WHAT DID CORPORATE TAX CUTS. deliver?

Transcription

1 WHAT DID CORPORATE TAX CUTS deliver? A Background Report for CORPORATE TAX FREEDOM DAY, 2014

2

3 What did Corporate Tax Cuts Deliver? A Background Report for Corporate Tax Freedom Day 2014 Edition It has become the norm to believe that cutting corporate income taxes is good for the economy. We have been led to believe that cutting corporate income taxes to increase after-tax corporate profits would lead companies to re-invest in operations like research and development, machinery and staff training to boost productivity. This in turn would stimulate economic growth, and create better paying and more secured jobs. But what did corporate tax cuts really deliver? What has happened to those tax dollars that were given away to corporations? Did cuts in corporate income tax really increase investment in research and development and in staff training? Did it boost productivity? Have we seen faster growth than what was observed prior to those corporate income tax cuts? Did we create better paying and more secured jobs? What has been the impact of cutting corporate tax rates on government revenues and services? Did Canadians get the promised return on their investment? The answer is a resounding No. January 2014

4

5 1. Corporate tax rates and Corporate Tax Freedom Day Since the year 2000, the general federal corporate income tax rate has been cut by almost half. As shown in Table 1, in the 1990s and in the year 2000, the general statutory federal corporate income tax rate that is, the rate applied after various deductions on corporate profits as defined for tax purposes stood at 28%. 1 The rate was cut to 21% under the Liberals, and later cut in stages, from 21% to 15%, under the Conservatives between 2007 and Today, the statutory corporate income tax rate stands at 15%, effective since January 1 st, Provinces also levy taxes on corporate profits, and have also been dropping their statutory rate from 13.31% on average in 2000 to 11.14% in As shown in chart 1, the combined federal/provincial statutory rate has fallen from 42.4% in 2000, to 34% in 2007, to 26.1% in The corporate income tax rates presented above do not include the 1.12% surtax paid prior to Source: OECD Tax Database Table II.1, December January

6 Chart 1 Combined Corporate Tax Rate on General Income % The statutory corporate tax rate in Canada is now well below that of our closest trading partner, the United States. The U.S. s federal corporate tax rate of 35% in addition to state taxes result in a combined rate of almost 39.1% in 2012 which is 13 percentage points higher than in Canada. Canada s statutory corporate tax rate in 2012 is also the second lowest of all G7 countries, behind the United Kingdom at 24%. The effective corporate tax rate that is, the actual percentage of profits paid as taxes is lower than the statutory rate. 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 January

7 and conditions. 3 Since 2000, the actual percentage of taxes paid by businesses on taxable income has decreased from 33.7% in 2000 to 24% in Chart 2 Enterprises income taxes to taxable income (percent) % Source: Statistics Canada, Cansim Table , extracted on December 16 th, As a result, the share of taxes paid to governments by corporations in Canada, as a share of overall government revenues has been decreasing since In 2012, corporate income taxes paid to the federal and provincial governments combined amounted to 7.85% of provincial and federal tax revenues of the government. 5 3 For details and estimates, see: Department of Finance. Tax Expenditures and Evaluations, Source: Calculated using Statistics Canada Cansim table , extracted December 16 th, Source: Calculated using Statistics Canada Cansim table , extracted December 1 st, January

8 Chart 3 Corporate taxes as a share of governments revenue in % 92.15% General governments revenue From corporations and government business enterprises, liabilities (accrual basis) Source: Statistics Canada, Cansim Table , extracted on December 16 th, Calculated over a calendar year, corporations in Canada had paid their share of government taxes in 2012 by January 29 th. After this, corporations in Canada no longer had to pay taxes on their profits, or that day was the Corporate Tax Freedom Day (CTFD). In contrast, the share of taxes paid by corporations to governments in Canada sat at 10.1% in The Corporation Tax Freedom Day was reached sometime at the end of the first week of February in Sunday Monday Tuesday Wednesday Thursday Friday Saturday January

9 2. Cutting corporate tax rates: Impact on Profits Proponents of ever lower corporate taxes argued that the money corporations saved from lower taxes would be reinvested in real assets such as Research and Development as well as machinery and staff training; thereby boosting productivity, economic growth, and helping create better paying and more secured jobs. Clearly, profits for corporations have been rising. Profits of non-financial industries industries that would invest profits in the real economy have increased significantly over the last decade. As shown in chart 4, the after-tax profit margin of non-financial enterprises, that is profit over income, has increased from an average of 6.9% in 2000 to 8.1% in Chart 4 Profit margin (percent) of non-financial industries % Source: Statistics Canada, Cansim Table , extracted on December 16 th, Source: Statistics Canada Cansim table , extracted December 16 th, January

