What did. Corporate Tax Cuts deliver?

Transcription

1 What did Corporate Tax Cuts deliver? A Background Report for Corporate Tax Freedom Day 2013

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3 A Background Report for Corporate Tax Freedom Day 2013 Summary Due to ongoing corporate tax cuts, corporate income tax makes up a falling share of all government revenues. In fact, by the end of January, corporations had fully paid their share of provincial and federal taxes, two days earlier than in The general federal corporate income tax rate stood at 28% in It was cut to 21% under the Liberals, and then cut in stages, from 21% to 15%, under the Conservatives. The most recent cut was from 16.5% to 15%, effective January 1, The corporate tax rate remains the same in 2013, at 15%. The argument to cut corporate income tax has been that increased, aftertax, corporate profits would be re-invested in company operations, boosting economic growth, productivity, and jobs. However, studies have shown that rising corporate after-tax profits have not resulted in increased real investment. Instead, cuts in corporate income tax have contributed to a significant increase in cash reserves held by corporations, delivered higher compensation to CEOs, cost Canadians billions in lower than expected government revenues, led to a higher federal deficit and debt, and cuts to public services. Corporate income tax cuts have helped private, non-financial corporations in Canada hoard more cash. According to Statistics Canada, the cash reserves of non-financial corporations increased by $72 billion in, from $503 billion in cash reserves by the end of 2010 to $575 billion by the end of. This extra $72 billion of dead December

4 money is money not at work increasing productivity, or creating more and better jobs in Canada. When looking at taxes and cash reserves of Canada s largest nonfinancial companies, those listed on the S&P/TSX Composite Index from 2001 to (financial companies and conglomerates are excluded because they typically hold large financial investments as part of their ongoing business), we find that the top-10 Corporate Hoarders have collectively accumulated $27.7 billion in cash 1 since In line with cuts to the statutory federal and provincial tax rate, the effective tax rate of Canada s largest non-financial companies (that is, taxes actually paid to the federal and provincial governments as a share of pre-tax profits) has fallen, from 40% in 2001, to 32% in. The leading cash hoarder in was Teck Resources Limited, which accumulated over $4.4 billion in assets over this period. The Appendix lists Canada s top public Corporate Hoarders in. 1 In this document, cash refers to cash and cash equivalent as par of corporations current assets December

5 1. Corporate Tax Freedom Day In, corporate income taxes paid to the federal and provincial governments combined amounted to 8.3% of provincial and federal income tax revenues of government. 2 It can be calculated that corporations in had paid their share of all taxes by the 30 th of January, which we therefore call Corporate Tax Freedom Day. This is two days earlier than in Corporate Tax Freedom Day used to fall much later in February. From the mid-1960s to the mid-1970s, corporate taxes on average contributed almost 11% of government revenues. 2. Falling Corporate Income Tax Rates The statutory tax rate is levied on corporate profits as defined for tax purposes, that is after various deductions are applied. As shown in Table 1, since 1960, the general statutory rate of federal corporate income tax levied on taxable corporate profits has fallen very significantly, from 41%, to just 15%, since January 1, Big cuts to the federal corporate tax rate took place under Liberal governments after 2000 (from 28% to 21%), and under the Harper Conservative government, which has dropped the statutory rate in steps, from 21%, when they took office, to 15% in Provinces also levy taxes on corporate profits, and have also been dropping their statutory rate. (The range in 2010 was between 11.5% and 15%.) 2 Source: Table 33, Total Government Income, Fiscal Reference Tables, Department of Finance Canada, October Note that small businesses are taxed at a lower rate than the general rate. The small business rate is currently just 11% on the first $500,000 of profits. Manufacturing and processing profits were taxed at a lower rate than the general rate until A small corporate surtax was in place from 1970 to 2007, which raised the statutory rate in those years by about 1.5 percentage points. December

