Firms confident of revival, but worry about tax hikes: poll
TORONTO Canadian corporate directors are confident the companies they oversee will rebound quickly from the current economic upheaval, but worry the rebound may come at a significant cost, according to a new survey by Environics Research.
Commissioned by the Institute of Corporate Directors, the survey found more than half of respondents — all of whom were drawn from the ICD’S membership — believed their companies would recover from the Covid-19-induced downturn in less than one year. They attributed the ability to bounce back to a variety of factors: Most had crisis response plans in place prior to the pandemic and said they had executed on them effectively, while 63 per cent say they benefitted from federal and provincial aid packages.
It’s paying for the latter that is cause for concern: 78 per cent of respondents are worried that the costs will trickle down to them through higher corporate and payroll taxes.
“Unfortunately, it is reasonable to assume that taxes will go up to pay for this unprecedented deficit spending,” said Rahul Bhardwaj, the CEO of the ICD. “It will be very important for government to get this right and to consult with businesses because coming out of the crisis, Canada will need every tool at its disposal to innovate and be competitive.”
Due to the combination of stimulus spending and low oil prices, the federal government’s deficit is expected to balloon to $252.1 billion in the next year, according to a recent Parliamentary Budget
Officer report.
Yyes Giroux, the parliamentary budget officer, told the Senate Finance Committee on Tuesday that these measures will soon need to taper off, “otherwise we’ll be looking at a level of taxation that’s not been seen since for generations.”
The last time Canada was in a rough spot, in the wake of the 2008 global financial crisis, corporate tax rates actually declined. Keeping them low has historically been thought of as a good way to drive investment.
But Bhardwaj and the ICD members worry this time might be different.
A hike would be particularly damaging to small- and medium-sized enterprises, he said.
Environics conducted the survey online between April 8 and April 24. It sent invitations to 14,512 ICD members and 693 replied and participated. The results are accurate plus or minus 3.6 percentage points, 19 times out of 20.