10 A TD Economics special study published late in 2012 confirmed that Canadian non-financial corporations have seen a marked improvement in the health of their balance sheets over the last decade. The study found that a combination of both a boom in global and domestic demands prior to the financial crisis as well as lower corporate taxes and higher dividend tax credits in recent years are key factors explaining a double of total pre-tax profits across most industries Cutting corporate tax rates: Impact on R&D Profits obtained from corporate tax cuts did not have a positive impact on investment of corporations in research and development in the real economy. A report produced by a panel of experts 8 looking at the private sector's time and resource investments in the development of new ideas as well as technologies and processes, found that business expenditures in Industrial R&D as a share of the economy in Canada (measured by gross domestic product (GDP)) are relatively low, when compared to other developed economies and they are declining. As shown in chart 5, Statistics Canada found that business expenditures in R&D in Canada represented only 0.88% of GDP in 2012, down from 1.13% of GDP in They are roughly half the level found in the U.S. in 2012 (1.98% of GDP). 7 Source: Canadian Corporate Balance Sheet solid as a rock, Special Report, TD Economics, October 30, The State of Industrial R&D in Canada, Council of Canadian Academies, 189 pages, Source: Industrial Research and Development: Intentions, Statistics Canada, XWE, October 2013, Table 3, January

11 Chart 5 Business expenditures on R&D as a share of GDP % Source: Industrial Research and Development: Intentions, Statistics Canada, XWE, October 2013, Table 3 January

12 4. Cutting corporate tax rates: Impact on real business investments Cuts to corporate taxes did not reverse the trend in real business investments in Canada. In fact, a detailed study by economist Jim Stanford, published by the Canadian Centre for Policy Alternatives (CCPA), shows that real business investments in building and in machinery and equipment, have actually fallen as a share of the economy since the late 1980s Cutting corporate tax rates: Impact on training Profits obtained from corporate tax cuts did not have a positive impact on corporation investments in workplace training. The Conference Board of Canada found that, on average, employers in Canada spent $688 per employee in 2010 on training and development. 11 The Conference Board also found that spending on learning and development in Canada fell thirteen percent since 2008, and is down 40 percent since its peak in the early 1990s. In 2010, U.S employers spent, on average, $1,071 per employee for training, approximately $400 more per employee than in Canada. 10 Jim Stanford. Having Their Cake and Eating It Too: Business Profits, Taxes, and Investment in Canada: 1961 Through CCPA Source: Learning and Development Outlook 2011: Are Organizations Ready for Learning 2.0?, The Conference Board of Canada, 62 pages, October January

13 6. Cutting corporate tax rates: Impact on productivity Clearly, corporations in Canada do not seem to have taken advantage of higher profits from lower corporate taxes to invest in key elements of Canada's productivity R&D, machinery and training to improve their competitiveness. With the lack of investments in these key components of the real economy, it's no wonder Canada has experienced relatively low productivity growth in recent years. Chart 6 provides an international comparison of average annual labour productivity growth rates of OECD economies over the period, that is the real growth rate of our economy per hours worked. It shows that Canada s labour productivity growth has been generally weak in comparison to other advanced economies, with Canada ranking 29 th among 35 comparator countries in January

14 In comparing with the two decades prior to the introduction of cuts into the general statutory corporate tax rates of governments (1980s and 1990s), labour productivity has been growing less rapidly after 2000 than it did in the 1980s and the 1990s. January

15 7. Cutting corporate tax rates: Impact on Corporations Cutting corporate tax rates didn t seem to have a positive impact on business investment in R&D or machinery and training in the last decade, but it clearly had a significant impact on cash reserves held by corporations over the last 12 years. While corporate taxes were cut and business profits were rising, the total corporate cash reserves of private, non-financial corporations 12 grew from $182 billion in the first quarter of 2000 to $541 billion in the last quarter of This is an increase of almost 300% of cash reserves over 12 years. Many have argued that it is rational for corporations to hoard cash in uncertain times, especially after a financial crisis. But as shown in Chart 7, the speed at which corporations accumulated cash increased approximately 5 years before the 2008 financial crisis, when tax cuts were progressively introduced. 12 Financial companies and conglomerates are excluded because they typically hold large financial investments as part of their ongoing business 13 Source: Statistics Canada, Cansim Table Total currency and deposits for non-financial corporations, January

