ler the MEm on capital. amI ,improw theoompetttiveness of their lmsll't,ess tl'lX !>ySt6F11~ is to cllmli:n0telhe taxation or l!u~in()&I, ,oopU:al ilnpu~ In theJr pruvirmiat ur'eos tS]( regimes, As discuflSed aoow. this i~ partlc'\Jlorly problern~liil:: tn the thrli8 !O!restern prolJilllCOS t.h;U lrnpese II PST-ilC, Sa~kBLt;howa,n !md M8!litob!l_lid ill O.f1t!l'~la. The tilxaUonol business inputs Via: tlie PST siOIliflaal1Uy increases !he MEm on capital in lIlese provinces, mrtwsigl1ihg 'Ille il"lRlient}O 0'1 :g~,ner~Jly Irn. ... ercrr rates. W'htle,SQ1iifjij Q'f'U'tl~ CQuid 100" aceornpllshed by reforming tI~~liI19 PST systems. the best ,mppmsdh would be to namKlnile '~1w ~m.IV11Ilcl~ I sliroes too: syst~rTilS wi;th nle fedellllmrr. (IS has; beel1 dona iln ,Atlantic C:an~dR AI'l~lysis done by the feder.s! Oep:arlment or ~1Ii1an>::)~iindl'e~leS that nemcriifl{ll ssles t.a~.ea on capital ,goo~~ d:{::I~vers one of tile highest "bangs, 1m dle buck~ on ~he t~ reform f~0'i1rt,." They use II dyn!lmic cOIlllJ!ltU.able, gOi'u:mal ~ujllb.rlum modelto es1imate ihart. a 'I pflfC&1ltage fXIirl! reductiion in the rewllUe to GDP' ratil) genemw[J In ili,is Ia.'Shlon 'HOuld lead to !;m almost 2% Increase 'in steady stlrte G DP per c!lpita.

Lil1dertaking these lMi'o "simple" rer'[](rms~lo~YElrif1g tlw oo~p:()l1]Ite il'lC(](me tax rate ~ndeJirnllnalil'lg p.rQ\Iinoj~1 sales taxes on bl1lsine~~ CIlPPlol tr hannonr~lng the PST wi~h the federal GST-wnuld I,(l,wer the MHR oncapit91 in Be. Saskatci];Bwafl,ma Manirob~ lathe Alberta mle, wtiidh is the "gulll slai1'.d'ard" r,'om a Canadian pernpeG'tiVl)" Til is wo!ldfd be 3 sign.ificantimprovement ami wo:u Id (ll:aike Ihe business rn)l s1ste<m in western GBrr~da mnre lir1lerrwtlollal;Y competitive,

The M'O basit:chang;trs disOlf:.!>..~ed above-a towering of cmpota:te jilCCiH11C tax rates and the llanrmnizalJOf'Ior pro~inci~1 sales I.3xes with ~h6 Gs.r-woLild 'go sorns WllY toward' rerluclF19 the' 'tlllllHliinrl or c.apllal' and enc{uJrn,girng investmem .!J; \wstarn Call1Qda. Wili10ul mini'rnl~lrng the challen9~S ImolVl;ld in implementing !liese" ctla'Il@Ss. p.1rUetll!1'I'1y lMe harm[Jnizatioll or :sa'e~ lillOOS.lhe¥ elll1 ~e~sily" be lIICCOn1lptished wnthin the 'firornework of 'the CldITe.nt 3ys~~ifn: they arc not a radlc(ll- 'Ill !Illy sense.

Another IlP!lro·~ch W01Jlld Ije 'Lo un ctargo a mQf,~ fUfldalmenta~, some rn~9ht 1;)~11 n "r.!dlea~," rcfOnl1 of the t8X8itiOrl ()f I;)Llsl~JE!ese$ in weslern Canada" There are sevE!'ral~pll(ms in Ihis r~ard. One approaCh. proposed in prevtol!s woi1o; by Richard Bird, Ken McKenzie al1d Jack ~;,Hntz. v,'ti1uld be ro ijmpl'il'ment ilcompIBH~!)' dtfjemm IIpprnad, to l:looJ,ness tl'Ixation-a oosi'ness "I8!l:m ,em {BV'l),6