6 The combined federal/provincial statutory rate has fallen from 40.5% in 2001, to 34% in 2007, to 27.8% in, 4 and is expected to fall to just 25% over the next few years. This is about one half the level of the mid-1960s. The statutory corporate tax rate in Canada is now well below that of our closest trading partner, the United States. The U.S. has a federal corporate tax rate of 35%, and state taxes result in a combined rate of almost 40%. Table 1: Federal Corporate Tax Rate on General Income The effective corporate tax rate the actual percentage of profits paid as taxes is lower than the statutory rate varying between 20% and 25% of before-tax profits since The effective rate is generally lower than the statutory rate because not all forms of corporate income are fully included in taxable income, and because corporations can deduct some costs from their taxable income on very generous terms and conditions Corporate Tax Cuts, Corporate Profits, and Cash Proponents of ever lower corporate taxes argued that the money corporations saved from lower taxes would be reinvested in real assets such as new factories, new machinery and equipment, and training, thus boosting economic growth and productivity, and helping create more and better jobs; however, this is not what has happened. A TD Economics special study confirmed that Canadian non-financial corporations have seen a marked improvement in the health of their 4 OECD Tax Database Table II.1, December For details and estimates, see: Department of Finance. Tax Expenditures and Evaluations,. December

7 balance sheets over the last decades. According to TD Economics, for the six years prior to the great recession, total pre-tax profits doubled across most industries, and cash was the fastest growing asset during that time. A combination of both a boom in global and domestic demands as well as lower corporate taxes during that period and higher dividend tax credits since are some of the factors used by TD to explain the improved balance sheets of corporations during that period. According to Statistics Canada, the total corporate cash reserves of private, non-financial corporations (financial companies and conglomerates are excluded because they typically hold large financial investments as part of their ongoing business) grew from $187 billion in the first quarter of 2001 to $575 billion in the last quarter of. 7 This is an increase of more than 200% of cash reserves over 10 years. Figure 1: Total Currency and Deposits of Non-Financial Corporations in Canada, ($millions) Q2001 2Q2001 3Q2001 4Q2001 1Q2002 2Q2002 3Q2002 4Q2002 1Q2003 2Q2003 3Q2003 4Q2003 1Q2004 2Q2004 3Q2004 4Q2004 1Q2005 2Q2005 3Q2005 4Q2005 1Q2006 2Q2006 3Q2006 4Q2006 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 Source: Statistics Canada, Cansim , December Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 1Q 2Q 3Q 4Q A figure like $575 billion is fairly difficult to envision. To give an idea of scope of cash that is floating around in corporate bank accounts, some 6 Canadian Corporate Balance Sheet solid as a rock, Special Report, TD Economics, October 30, Source: Statistics Canada, Cansim Table Total currency and deposits for non-financial corporations, December

8 comparisons are needed. Corporate Canada s cash reserves could pay off most single CMHC insured mortgages in Canada. Put another way, there is so much corporate cash in non-financial corporations, in Canada, that it could almost entirely pay off the federal national debt in one shot. Between the last quarter of 2010 and only, cash reserves of private non-financial corporations in Canada grew an extra $72 billion, from $503 in the last quarter of 2010, to $575 billion dollars in the last quarter of. When compared to the 33.4 billions of dollars of federal government deficit in fiscal year 2010/, one can appreciate how much cash non-financial corporations have been able to hoard while the federal government was running a deficit. All this cash sitting on the sidelines has significant impact on Canada s potential economic growth. It is money not at work that could be otherwise invested to increase productivity and create jobs. The fact is: even if some of this corporate cash in Canada was to be spent this year, for instance 10%, or $50 billion in 2013/2014, it would be equivalent to federal government stimulus measures during the Great Recession. The Bank of Canada s Governor, Mark Carney, worries about this situation, calling these cash reserves dead money, and calls on Canadian private corporations to put money to work. 8 Even the federal Finance Minister, Jim Flaherty, has repeatedly expressed his frustration with the situation, and called private corporations to invest in Canada. 9 Corporations in Canada are taking advantage of corporate tax cuts, but they are not necessarily using them to invest in productivity and jobs. Instead, they have accumulated billions of dollars in cash reserves, especially during the last decade when corporate tax rates were cut. 8 The Economist, November 3, There s a lot of capital sitting out there that needs to get engaged in the economy, Jim Flaherty to business leaders: Loosen your fists, Toronto Star, published August 21, December