16 Chart 7 Total Currency and Deposits of Non-Financial Corporations in Canada ($millions) Q2000 2Q2000 3Q2000 4Q2000 1Q2001 2Q2001 3Q2001 4Q2001 1Q2002 2Q2002 3Q2002 4Q2002 3Q2003 4Q2003 1Q2004 1Q2003 2Q2003 2Q2004 3Q2004 4Q2004 1Q2005 2Q2005 3Q2005 4Q2005 1Q2006 2Q2006 3Q2006 4Q2006 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 Source: Statist cs Canada, Cansim , December 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 among 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. January

17 8. Cutting corporate tax rates: Impact on Economy A figure like $541 billion is fairly difficult to envision. To give an idea of the scope of cash that is floating around in corporate bank accounts, some comparisons are needed. Corporate Canada s cash reserves could pay off the accumulated net debt of all provinces and territory in Canada as of today. 14 All this cash sitting on the sidelines has significant impact on Canada s potential economic growth. It is dead money not at work that could be otherwise invested in R&D, machinery and employee training to increase productivity and create better paying and more secure jobs in Canada. The fact is: even if a fraction of this corporate cash in Canada was to be spent this year, for instance 10% or $50 billion in 2014/2015, it would be equivalent to federal government stimulus measures during the Great Recession of This is money that could be spent to invest in public infrastructure, thereby enhancing Canada s productivity. Having high levels of private investment is important, but cutting corporate tax cuts is a costly and ineffective way to raise real business investment. 14 The net debt of provinces and territories is $509 Billions in 2012 Sources: Provincial/territorial Public Accounts and 2013 Budgets, Table 31, Fiscal Reference Tables, Finance Canada, January

18 9. Cutting corporate tax rates: Impact on Governments Recent corporate tax cuts have had no impact on key real investments of business, but have been very costly in terms of foregone government revenues. In , the federal government collected $34.9 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, revenue would be $13 billion higher. Lower corporate tax revenues contribute to the deficit, meaning that the federal government has to borrow to finance tax cuts for corporations. The government is also cutting spending on programs and laying off public service sector 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, as well as cuts to public services they need and deserve. January

19 10. 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. Here, we examine Canada s largest publicly traded, non-financial companies which make up the S&P/TSX Composite Index. 15 For the purposes of this analysis, 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 our sample down to 141 companies. 16 Table 2 below shows the sales, earnings before income tax, income taxes, after-tax profits, cash in reserves in millions of dollars, and their effective tax rates. 15 The paper builds on David Macdonald s Corporate Income Taxes, Profit and Employment Performance of Canada s Largest Companies, CCPA. April Based on total reported corporate earning before tax of $192 billion in the 4 th quarter of 2011 as reported by Statistics Canada, Cansim January

20 Between 2001 and 2012, the sales and earnings before income tax of the top-141, non-financial corporations in Canada exploded. Sales increased by almost 2 ½ times from $289 to $705 billion, and earnings before income tax almost tripled from $20.7 to $57.5 billion during that period, peaking at $83.8 billion in However, income tax paid didn t even double during that same period for these corporations with $8.9 billion to $16.3 billions. 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 43.3% in 2001 to 28.4% in 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 reduction: 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 quadrupled their holdings of such assets, from $15.3 billion in 2001, to $60.4 billion today. 17 (Financial companies and conglomerates are excluded, since they commonly hold large financial assets.) Giving tax breaks to corporate Canada leads them to simply shove more money under their collective mattress. That is, unless they haven't already paid out the savings as dividends. 17 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). January

21 11. Canada s Corporate Hoarders 2012 Some of Canada s major, non-financial, corporate hoarders have accumulated much more than others. Table 3 shows the top-10 public trade non-financial corporations that have accumulated the most shortand long-term assets in (For a full list, see the Appendix.) Among Canada s top 141 non-financial giants, the leading cash hoarder in 2012 has been Suncor Energy Inc, which accumulated over $4.4 billion in assets over this period. Seven out of the top-10 non-financial corporations come from the resources sector (energy and materials), confirming Canada s reliance on the exploitation of Canada s natural resources. Only a key manufacturers is in the top-10 Bombardier Inc., with no other representative of knowledge-based industries. And finally, George Weston Ltd. is the only retailer in the top January