TIl!"! kfe,~ buhil'ld tl'IC M 1$ 10 lowjjj" the t~X!liIl(:)f! of bu~ness caplt!lliby ~ndiflg ~hC'! Cllfpor',Q.ta, ta:( I~$O' ~8y from "in~~me"lO'Iwrd businessi velue adcled, Su.sinG&l!t)s· otdd v{Jhrfl by CQ'mbining labeur lind capiu~1 wil,h oiile<r pUl'Cha~d Inputs. l1w wille added by labour Is II'I~ oO'!i! Ctf :labCliur (wages) willie the v.a,]t:Jo added by cap.ltal' is Ihe eest of capital' (I;oth debt. Briel equily), ;10 broad teJ1I1S!, the INT balie oortslste [IF reV€!lues, tess ~urehases of current fnp[Jts eJ<'Gept I'abour. less deprl:!'{';iIUij(m itllowa,ilC~S" hf~ r'(i.yiilli(!S paW to IJ1.B ,cmWfl_ rn geneml' terms .he BVT base CBn De D31c ulated simply by IItkdiO[! back. the appropria!.e amo~nt~ oJ ijnwreet ~ rid i.W!],Q's to ~h!i! ,em base a:s: tt ts curnrenlJy ca~ctJ~a~d, The BVT base Is lIlu;lI(:(];rnsid81i'a!)ly IJroade~ Uian the err b<lSe. and theref(l(re nl(!Lllttl'3 ~. nq'1){:11I JD'Wor rate to gem~I'~te Ule $<am6 re~~ml,le.

To uncerstendtbe moliva~olill behind the BVT. !t 'is lDsefuilto Vet)' Ilriefly explore nm" the B,VT base compBres to the! present CIT base" f~rni1 e,n uoonorllrcp.erspectill'e, the appropdate ~x ~e5e flOr an irlC;come t~)i. Is 'eamomic iac:ome. "",hid, [equines tihe de(hJOIion from Ire .... enues of the OP'PClfWnrty (;OSl of aU ()If tile' inptilts used In pr5CILm1JlOnl (curre nt expenses, im:lludilil9 labour, !l!lI we1~ a<iI interest e.$socia'ted wiUl d€!ibl. the I.lPPQ!1l,.il1ilty cost ,of equity Ililance, lind ecenemtc ,c!epreciatton). Illihe a pf'lrt1jpriate d'ed.y!."!io.)s Ive it1ildIO, and

1 s~ ~~)!rOO {!'~~ :B(l;lIu~o~r 2~.

S See Bif~ Rnd Mil:itl:. ~ ~n~ ~I,rd ~~d Md{~lwe 200 L

14

, ,

CanadilUlfst

the oorporSki ~.EI1:'; lis Ie,Vje(l OIl a base oof'l;si~tI ng of eC:~D:rnio inoome, Ul!EI MHR OIi oorporare eari!!11 \Vl1Uld be zerc, land the crr would 00 oompletely ,,;,eucrall.vith respect to ca.pltBl, neitlwr ol1courag!ng nor dlisoo'UrlIJ;llin:g il'1V"6sl,m~m..g

III reality. as dlSClJ1ssed elir]OOr, t:he METR 011 corporate oop'lt8ll!l hBrdb'i'JiltO In ClIlnllda {or ell>~w,here). 7111:15 is b~lLi~ Ihe corporate lneomc t!l~ (IS lt 'B:!:ist8in prActice ls not·~ ta'K 011 eoolltHnic inCQme. nli~ ia nue 'fQ.r sewral li:eaSO!'l$, ClJll_oe:ji~!.!ally, nne or ~e most i rnporttlll! Is Iha,t vdllle payments for debt finoflced cap,iullt!lrit¢l'csQ are lax ded'1,JC!ilble. payment$ fer equity lin:!ll'iced oopillli' (th e opp'mlllli~lry' eest DF equ;ity) Olre not. Eq lIity liinElJI'l'Ce, liIo;;e debllinance .. does nm tome tree, Ihe 0tt~n!.ltlity {lost (if eqiU1iy fJnom:e arises r rom the fllOl that investors lin COrpg~aUons havu the opportunity to 'ilw!l$llileiJ" hinds, IIndllRrI'l a flne of return, eRsIl!l!i!hielre. 1110 neeIi to gene.(aJt.~ a retllirn high enough to oomlJ'lmsa~e sihilreho1d,m: ('(If dle income ili!;!s Iar9lul1ie, Is no liBSS 0, {lost.Q1 d{)ir19 bllls~oo~ ~limis the need! t(j generate 11 return high 01'10\1£111 to pay tile illterest. en d!!'I:J,1!. Because flO ,tiedilfCtiCitl f(Ji: the 0ppoouf\ily OO$t Of e<!uity11in911"ee is !lertTLilbedl.m'(!er' the Canaai,llfl C~T, ~he CIfT ea n be viewedl as 8nimplici.t '~fi)( cmequit'}, liuulrK)ed cerpmate (;apit~t l1htis disGrimirl~tlon between !Jsbl and eqIWil.y financed capital i>BiVtlS no mtl(lF1IlIIPll~pose !lflId .is: econ<Hui'oally costly"