9 The need for high cash savings by Canadian corporations can t be justified by the fact that the world has just been through a financial crisis. The fact is that cash-hoarding by Canadian non-financial corporations started well before the financial crisis. Furthermore, cash-hoarding of Canadian corporations can t be justified by a weak financial sector. Canada has been seen, and sold, as a country with one of the strongest financial sectors amongst developed countries. As a result, if corporations needed liquidity, they should technically rely on Canada s strong financial sector to supply cash, especially these days, when liquidity is cheap to borrow due to low interest rates, and put their cash reserves to work. 4. Corporate Tax Cuts and Costs Having high levels of private investment is important, but cutting corporate tax cuts is a costly and ineffective way to raise real business investment. A detailed study for the Canadian Centre for Policy Alternatives (CCPA), by economist Jim Stanford, shows that corporate tax cuts, since the late 1980s, have greatly increased corporate cash flow, while real business investment in building, and in machinery and equipment, has actually fallen as a share of the economy. 10 Recent corporate tax cuts have had no impact on real investment, but have been very costly in terms of foregone government revenues. In , the federal government expects to collect $33.1 billion in corporate income tax revenues based on a corporate income tax rate of 15%. If the corporate tax rate was still at 21%, where it was when the Conservatives took office, revenues would be $13 billion higher. 10 Jim Stanford. Having Their Cake and Eating It Too: Business Profits, Taxes, and Investment in Canada: 1961 Through CCPA.. December

10 Lower corporate tax revenues contribute to the deficit, meaning that the federal government has to borrow to finance tax cuts for corporations. And the government is cutting spending on programs and laying off federal public service employees to pay for the corporate tax cuts. In a way, Canadian tax-payers are subsidizing corporate tax cuts with higher government deficits and debts, and cuts to public services they deserve and need. 5. What did Canada s Largest Public Companies do with Their Tax Breaks? Cuts to corporate tax rates and their impact on profits and cash reserves can also be observed on Canada s largest public companies. This part of the paper examines Canada s largest publicly traded, nonfinancial companies which make up the S&P/TSX Composite Index. 11 There are approximately 250 companies on the index at any given time. For the purposes of this study, only those non-financial companies that have continuous data since 2001 and are still on the S&P/TSX Composite are included in our analysis. These restrictions bring the sample down to 150 companies. While this may seem like a small number of companies, they represent 45% of the pre-tax earnings for all Canadian corporations in Table 2 below shows the sales, earnings before income tax, income taxes, after-tax profits, cash in reserves in millions of dollars, and their statutory and effective tax rates. 11 The paper builds on David Macdonald s Corporate Income Taxes, Profit and Employment Performance of Canada s Largest Companies, CCPA. April. 12 Based on total reported corporate earning before tax of $192 billion in the 4 th quarter of as reported by Statistics Canada, Cansim December