22 The top-10 corporate hoarders alone have managed to pile up $27.4 billion since While some of these funds may be invested in productive assets in the future, their accumulation has meant that we have foregone government revenue. These funds could have been used to increase public investment in areas like transit, green energy, and early childhood learning, or to stimulate business investment in R&D, training and machinery and equipment through more direct and targeted means, such as accelerated write-offs for equipment investment, and investment tax credits. The big winners of hoarding are corporate CEO's. CEO compensation of the top-10 non-financial corporations averaged $8.7 million in 2012, ranging between $5.9 million and $12.1 million in For more details, see CCPA s annual review of CEO pays, published early in January of each year. January

23 12. Canada s Serial Corporate Hoarders Out of all Canada s top non-financial giants, some corporations do invest and move out of Canada s top hoarders, while others remain in the top list of hoarders for multiple years. Table 4 presents Canada s serial corporate hoarders, defined as Canada s largest publicly traded, non-financial companies on the S&P/TSX Composite Index that have made Canada s top 10 list in the last three years. In our compendium of Canada s top serial hoarders, George Weston Limited has been keeping, on average, more than $4 billions in short term and long term cash assets over the last 3 years studied, followed by Bombardier Inc. with $3.5 billions, and Barrick Gold Corp. with $2.9 billions. January

24 Conclusion Cutting taxes paid by corporations didn t produce the investments needed to stimulate Canada s real economy. Investment in R&D, machinery and equipment, and training as key elements contributing to Canada s productivity growth and competitiveness have decreased during that period, despite increased corporates profit and cash assets. Instead of investing profits from lower corporate tax rates in the real economy, corporations in Canada have hoarded $541 billion in cash while paying investors and CEO higher compensations. Canada s largest public trade corporations did the same, sitting on $27 billion of cash and paying their CEO's on average $8.7 million/year in The winners have been those who own company shares, notably Canada s highly paid CEO's and other members of the top 1%. This policy decision of cutting corporate tax rates has a huge impact on federal and provincial government revenues and services. The foregone of corporate tax revenues forces provincial and federal governments to implement austerity measures. This decision can also significantly alter Canada s competitiveness in years to come. The lack of public investment due to austerity measures further decreases the government s capacity to invest in needed infrastructures and services that contribute to both our social and economic well-being. If this policy decision is not reversed, Canada will fall in a dangerous spiral, pushed down by low investments by both Corporations and governments in key elements contributing to productivity growth, competitiveness, with significant negative outcomes for our overall economic and social performance. Clearly, cutting corporate tax rates did not produce the expected outcomes, and new policies to put the cash-hoarded dead money back to work are needed. 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 invest more in R&D, better machinery, and workplace training, and pay their fair share of taxes. January