,111 ;],ddHionl Impos,irt9 a IIlX on oou-porate ~~:pil.eJ rntrodllDeS anether ImpOfwllt d istqrUon by d:t!rrtQllIlg till! Felati~e prices 'C!'f' lailour aad caplta4, 1 a MrNil1!J to a business tu base thal does rmt discriminJ£)tc ~{]'ainst:cliIP1tal relaGlve to laOOlJf wou.ld not only generate the I,tsum~ iJene'lits IIs~Q>C1 atoo witli lowertm«ls on C~pil!ll lJut ats.o tadlJCtHhl'l inefficiletlcie=s associated wlOI taxing labour nnd caprtal :at wirlery di~ll1'g~1 rates.

Although ~he B\fl explicitly trrl~$ a tax. on corpotale CliOlpat.al: romp:1lfoo to ti1~ imp'Hci~ too! Imposeu byth~ CIT; il,l does ~o irl a more eHiciant and sensible manner. iBy irwiEJdling the '!;',~llJI(l added b~ ~~ bo~r ln the ta~ baes alorl!;! wi!h cS~l,lt~1 I~ ~lllows for a SlJl}st~fltiial redul()liofl in Ule erfifcWe' tax rate an capitoL MoretJYor, by cUminating blliO'FC$t de<luci.ibi lit~ I~ taxes e(j,ui\y o~pl:tal at the same rDte es de,bt c~pi~al', f'(:d'u!ClfI'!;l 'fet another dialOf"Ucm ceused b~ lJie cerperate il1oon1l!3 lll:>L 11

Iva illdicBted 1l11;tQ'\I'oe, Ih<e eVf balSe' i~ CIDfisiden;oly bro~,der than 'lheo GITbase, This mesne Vh'lit !t~ revenue neutral BVT r,a1Je (lim be' very low, Bird BI1Ij MinlZ :omol) calculate thai replee.illl} the pro ... indi!1 OOrp!l'l'lIte linC0fIl6 tax wilfla BVT thaI 9enerates tile same rellEN1ue would reqllti'e ~I BVT rata ,of under.3% ((jepooclifl9 (In tIiIe prOlllnoo),

Bird ~i'ldl McKenzie 20(1] show that the- METR~ on oapital 'uin:d~r a BVT 'NOlIld f~~1 by from 6. to 10 p~ntBg6 poii1tsErorn t.he l:e-'fflls Ul'!dic:nhe exIstillg corporate inoolfTl!) ill:>::' This wOl,ld lrestill in a stglnilkam tlxi!uctior:t il'l ibe 18XGlt10l'lI(lf capfUl! III we$'tem CIIIl8ldI!. ,lind wou~d make thetax 'te{j ime €');.tllluwlr COnlpe~~i'l/e by i[Qlem~tldnal stlmdan:llS.

Ilmpla"Jllenlin'~la BVT at the prGyiil'loial Ie.VfiI ill l!1!i western Caf1;adiIBlnlJWl'in<:ea WGul'd (ltwla~lslry he ~ ~ignmoar'lq' depor1;ume from the turrentapproadl 10 tllxirl,g I:il.lsil1a~es, A ... ~s ~ lways the ease in lm! H~f{lrnl, "the devil fs in U~e det~ils," IiInd In !he ease of tile SVT tor;: da,ll]j[s are rn an~ a nd ~\afled. Bird and Mt::I<en~ie· 2(10 l dlseuss se?l!eral []f the practiOiiI ~tls, thalt W'Ou~di need to 00 addressed in irn plllnJenlinga 113Vf tn Cllnaoa.. HD1II'B:Ver; if \V(!sll,lrrl O;lnada wanlS to t!lkll () !:lold step towards "goiJ1'J;I'or Gold" lilo IWT would be one w~y of 8C1Jornplistlling tills go~L

9 1lIi~, i;loo;s nut, it .i!'rlm&t be stre-Meil. m!!~!) t~t a CIT ie~i~d '011 eccnomie jntool~ {which wo~1d ml'e R l¥lli·l.R. of lC:ro} 'O\f()uld g~~1i1:l1C DO 15X

TI:;\'CMc, "II~ tI!~ e~'~. ~~~ liirms ~ Pl!!.iliW: Wl.,~mjc, i~_(lDr.tl~ cm~.allI: irn::ti!M ~~5 1.IioiJnlll b'l j::G'I~a,