11 Table 2: Canada's Non-Financial Corporate Giants ($millions) Earnings Income After-Tax Year Sales Before Cash Taxes Earnings Income Taxes Effective Tax Rate Statutory Rate , , , , , % 40.5% , , , , , % 38.0% , , , , , % 35.9% , , , , , % 34.4% , , , , , % 34.2% , , , , , % 33.9% , , , , , % 34.0% , , , , , % 31.4% , , , , , % 31.0% , , , , , % 29.4% 668, , , , , % 27.6% Source: GlobeInvestor.com, author s calculations. (Note that companies report total taxes paid to the federal and provincial governments combined.) Between 2001 and, the sales and earnings before income tax of the top-150, non-financial corporations in Canada exploded. Sales increased from $264 to $669 billion, and earnings before income tax flew from $21.5 to $86.5 billion during that period. While sales increased by 150% or so, earnings before income tax increased twice as rapidly, with an expansion of 300% over that period. At the same time, income tax paid to governments by these top-150, non-financial corporations increased from $8.6 to $28 billion, an increase of 225%. Meanwhile, after-tax profits increased by more than 300%, from $14.5 to $58.9 billion, between 2001 and. As a result, the effective tax rate (that is, taxes actually paid by Canada s largest non-financial companies to the federal and provincial governments as a share of pre-tax profits) has fallen from 40.2% in 2001 to 32.6% in. The effective rate dropped even lower prior to, in part because of losses for some companies during the recession. While effective tax rates vary somewhat depending upon the state of the economy, the fall in the effective tax rate should come as no surprise given that the federal government embarked on two significant rounds of December

12 reductions: under the Liberals in the early 2000s, and later under the Conservatives. Several provinces followed suit. At the same time as corporate tax cuts are being paid out to investors, corporate Canada is also building an enormous pile of mainly financial assets. Canada s biggest non-financial companies have more than doubled their holdings of such assets, from $16 billion in 2001, to $60 billion today. 13 (Financial companies and conglomerates are excluded since they commonly hold large financial assets.) Giving tax breaks to corporate Canada when times are uncertain leads them to simply shove more money under their collective mattress. That is, unless they haven t already paid out the savings as dividends. 6. Canada s Corporate Hoarders Some of Canada s major, non-financial, corporate hoarders have accumulated much more than others. Table 3 shows the top-10 nonfinancial corporations who have accumulated the most short- and longterm assets since (For a full list, see the Appendix.) Amongst Canada s top 150 non-financial giants, the leading cash hoarder in has been Teck Resources Limited, which accumulated over $4.4 billion in assets over this period. More than half of the top-10 non-financial corporations come out of the resources sector, confirming Canada s reliance on this sector. Only a couple of manufacturers are in the top-10, Magna International and Bombardier Inc., while Research In Motion is the only representative of a 13 The term financial assets includes both Cash and Cash Equivalents and Long-Term Investments which the company intends to hold for at least one year. Long-term investments consist of financial assets, and do not include investments in capital stock (nor accounts receivable, inventories, or intangible assets). December

13 knowledge-based industry. Finally, George Weston Ltd. is the only retailer in the top-10. Table 3: Top-10 Corporate Hoarders ($millions) Company Sector Earnings Before Income Tax Taxes After-Tax Profits Short- and Long-Term Assets Short- and Long-Term Assets 2001 Assets Change CEO Compensation in Teck Resources Limited Materials 4,061 1,398 2,668 4, ,304 9,326,668 Bombardier Inc. Industrials 1, , ,281 8,365,978 Suncor Energy Inc. George Weston Limited/Loblaw Barrick Gold Corporation Energy 7,205 2,765 4,304 3, ,802 14,857,818 Consumer Staples 1, ,734 1,261 2,473 3,678,000 Materials 6,824 2,287 4,484 2, ,954 9,204,973 Research In Motion Limited Information Technology 4,644 1,233 3,411 2, ,399 7,910,047 Husky Energy Inc. Energy 3, ,224 1, ,841 6,393,839 Goldcorp Inc. Kinross Gold Corporation Magna International Inc. Materials 2, ,881 1, ,705 11,117,750 Materials -1, ,074 1, ,685 7,598,699 Consumer Discretionary 1, ,018 1, ,984,820 Source: GlobeInvestor.com. Half of those listed as top corporate hoarders in were also there in 2010 (George Weston Ltd, Barrick Gold Corp, RIM Ltd, Kinross Gold Corp and Magna Intl Inc). The top-10 hoarders alone have managed to pile up $27.7 billion since Instead of investing the savings from corporate tax cuts to boost real investment and productivity, and to create jobs, they have kept those funds locked away for an undefined future point. While some of these funds may be invested in productive assets in the future, their accumulation has meant that we have foregone government revenues which could have been used to increase public investment in areas like transit, green energy, and early childhood learning, or to increase business investment through more direct and targeted means, such as accelerated write-offs for equipment investment, and investment tax credits. Finally, the big winners of hoarding are corporate CEOs. CEO compensation of the top-10 non-financial corporations averaged $11.9 million in, ranging between $3.7 million and $40.9 million in For more details, see CCPA s annual review of CEO pays, published early in January of each year. December

