When Burger King gobbled up Tim Hortons two weeks ago, Joe Oliver crowed about Canada's low corporate tax rates. But, Linda McQuaig writes, Oliver was telling whoppers, not selling them:
One might be left with the impression that the corporate creator of the Whopper plans to invest a whopping $11 billion in Canada. Now there’s a whopper for you — but it’s not inside a bun.
The truth is that the Burger King-Tim Hortons deal is just a paper transaction that, apart from enriching some stockholders, likely will provide zero benefit for Canada, in terms of job creation or additional revenue for the public purse.
Certainly, south of the border, Americans were unimpressed:
Burger King is clearly trying to take advantage of a popular U.S. tax scheme known as “tax inversion,” whereby a corporation takes over a foreign company to get around U.S. tax laws requiring corporations to pay tax on their worldwide incomes. Canada doesn’t have such a requirement, making it easier for companies headquartered here to avoid taxes through “transfer pricing” — that is, shifting profits to offshore tax havens.
The Obama administration has been trying hard to clamp down on this “unpatriotic” tax inversion scheme, whereby some of America’s wealthiest corporations have managed to dodge billions of dollars in taxes.
The American president understands that this is all about a race to the bottom. And he would appreciate a little help from Canada:
The more we cut our tax rates, the more other countries feel obliged to cut theirs. Round and round it goes, with less and less revenue for vital public programs everywhere. It’s a race to the bottom only corporations can win.
Instead, we should be supporting the Obama administration in its efforts to stop international corporate tax dodging. The White House is now locked in a fierce battle with powerful corporations over tax inversion schemes and also over the U.S. corporate tax rate, which — at 35 per cent — is one of the highest in the world. Corporations want it slashed.
But the Harperites have always been bottom feeders. No one appears to have asked, "How many McJobs go with that? And will they be filled with Temporary Foreign Workers?