III Of cOlJrs~ IatOlTr is '1fI1o:t=d una'" ofl!o:<r!"'lm -of tbt tax syS!CIi'l, l1_1I;:!I !I~ the peJSlmill It'!Coma (11l!( and pil)'t,oi I ta~_

11 Ali lIih~t'lI;il~ve ~~p~~~ WQ~G~ ~ i.(Ito tlIO' G111~r dLreeLiwtmdilmlOY'C' lite ooam I:'I3pbUlI.,tLol1lCtller, T~~~ mmld be ~eull!1r4i~~C1I1 ill1l ~'I.\-O 1A;l),S,

'The lilr~t ~Hl\lld be ;0 ~llow a ded!!cHM Ill! tlre cost ad' ~.~ i~ ftn;l:!M:G under the ~illllli'la inecme tsx, Whilo ~jbl~ io '~III1', U-u$ is 4i:f!t~~tll0 dg Jm pr,lQ!~e dtlC bD Ill:' ,,,b~'IpU5 liiel1S~relnerri PIo~~rn5. I~n~ :I~ ld~el~ to &~~rntc ·otlr.c:F iliswn[Oll$, .'mc!bcr ~pproi),(~ .i~ W di~ll{jw deducliol!s t~,.r tile ~i ,~n>WI1 debt trnd equity D<S ander U\e IJYYprop{f~~I, but 1miUO\'1' f)(}nh~ inlrn~j8t'C dru~I~'~o~ (If'tllpite!L ezo:fdtd.~nare;$,. ~Hi~~ .rulI~ d~pr~[~lill~ ~~eln i;)'o'Ct:ti1lt!e, 1I'~1j,$ ~!)·~aoJled "C<l£A 1l1[j .... ,t~;o;;" \\ulil" ~!so ,t~lnQ'\'e tl1clJil;';; 00 ,t;lpll~l. A Lili(MJgh n~1i no''''w.~ i~ !lr(lDJl~e'pl.Y~lly simple W;}}"OIC~Wli"!!Ail1!l i.I\Il! 11IX'Dil Mill~~ c,njlilDl" DllQ Im~ ooel~ t;:..,()1q'iiletm~ ~tl'l' illJ!~ ~Eore in I;i~l.er ~OOl~,. it ims 00\ .~O IIIlr hl)~n RdQpteil ~1l;)~vheJ~, !!lII".gdy O'Wllvt hi iro,"mn.tioo..~[ BOO itll'i~;' ti~Pllil ~.O[l5~t.lIliom be-'~ Mi~llu~ s,l1;1g~ 1991, ~liid M~l~re ~r.d ZOOlrow Hl'%).

]5

, .

RefenMwes

Bilylor, M, Bl11d L. Be'auoojotJe'. 2001( .. ''Th1>:.8oo1l and Eaolnom[{J Eflidem::y:. ,ReSJiJM 11'tnm a Cafli1:dianCGI: Mlldoli," DQptJl'tmenl of Fmanre W()(/{Ing Ps/J'e.r2(l(!4·1(l.

Bird, Ft, M. ~f1d J.M. Mi!ltz, 2,000.. "luAs~i9rmtBnt in Canadli: A Modie-Sl Proposa'." to Harvey LB~ar. ed., CBntrd8:: 'l1w S{(j(e and ,me FerJwlli:m r09V..wOll. rawtmi a M/s.skm StcaflJ!Ilool fOl C:mMitill FiSf:Pf fedemlJsm, !liP- Z63-1l2.

Ch~n, Duanjle 8 rid. Jack M. Minl.l:, 2(1)6~. ~Url1ite.d Horiz&.n:s: Th~ 2008 R.eport. on Fedeml ana Prl>VinCial BudlIet!!i)' F'oll~le$;' C.D, HaLve fn-WW/fif Ct}I'I'If~18mmy 2:70.

Ohe:n.,DuanJi!l' and Jilek M_ Mintz. 2:00311, "St~1 a Walll~ol,vel~ The 200a Repor~ ~ml ICanad~'s lnterna1iional T&'( CQmp(lll:l:l'.'en~,~ CD_ .Howe ffl'SfiMe e-brlef (S,cptembel" 20(5),

iJahlby. B.lind E. Ferecle., ZOO'B. ''lID: Outs. EoonOftlic Growth nod ~heMai'gin:li~ Cost ofl\Jblir. Funds ror Canadian PII"lJvrltCial GO¥eJlimenlS.· mlrnoo.,

Nlgnkiw, N- Gr~oTy and Matthew Welm:1arL 2006,. ~Dynamic Sooting: A ti'ack.of"the--en'll.eltJFHl Uuid~.~ Jounffil a( PlIb/k·£t'Jf).omiaJ Vb~. 9D{6"9'J. 14] 5--1433.