14 Conclusion Data for non-financial corporate Canada and for our largest public nonfinancial companies show that lower corporate taxes in and of themselves have mainly resulted in the accumulation of mainly financial assets, not an increase in capital stock and other investments which boost productivity and sustain and create good jobs. Government revenues have taken a big hit, without the expected upside of a stronger and more productive economy. The winners have been those who own company shares, notably Canada s highly paid CEOs and other members of the top 1%. It is time for corporate Canada to take its share of the blame for capital underinvestment. It is also high-time for Canada s most profitable companies to pay their fair share of taxes. This report was prepared by Sylvain Schetagne, Chief Economist,. SS:jc:cope 225 / File: E02 December

15 Appendix: Asset Hoarders ($millions) Company Sector Sales Earnings Before Income Tax Taxes Profits Short- and Long-Term Assets Short- and Long-Term Assets 2001 Asset Change Teck Resources Limited Materials $11,514 $4,061 $1,398 $2,668 $4,405 $101 $4,304 Bombardier Inc. Industrials $20,015 $1,135 $221 $913 $4,195 $914 $3,281 Suncor Energy Inc. Energy $39,337 $7,205 $2,765 $4,304 $3,803 $1 $3,802 George Weston Limited / Loblaw Consumer Staples $32,376 $1,243 $324 $635 $3,734 $1,261 $2,473 Barrick Gold Corporation Materials $14,312 $6,824 $2,287 $4,484 $2,745 $791 $1,954 Research In Motion Limited Information Technology $19,907 $4,644 $1,233 $3,411 $2,121 $722 $1,399 Husky Energy Inc. Energy $24,489 $3,140 $916 $2,224 $1,841 $- $1,841 Goldcorp Inc. Materials $5,362 $2,253 $686 $1,881 $1,789 $84 $1,705 Kinross Gold Corporation Materials $3,943 -$1,502 $511 -$2,074 $1,767 $83 $1,685 Magna International Inc. Consumer Discretionary $28,748 $1,217 $202 $1,018 $1,325 $890 $435 Inmet Mining Corporation Materials $979 $370 $105 $348 $1,265 $64 $1,201 WestJet Airlines Ltd. Industrials $3,072 $214 $59 $149 $1,244 $59 $1,185 SNC-Lavalin Group Inc. Industrials $7,210 $482 $95 $379 $1,231 $323 $908 Cameco Corporation Energy $2,384 $450 $12 $450 $1,203 $34 $1,170 Imperial Oil Limited Energy $30,474 $4,406 $1,035 $3,371 $1,202 $872 $330 Iamgold Corporation Materials $1,673 $651 $221 $807 $1,076 $25 $1,051 Turquoise Hill Resources Ltd. Materials $179 -$289 -$1 -$570 $998 $16 $982 HudBay Minerals Inc. Materials $891 $214 $134 -$154 $899 $0 $899 Nexen Inc. Energy $6,169 $1,776 $1,328 $697 $845 $61 $784 Atco Ltd. Utilities $3,991 $827 $230 $327 $768 $329 $440 TransCanada Corporation Energy $9,139 $2,284 $573 $1,582 $765 $299 $466 Encana Corporation Energy $8,467 $2 -$126 $128 $732 $610 $122 Canadian Oil Sands Limited Energy $4,182 $1,531 $387 $1,144 $718 $357 $361 Sherritt International Corporation Materials $1,978 $288 $89 $197 $661 $124 $536 Celestica Inc. Information Technology $7,213 $199 $4 $195 $659 $1,343 -$684 Uranium One Inc. Energy $530 $151 $63 $88 $619 $1 $618 Empire Company Limited Consumer Staples $15,656 $442 $120 $393 $616 $557 $59 Canadian Utilities Limited Utilities $2,999 $702 $187 $496 $613 $255 $358 Yamana Gold Inc. Materials $2,173 $911 $270 $548 $550 $1 $549 Canadian Tire Corporation, Limited Consumer Discretionary $9,352 $630 $163 $467 $508 $579 -$70 Pan American Silver Corp. Materials $855 $463 $117 $352 $491 $4 $487 Talisman Energy Inc. Energy $8,194 $2,445 $1,669 $776 $474 $11 $463 Precision Drilling Corporation Energy $1,951 $241 $47 $193 $467 $13 $454 First Quantum Minerals Ltd. Materials $2,584 $1,116 $461 $529 $452 $10 $442 Shaw Communications Inc. Consumer Discretionary $4,741 $753 $205 $454 $443 $- $443 Wi-LAN Inc. Information Technology $- -$43 -$8 $32 $434 $4 $430 Potash Corporation of Saskatchewan Inc. Materials $8,715 $4,147 $1,066 $3,081 $430 $45 $385 Thomson Reuters Corporation Consumer Discretionary $13,807 -$1,116 $293 -$1,390 $422 $532 -$110 Enbridge Inc. Energy $19,402 $1,503 $568 $991 $420 $74 $346 Eldorado Gold Corporation Materials $1,099 $514 $166 $319 $396 $5 $392 Silver Standard Resources Inc. Materials $148 $71 $31 $80 $363 $4 $359 China Gold International Resources Corp. Ltd. Materials $311 $98 $23 $79 $354 $- $354 Methanex Corporation Materials $2,608 $284 $56 $201 $351 $332 $19 Nevsun Resources Ltd. Materials $548 $406 $156 $147 $348 $0 $348 Catamaran Corporation Health Care $4,976 $138 $47 $92 $341 $5 $336 Agnico-Eagle Mines Ltd. Materials $1,822 -$779 -$210 -$569 $331 $- $331 Alimentation Couche-Tard Inc. Consumer Staples $18,550 $490 $121 $369 $310 $- $310 New Gold Inc. Materials $696 $258 $79 $179 $309 $2 $307 Reitmans (Canada) Limited Consumer Discretionary $1,059 $128 $39 $89 $300 $20 $280 Viterra Inc. Consumer Staples $11,790 $366 $103 $265 $298 $45 $253 Source: GlobeInvestor.com, OECD Tax Database, author s calculations. December

