Flaherty's misguided belief that his indiscriminate across the board corporate tax cuts would spur the economy shows just how incompetent he truly is. As I said at the time, any reductions in corporate taxes should be directly tied to that activity the gov't sought to encourage, be it capital investment or job creation.
What a total incompetent this Flaherty guy is. His comments today confirm it, as it's just more pissing in the wind.
Meanwhile much of Flaherty's corporate tax cuts were funded directly by the HST, making Flaherty doubly stupid, since the only bottom line effect of the HST was to reduce consumers' purchasing power and to increase the already massive underground economy.
OTTAWA — Finance Minister Jim Flaherty is once again urging Canadian companies to use the billions of dollars in cash they’re sitting on to invest more in the Canadian economy and create jobs.
On Tuesday, in a speech to a Canadian Council of Chief Executives conference in Ottawa focused on Canada-Asia relations, Flaherty hammered home the message once more, urging companies to get off their wallets and spend some of the more than $500 billion they’ve got stashed away.
The minister said there are two main international risks to the global economy and Canada’s fiscal outlook: the sovereign debt and banking crisis in Europe and a U.S. economy that’s facing a “fiscal cliff” in the coming months due to political gridlock over tax hikes and spending reductions.
With that in mind, he noted the world is rebalancing towards Asia — especially China — and that “Canada must respond to this fundamental shift.”
The federal Conservative government has lowered taxes and opened trading markets in Asia to spur the Canadian economy, he said, and it’s now up to the private sector to act.
“Our country’s long-term prosperity is linked to reaching beyond our borders for economic opportunities that serve to grow Canada’s trade and investment,” Flaherty told several dozen CEOs gathered in Ottawa.
Flaherty cautioned that the global economic recovery is “extremely weak” in some sectors, although he’s hopeful it will improve with the help of the private sector.
“Our government cannot do this alone. Private-sector business investment must also help lay the foundation for a sustained, long-run expansion of Canada’s economy and job growth,” Flaherty said.
The government has lowered corporate and personal income taxes, encouraged purchases of new technologies and equipment with capital cost write-offs and sliced bureaucratic red tape for businesses, he said.
“But ultimately, it is up to you in the private sector to take advantage of all of these strengths and to invest, to create jobs and to grow our economy,” the minister added.
Non-financial Canadian companies have seen the total amount of cash they hold grow to $562 billion at the start of 2012 from $370 billion in mid-2009, according to data from earlier this year.
However, John Manley, president of the Canadian Council of Chief Executives, said corporations have demonstrated they’re “doing quite a lot” to invest in the Canadian economy.
He said planned capital investment in Canada from his members alone over the next few years will exceed the entire federal and provincial stimulus spending from the economic downturn.
Manley said businesses invest when they see opportunity and sit on cash when there’s greater risk like that found in the global economy today.
“I think we heard Mr. Flaherty point out very clearly that there are two major financial risks in the world today, one in Europe, one in the United States,” he said.
“So I don’t think he or Mr. Carney would find it surprising that companies would be trying to retain a little cushion of insurance in terms of cash on their balance sheets when you really don’t know what the next couple of months is going to bring.”