Phase out Payroll Tax as Substitute for Reduction to Corporate Welfare

WINNIPEG: The Canadian Taxpayers Federation (CTF) throws its support behind the Manitoba provincial government's initiative to reduce inter-provincial business subsidies. The province took the lead at the internal trade minister's meeting in Vancouver to press for an inter-provincial agreement to reduce business subsides and create a level playing field for business.

"Kudos to Industry, Trade and Mines Minister Mary Ann Mihychuk for taking the critical first step toward the reduction of the costly and inefficient business subsidies," said Victor Vrsnik, CTF provincial director.

The CTF has actively fought against provincial and federal business subsidies and has repeatedly urged the province to make good on its pre-election promise to reduce its business subsidy programs by half. Over the past five years, the CTF released six landmark studies documenting the excessive waste of economic development programs.

• The Internal Agreement on Trade would be enhanced by the Manitoba's proposal to:
  
• Prevent business subsidies through third party organizations and governments;
  
• Not allow any government to poach business from other provinces through subsidies and inducements; and,
  
• Not permit certain business subsidies while outlawing others.

"To put its best foot forward, the province should press for a more simple recommendation, namely that all governments abandon all forms of business subsides and inducements," added Vrsnik. "The province should also press for the elimination of industry-specific credits and firm-specific credits that are an indirect form of subsidy.

"To improve the business climate, the provinces and federal government should offer competitive corporate income taxes as a tried and true policy for economic renewal," recommended Vrsnik. "Specifically, Manitoba should replace its business subsidy structure with a phasing out of the payroll tax."

The CTF encourages the ten provinces to endorse Mihychuk's improvements to the Internal Agreement on Trade and to press Ottawa to abandon its own misguided corporate welfare programs.