16 Appendix: Asset Hoarders, continued ($millions) Company Sector Sales Earnings Before Income Tax Taxes Profits Short- and Long-Term Assets Short- and Long-Term Assets 2001 Asset Change Open Text Corporation Information Technology $1,033 $136 $13 $123 $284 $88 $197 Taseko Mines Limited Materials $252 $51 $24 $27 $278 $0 $278 CAE Inc. Industrials $1,631 $223 $62 $160 $276 $280 -$3 Russel Metals Inc. Industrials $2,693 $170 $51 $118 $271 $17 $254 Lundin Mining Corporation Materials $784 $235 $51 $184 $265 $0 $265 Metro Inc. Consumer Staples $11,431 $537 $150 $386 $256 $- $256 MacDonald, Dettwiler and Associates Ltd. Information Technology $761 $180 $50 $160 $247 $17 $230 Vermilion Energy Inc. Energy $1,032 $316 $173 $143 $235 $7 $228 Aurizon Mines Ltd. Materials $260 $86 $43 $44 $214 $2 $213 Semafo Inc. Materials $396 $153 $30 $112 $201 $11 $190 AuRico Gold Inc. Materials $402 $234 $96 $177 $187 $0 $187 Westport Innovations Inc. Industrials $302 -$23 $21 -$61 $180 $27 $153 Dundee Precious Metals Inc. Materials $338 $89 $16 $86 $177 $1 $176 BCE Inc. Telecommunication Services $19,497 $2,187 $720 $2,340 $175 $569 -$394 Valeant Pharmaceuticals International, Inc. Health Care $2,255 -$4 -$178 $160 $170 $435 -$264 CGI Group Inc. Information Technology $4,323 $547 $111 $435 $168 $46 $122 Quebecor Inc. Consumer Discretionary $4,207 $524 $141 $201 $146 $373 -$227 CCL Industries Inc. Materials $1,268 $118 $34 $84 $141 $113 $28 Gabriel Resources Ltd. Materials $- -$17 $- -$17 $135 $34 $102 Calfrac Well Services Ltd. Energy $1,537 $276 $89 $187 $133 $2 $131 Trican Well Service Ltd. Energy $2,310 $478 $140 $339 $126 $1 $125 Finning International Inc. Industrials $5,884 $327 $67 $259 $123 $- $123 Shoppers Drug Mart Corporation Consumer Staples $10,459 $847 $233 $614 $119 $- $119 Harry Winston Diamond Corporation Materials $624 $55 $8 $42 $109 $82 $26 Saputo Inc. Consumer Staples $6,003 $658 $195 $450 $105 $6 $99 Pason Systems Inc. Energy $334 $112 $26 $86 $105 $1 $104 Canadian National Railway Company Industrials $9,028 $3,356 $899 $2,457 $101 $53 $48 Cott Corporation Consumer Staples $2,335 $41 -$1 $38 $101 $4 $97 Osisko Mining Corporation Materials $263 $11 -$7 $18 $101 $0 $101 Linamar Corporation Consumer Discretionary $2,861 $131 $24 $101 $99 $38 $62 Just Energy Group Inc. Utilities $2,953 $526 $173 $355 $98 $- $98 Fortis Inc. Utilities $3,747 $436 $80 $347 $89 $14 $75 Gildan Activewear Inc. Consumer Discretionary $1,726 $224 -$16 $240 $89 $- $89 Extendicare Inc. Health Care $2,079 -$28 $13 -$30 $80 $26 $54 Emera Incorporated Utilities $2,064 $203 -$37 $248 $77 $23 $54 Toromont Industries Ltd. Industrials $1,382 $142 $40 $247 $75 $35 $40 Transcontinental Inc. Industrials $2,044 $137 $30 $85 $75 $110 -$35 Nordion Inc. Health Care $274 $61 $17 $17 $74 $116 -$42 Rubicon Minerals Corporation Materials $- -$21 -$0 -$21 $69 $1 $68 West Fraser Timber Co. Ltd. Materials $2,762 $45 $18 $73 $68 $270 -$202 Veresen Inc. Energy $807 $121 $44 $54 $67 $14 $54 ShawCor Ltd. Energy $1,157 $80 $13 $56 $67 $56 $12 NovaGold Resources Inc. Materials $0 -$194 -$7 -$153 $67 $0 $66 Mullen Group Ltd. Energy $1,387 $159 $40 $119 $66 $14 $52 Westshore Terminals Investment Corporation Industrials $206 $59 $16 $43 $66 $16 $50 BlackPearl Resources Inc. Energy $179 $14 -$5 $19 $60 $- $60 Northland Power Inc. Utilities $351 -$139 -$55 -$63 $59 $1 $59 Peyto Exploration & Development Corp. Energy $387 $168 $40 $128 $57 $- $57 Corus Entertainment Inc. Consumer Discretionary $825 $204 $55 $147 $56 $- $56 Cogeco Cable Inc. Consumer Discretionary $1,185 $270 $71 -$46 $55 $3 $52 Source: GlobeInvestor.com, OECD Tax Database, author s calculations. December

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