Mt:i<l:mlle. f\.J. 2005. "Iax Subskllos for R&D in C,lIladJan Pmvinoes.~ ('.(lnadiM Publi~.Polic.y.XX:XI N'D., 1" March, 213-44.

Mclure" Jrr., c'E. and G. Zgdrl;lW, 1996. "1\ li)'btidCllIlSlIillpl,lon·Sased Direct Til:>: Prwms~dror BoIM~.~ JfJtemt}.riorlal Tax .8nd Publ/.c Fln~HXj J: 9J~n2,

MinlX,.t, ~l1Id M. Sma,rt, .2003, ;'I:nooille .shJltil'lg,inveSlm13rJ1. and 'ta!( OOi!tllp>e~ilJon: Th.emy lind evi dence from p~ovim:i~1 'El.:t~'lIOIii i,n Ctlinadll:" Jwmm of fJi!b/k;. f(xmtillijJb$ 66 (J UnO, 20104), f·~ ~.9·11188,.

Mintz, J.M. and J- Seade.,l991. "Gash Fl[]11'I or Inoamell" WOtkl fJf1Irk ihS(Ulrd/ Rt:vfuw 6'; 177-90.

About the eal!1ada We.st fOE.mdalion

OwrVlsio:n

.A dyf!;lm io <1M prosporous 'WeSUFI it ~tro~ Canada,

DliIr Mission

A learnii'lJ;l fiOUr«l4'f !llra~egro !i\:light, ooml~ro1ir1g snd . .oomO-luf(lIc~U!il!l} 00:'1" paFlili,an e>OCil'ii[Jl'J1j'c and pUtlfD p:,:ility re~rcllQfimpQr:lflflee Ul~he four we3tem prL}Vinres ~nd all Oan~;;f()~,

COOil{is! 'I.!\Ielll fCII:mdwmil Is I!l (ifgistered GBna~n th>lritabl'e crganlliltion iFl(;J;)r~l[)r~1>e~ tiMet( 'federa:1 clian:er C#ll SS2 BS91l RF~ oom),

lnl 1l7e, the One Prairie IProWnce Conre.ren;ee \'0\1:,$ he[d if"! L6thllnd~, Albe:rtG. SpfiIlso"rl!id by!h~ Uni'olOrsit, of lethbr:idlg.~ end ll1!aLQ!h~ld!2le ~1~~ld. d1!l oollr~renoo recer.oed OOntlK:iernole a~ten~on from 0'J11Jt:€ft100 citiZ-6f1S i:lrl(]:

COml'lll.,lnity Itl;J.i!j~rs, Th~ callserwus at tum timo wma that re~[ch Of! !tie We!"l :OnallKli,ng BCBr.d the Oroadr.J'n North] slhouldi be expanded hya new :tV'Q:aI~i~~oon, To~l~lhi$ Ileed, lIiiie: Cmadal,li/ei;l FoUl'ldalJo~ \v<l$ (l~b~d under leller'S ,p6tCrlit on Dm::ember 31. I 87lJ Siflcelhal time. tile C(ln~a !Ne~t fQlJlfiIdI;tioo.has wBbli~lle[J ilseif as. O)\€ or Canad::i's :;Jfemter .research ilnstillJb!::s, NOIl.'parruSQln, ~slble ne~~[(ihatl'!d flmive Ci~rz~ii .8!1gagernertt EWe hallmatk:s, Q~tll~ FoiJfldBlion'~ past, present an D' future er~deawJlJlr'll, Tl1eS>3 .e-jl':CIf~$ ere mo~C'd' ill the oolie'f"lJ;mt.a SlJrDng v,'est Ilmk.es !Of a ~tJrQI'l9' Galnads.

CanadalWest

FOU:NDAT'I.oN

He.illtl Office: #900. 12.02 Centro Street S E Carg~!y. All T2u 3AO TI:lI~ph(y,1~: 4W,:?M:Il~3 5

8ri~ish Columbia Office: ",61Q, 105(1 W~ ;P€~der S'lf'tlel' Van.omlllllr, Be ViB( as)! Teleph(!ne: 6(lIi, 646.4 625

Saskatche'W<lln Cffic.e~ f:I[)~ B~(lfIld~ IIIP;w SBSk.Bloon. S K SlV Mil TGlephone: 309,373,a408

MBnittiD:Ei Omce, 1'I'~!lJU.l G 1 ~~flr'! Avei1lile Ea&'l Vlinnjj,Peg, M B R3B 'oY~ Telephofl!:l:20~ .. M7.395ij

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