Economic Action Plan 2013 Act No. 2 (Bill C-4)

Elizabeth May: Mr. Speaker, I have a serious economics question for the member. A lot of us in this place talk about economics. The member for Markham—Unionville is one of those who is actually qualified to speak to it, having achieved a Ph.D., having taught at four universities, and having been the former chief economist at the Royal Bank.

I am curious about his views. We keep hearing the mantra that cutting corporate tax rates, so that Canada now has the lowest corporate tax rate in the OECD, is helping the job creators. However, we are also seeing that our job creation rate is very low. Youth unemployment is 14%.

Current RBC staff are telling us, as Mark Carney from the Bank of Canada pointed out, that low corporate tax rates are resulting in a large accumulated pile of what Carney called “dead money”. It is not going into the economy. It is not stimulating jobs. A current RBC economist says that it is now $600 billion. I believe that is 32% of our current GDP. I wonder if my friend from Markham—Unionville has any comments on this.

Hon. John McCallum: Mr. Speaker, I thank my colleague for her reciting of my various credentials.

I believe that Canada already has a very low corporate tax rate on the largest corporations. I believe that it is something in the order of 25%, when we include both the federal government and the provinces, whereas in the United States, it is something in the order of 39%. There is a huge gap.

In previous election campaigns, we in the Liberal Party said that we did not want to go back to super high corporate tax rates, but we thought that given other needs of the economy, this gap was larger than it needed to be. At the time, we wished to freeze corporate tax rates rather than allow them to go down further.

That was in the past. If we look to the future, I take her point about the proceeds from these lower taxes not always being used to advantage the Canadian economy through investment. There is a lot of what Mark Carney called dead money. Personally, if one thinks of all the possible tax cuts, it seems to me that the cut in corporate tax rates to the low level it is at today would not be among my top priorities. I do not think there is a great deal of evidence that the cuts we have seen to date have had a major positive effect on investment and jobs in the country.