United Steelworkers

By: Dana Wagner on June 19, 2015

Canada’s corporate tax rate is 15 per cent. Mulcair was off by 2-3 per cent, and later acknowledged his mistake.

An increase to the federal corporate tax rate is a longtime promise of Tom Mulcair. But during an interview earlier this week, the NDP leader was not able to pinpoint an exact increase. Why? It appeared he did not know what the rate currently is. In response to a question from CBC’s Anna Maria Tremonti on the current federal rate, Mulcair said, “we’re about 12, 13 [per cent], something like that right now.”

Canadian companies are taxed by the federal government at a rate of 15 per cent. This has held for over three years, since 2012, following a few years of reductions. It was 16.5 per cent in 2011, 18 per cent in 2010, and before the Conservatives came to power in 2006, it was 21 per cent.

Interviewed later the same day by reporters, Mulcair acknowledged the mistake. He said, “I’ll take responsibility, as I always tend to do, for any lack of clarity there. That would be my fault.” He added that he was referring to the difference – of about 13 per cent – between the combined rate in Canada (federal + provincial) and the combined rate (federal + state) in the United States.

Beyond getting the number wrong in this case, the NDP position on corporate tax rates does not have a good record for clarity.

For one, the exact increase is a moving target. In 2013, Mulcair said the NDP would raise the federal corporate tax rate to pre-Conservative levels, or from 15 to 22 per cent. He has also spoken about keeping the combined rate below the OECD average, which is roughly 26 per cent. In the CBC interview this week, Mulcair repeated that he would raise taxes, but gave a lower figure “closer to the G7 average,” which he said is “something in the 18, 19 [per cent] range.”

Incidentally, Mulcair did not get this G7 figure right either.

It’s difficult to compare the Canadian federal corporate tax rate to other countries, because there are different federal and provincial taxes, which is not the case in all countries. So they are typically compared using the combined rate. Canada’s federal rate is 15 per cent, but with the provincial rates tacked on, the combined rates across the country vary from 25 to 31 per cent. The combined Canadian average is 26.5 per cent. The G7 average, meanwhile, is just under 31 per cent, according to 2015 rates compiled by consulting firm KPMG.

Canada 26.5% France 33.33% Germany 29.65% Italy 31.4% Japan 33.06% United Kingdom 20% United States 40% G7 average 30.56%

Source: KPMG

If Mulcair intends to raise Canada’s tax rate to the G7 average, that would be an increase of 4.5 per cent. (Ironically, with the incorrect numbers Mulcair used, the needed increase would be even higher, at 6 per cent.)

The claim is false, Canada’s federal corporate tax rate is 15 per cent. And Mulcair admitted it. Precision on the targeted increase might solve this mistake (and others) in future.

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