25 Appendix: Asset Hoarders in Canada ($millions) Company Sector Short- and Short- and Earnings Asset Long- Long- Sales in Before Taxes in Profits in Change Term Term 2012 Income Assets Assets Tax Suncor Energy Inc. Energy $ $5 041 $2 258 $2 783 $4 393 $1 $4 392 George Weston Limited Consumer Staples $ $975 $249 $486 $3 727 $1 261 $2 466 Teck Resources Limited Materials $ $1 344 $615 $811 $3 267 $101 $3 166 Encana Corpora ion Energy $ $ $ $2 794 $3 179 $610 $2 569 Bombardier Inc. Industrials $ $698 $100 $588 $2 896 $914 $1 982 Barrick Gold Corpora ion Materials $ $913 -$236 -$665 $2 093 $791 $1 302 Husky Energy Inc. Energy $ $2 836 $814 $2 022 $2 039 $- $2 039 Air Canada Industrials $ $272 $1 $127 $2 026 $1 067 $959 Kinross Gold Corpora ion Materials $ $2 293 $262 -$2 505 $1 983 $83 $1 900 Loblaw Companies Limited Consumer Staples $ $865 $215 $650 $1 795 $1 001 $794 Enbridge Inc. Energy $ $982 $128 $715 $1 776 $74 $1 702 BlackBerry Limited Information Technology $ $1 518 $347 $1 164 $1 774 $722 $1 052 Canadian Oil Sands Limited Energy $3 905 $1 299 $318 $981 $1 553 $357 $1 196 Magna International Inc. Consumer Discretionary $ $1 562 $324 $1 433 $1 522 $890 $632 WestJet Airlines Ltd. Industrials $3 427 $340 $98 $242 $1 408 $59 $1 349 HudBay Minerals Inc. Materials $703 $52 $73 -$19 $1 337 $0 $1 337 Thomson Reuters Corporation Consumer Discretionary $ $2 201 $157 $2 070 $1 301 $532 $769 Canadian Tire Corporation, Limited Consumer Discretionary $ $677 $178 $499 $1 184 $579 $606 Turquoise Hill Resources Ltd. Materials $134 -$784 -$19 -$435 $1 178 $16 $1 161 SNC-Lavalin Group Inc. Industrials $8 091 $378 $68 $309 $1 175 $323 $852 Goldcorp Inc. Materials $5 435 $2 252 $503 $1 749 $930 $84 $846 Valeant Pharmaceuticals International, Inc. Health Care $ $376 -$278 -$116 $921 $435 $486 Iamgold Corporation Materials $1 670 $571 $199 $335 $833 $25 $807 Eldorado Gold Corporation Materials $1 148 $452 $128 $305 $819 $5 $814 Cameco Corporation Energy $2 321 $218 -$46 $266 $799 $34 $766 Methanex Corporation Materials $ $118 -$84 -$68 $746 $332 $413 Agrium Inc. Materials $ $2 093 $595 $1 494 $726 $51 $675 Talisman Energy Inc. Energy $ $ $306 $132 $721 $11 $710 New Gold Inc. Materials $791 $279 $80 $199 $688 $2 $685 AuRico Gold Inc. Materials $164 -$114 -$1 $33 $603 $0 $603 Potash Corporation of Saskatchewan Inc. Materials $7 927 $2 905 $826 $2 079 $562 $45 $517 Open Text Corporation Information Technology $1 207 $137 $12 $125 $560 $88 $472 Sherritt Interna ional Corporation Materials $1 840 $66 $30 $33 $554 $124 $430 TransCanada Corpora ion Energy $8 007 $1 938 $466 $1 354 $551 $299 $252 Celestica Inc. Information Technology $6 507 $112 -$6 $118 $551 $ $792 Pan American Silver Corp. Materials $929 $157 $94 $87 $542 $4 $538 ATCO Ltd. Utilities $4 355 $891 $214 $375 $517 $329 $189 Empire Company Limited Consumer Staples $ $474 $122 $339 $510 $557 -$47 Imperial Oil Limited Energy $ $4 993 $1 227 $3 766 $482 $872 -$390 Shaw Communications Inc. Consumer Discretionary $4 998 $975 $214 $728 $427 $- $427 Silver Standard Resources Inc. Materials $241 -$9 -$20 $55 $402 $4 $398 Torex Gold Resources Inc. Materials $- -$65 $1 -$65 $401 $0 $401 Nevsun Resources Ltd. Materials $566 $401 $154 $145 $396 $0 $396 Canadian U ilities Limited Utilities $3 132 $738 $158 $580 $382 $255 $127 ShawCor Ltd. Energy $1 483 $223 $44 $178 $372 $56 $316 Catamaran Corporation Health Care $9 940 $190 $69 $117 $371 $5 $366 Alamos Gold Inc. Materials $329 $167 $49 $118 $364 $0 $364 Agnico Eagle Mines Limited Materials $1 918 $426 $124 $311 $351 $21 $330 Yamana Gold Inc. Materials $2 337 $883 $373 $442 $350 $1 $348 Canadian Pacific Railway Limited Industrials $5 550 $637 $152 $484 $333 $557 -$224 First Quantum Minerals Ltd. Materials $2 950 $2 197 $328 $1 773 $309 $10 $299 Alimentation Couche-Tard Inc. Consumer Staples $ $593 $144 $449 $304 $5 $300 CAE Inc. Industrials $1 821 $240 $58 $180 $287 $280 $8 Alacer Gold Corp. Materials $719 -$334 $9 -$386 $277 $1 $276 Lundin Mining Corporation Materials $721 $147 $23 $123 $275 $0 $275 Reitmans (Canada) Limited Consumer Discretionary $1 019 $67 $18 $48 $268 $20 $248 NovaGold Resources Inc. Materials $- -$93 -$7 $68 $253 $0 $253 Quebecor Inc. Consumer Discretionary $4 352 $157 $100 $168 $229 $373 -$144 Westport Innovations Inc. Industrials $156 -$113 $2 -$99 $216 $27 $189 Cogeco Cable Inc. Consumer Discretionary $1 278 $248 $79 $225 $215 $3 $212 Rogers Communica ions Inc. Telecommunication Services $ $2 117 $620 $1 700 $213 $17 $196 ARC Resources Ltd. Energy $1 389 $188 $49 $139 $196 $1 $196 CCL Industries Inc. Materials $1 309 $133 $36 $97 $189 $113 $76 China Gold Interna ional Resources Corp. Ltd. Materials $332 $100 $26 $71 $182 $- $182 Cott Corporation Consumer Staples $2 251 $54 $5 $48 $179 $4 $176 Ritchie Bros. Auc ioneers Incorporated Industrials $438 $114 $32 $80 $178 $50 $129 Wi-LAN Inc. Information Technology $88 -$16 -$1 -$15 $177 $4 $173 Rubicon Minerals Corporation Materials $- -$10 $0 -$10 $172 $1 $171 Pason Systems Inc. Energy $387 $60 $20 $40 $158 $1 $157 Canadian Na ional Railway Company Industrials $9 920 $3 658 $978 $2 680 $155 $53 $102 Fortis Inc. Utilities $3 654 $432 $61 $362 $154 $14 $140 Precision Drilling Corporation Energy $2 041 $28 -$25 $52 $153 $13 $140 Paramount Resources Ltd. Energy $186 -$126 -$34 -$62 $147 $15 $132 Saputo Inc. Consumer Staples $6 930 $579 $199 $381 $144 $6 $138 Semafo Inc. Materials $389 $34 $18 -$7 $139 $11 $129 Taseko Mines Limited Materials $254 -$19 -$3 -$16 $135 $0 $135 Norbord Inc. Materials $1 149 $99 $27 $72 $128 $165 -$37 CGI Group Inc. Information Technology $4 772 $263 $131 $132 $128 $46 $82 January

26 Appendix: Asset Hoarders in Canada ($millions) Company Sector Short- and Short- and Earnings Asset Long- Long- Sales in Before Taxes in Profits in Change Term Term 2012 Income Assets Assets Tax BCE Inc. Telecommunica ion Services $ $2 809 $825 $2 763 $127 $569 -$442 Dundee Precious Metals Inc. Materials $385 $50 $20 $54 $123 $1 $122 Mullen Group Ltd. Energy $1 428 $179 $45 $131 $123 $14 $108 Russel Metals Inc. Industrials $3 000 $138 $39 $99 $115 $17 $98 Finning Interna ional Inc. Industrials $6 568 $404 $79 $338 $115 $- $115 Trican Well Service Ltd. Energy $2 213 $58 $5 $54 $114 $1 $112 Osisko Mining Corporation Materials $665 $151 $72 $78 $113 $0 $113 Telus Corporation Telecommunica ion Services $ $1 775 $457 $1 318 $107 $17 $90 Shoppers Drug Mart Corpora ion Consumer Staples $ $823 $215 $608 $105 $- $105 Vermilion Energy Inc. Energy $1 083 $308 $163 $191 $104 $7 $97 West Fraser Timber Co. Ltd. Materials $3 000 $115 $28 $87 $102 $270 -$168 ATS Automation Tooling Systems Inc. Industrials $595 $59 $15 -$60 $96 $73 $23 Maple Leaf Foods Inc. Consumer Staples $4 865 $166 $48 $115 $90 $53 $38 TransGlobe Energy Corporation Energy $634 $176 $88 $88 $83 $1 $82 Linamar Corpora ion Energy $3 222 $188 $42 $146 $82 $38 $44 Dominion Diamond Corpora ion Materials $290 $26 $9 $25 $78 $82 -$4 Emera Incorporated U ilities $2 059 $233 -$12 $232 $78 $23 $55 MacDonald, Dettwiler and Associates Ltd. Information Technology $876 $133 $47 $86 $76 $17 $59 Metro Inc. Consumer Staples $ $651 $171 $473 $73 $- $73 Extendicare Inc. Health Care $2 019 $38 $11 $63 $71 $26 $45 Gildan Activewear Inc. Consumer Discre ionary $1 948 $144 -$4 $148 $70 $- $70 Aecon Group Inc. Industrials $2 947 $87 $6 $78 $67 $107 -$40 Inter Pipeline Ltd. Energy $1 187 $352 $89 $307 $64 $18 $46 Algonquin Power & Utili ies Corp. U ilities $366 $10 -$14 $15 $53 $32 $21 Westshore Terminals Investment Corporation Industrials $232 $88 $22 $66 $44 $16 $28 Calfrac Well Services Ltd. Energy $1 595 $138 $41 $97 $42 $2 $40 Stantec Inc. Industrials $1 556 $164 $44 $121 $42 $8 $34 Dorel Industries Inc. Consumer Discre ionary $2 476 $130 $21 $109 $38 $19 $20 Major Drilling Group International Inc. Materials $797 $128 $39 $90 $37 $4 $34 Canadian Natural Resources Limited Energy $ $2 729 $717 $1 892 $37 $15 $22 Bankers Petroleum Ltd. Energy $432 $99 $65 $34 $34 $3 $31 Ensign Energy Services Inc. Energy $2 197 $320 $102 $218 $33 $49 -$16 Northland Power Inc. U ilities $342 -$2 $8 -$10 $32 $1 $32 Mar inrea International Inc. Consumer Discre ionary $2 901 $52 $18 $39 $29 $4 $25 Pembina Pipeline Corporation Energy $3 427 $297 $75 $225 $27 $5 $23 TransAlta Corpora ion U ilities $ $443 $103 -$583 $27 $62 -$35 The North West Company Inc. Consumer Staples $1 495 $80 $25 $58 $27 $9 $18 Labrador Iron Ore Royalty Corporation Materials $128 $29 $99 $27 $0 $27 Corus Entertainment Inc. Consumer Discre ionary $842 $213 $57 $149 $25 $- $25 Bonterra Energy Corp. Energy $143 $45 $11 $33 $23 $- $23 Rona Inc. Consumer Discre ionary $4 767 $26 $7 $17 $21 $- $21 BlackPearl Resources Inc. Energy $205 $1 $2 $0 $17 $- $17 Transcontinental Inc. Industrials $ $56 $112 -$177 $17 $110 -$93 Veresen Inc. Energy $264 $76 $29 $47 $16 $14 $2 Parkland Fuel Corpora ion Energy $4 134 $124 $39 $85 $15 $8 $7 AltaGas Ltd. Energy $1 428 $166 $46 $117 $12 $- $12 Superior Plus Corp. Industrials $3 586 $70 $9 $93 $8 $- $8 Intertape Polymer Group Inc. Materials $784 $23 $0 $23 $6 $- $6 Enerplus Corporation Energy $ $348 -$61 -$156 $5 $1 $4 Trinidad Drilling Ltd. Energy $859 $38 -$5 $55 $5 $1 $4 Bonavista Energy Corporation Energy $832 $91 $26 $64 $3 $- $3 Pengrowth Energy Corporation Energy $ $93 -$32 $13 $3 $4 -$1 Toromont Industries Ltd. Industrials $1 507 $165 $44 $121 $2 $35 -$33 Baytex Energy Corp. Energy $1 216 $376 $118 $259 $2 $- $2 Freehold Royal ies Ltd. Energy $168 $65 $19 $46 $0 $0 -$0 Jean Coutu Group Inc. Consumer Staples $2 417 $273 $70 $226 $- $164 -$164 Wajax Corpora ion Industrials $1 466 $90 $24 $66 $- $5 -$5 Canfor Corporation Materials $2 669 $56 $14 $32 $- $32 -$32 Peyto Explora ion & Development Corp. Energy $358 $130 $36 $94 $- $- $- Advantage Oil & Gas Ltd. Energy $269 -$126 -$29 -$89 $- $- $- Penn West Petroleum Ltd. Energy $3 235 $237 $63 $174 $- $- $- TransForce Inc. Industrials $2 812 $209 $55 $154 $- $1 -$1 Manitoba Telecom Services Inc. Telecommunica ion Services $1 704 $225 $50 $175 $- $23 -$23 Source: GlobeInvestor.com, OECD Tax Database, author s calculations. January

27

28 WHAT DID CORPORATE TAX CUTS deliver?, All rights reserved Riverside Drive, Ottawa ON K1V 8X7 facebook.clc.ctc