The benefits of business investment

Occasionally, people post in this blog criticizing economic development success stories such as Ireland. On that point, I am unrepentant. Attracting large scale business investment into your province must be a top priority in poor places like New Brunswick.

According to this article, the Dublin subsidiary of Microsoft paid almost $1 billion in corporate taxes to Ireland between 2001 and 2004.

$ 1 billion in four years.

Now let’s put a little perspective on this, shall we? New Brunswick’s total government budget for this year is just over $6 billion. Total corporate taxes to support this budget are $152 million (that’s according to the government’s own data). Microsoft, one company, pays almost double in corporate taxes in Ireland than every corporation in New Brunswick combined.

Since you asked, Microsoft in the U.S. paid $4.4 billion last year in corporate taxes.

So the lesson here is that we need to attract companies because they contribute vast amounts to the public purse (directly and indirectly).

Since you asked, NB generates approx. $608/per person in corporate tax compared to $1833/per person in Ontario.

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0 Responses to The benefits of business investment

  1. vivenewbrunswick says:

    That only 5% of NB’s budget comes from corporations is a CRIME. Who benefits from the forests, the rivers, the low wages, mines, the subsidized trans canada, the subsidized gas pipeline, the subsidized LNG terminal,etc. Who will pay for reactor problems, gas leaks, dioxins in the environment and when a company arbitrarily decides to move on to greener pastures?

    In fact, all resource companies should be thrown the hell out, they’ve contributed next to nothing, poisoned the environment, get tax breaks on technology that has let them decimate the workforce. We’d be better off simply giving the land to the natives, they hire far more people per capita than resource companies and it would get them out of abject poverty (another federal milking machine where we are supposed to believe all that money goes to natives)

    I think SOME of that irish model should be brought here, namely that 2 billion euros of agricultural subsidies that ireland gets from the EU each year. That’s more than New Brunswick gets in health and social transfers. By all means, let’s ‘irish’ it up a bit!

    The problem is that economics and politics constantly change. More companies are moving to asia and India, what can an illiterate have not province offer a company? McKenna tried buying them off with cheap labour and incentives, now every place has incentives and even cheaper labour.

  2. David Campbell says:

    New Brunswick’s corporate tax rates are higher than Ontario so it’s not the rate. Either, Ontario company profits are much higher or NB companies are finding ways to get around paying taxes (collectively).

  3. vivenewbrunswick says:

    Not according to my stats, but everything is relative they say, but this is from Ernst and Young, copy and paste this address in your header:

    http://www.ey.com/global/download.nsf
    /Canada/Tax_Rate_Card_05_Corporate
    /$file/13016Corporate.pdf

    If you’re real lazy, then the meat is that NB’s corporate rate, for income over $300,000 is 24.12%, down this year from 24.62. Ontario’s is 27.62%. Small corporations under $300,000 is also lower. I’ve researched it and have found that New Brunswick corporate tax rate is not only less than all canadian provinces, but is also less than ALL american states, except one I believe. So no speeches please on how low taxes bring investment, New Brunswick is living (or dying) proof of that.

  4. David Campbell says:

    According to the E&Y tax tables Vive posted, the manufacturing and processing corporate tax rate for New Brunswick is 13% (eliminate the small business figure – they don’t pay any real taxes anyway) compared to 11.5% to 16% in the rest of Canada – or about the same. Ontario’s rate is 12% (NB 13% just as a I said).
    For non M&P income, the is a little more favorable for NB corporations but not enough to justify the much lower amount of corporate taxes paid.

  5. Anonymous says:

    I might be missing something, I’m no statistician but M&P corporate taxes over 400,000 would be 35.12 in NB and 34.12 for Ontario, which is slightly higher for NB, although with more industry Ontario can afford lower taxes. I’m thinking your number was the fish, farm and logging number in the notes, however, it doesn’t give NB numbers or whether NB has similar exemptions for those industries.

    Of course there are other issues too, notably how much ‘enforcement’ and auditing procedures a jurisdiction enforces, this is rarely covered but I’d suggest that it’s practically nil in New Brunswick, while not a whole lot better in Ontario, but some since they do have a market presence.

    The biggest issue is, as always, the various loopholes, which in NB I’d pretty much guarantee are written by McCain and Irving. As these are ‘family’ operations we dont’ get public accountability and I’ve got a feeling we’d really be horrified if we saw the truth. I’ve got a few high level accountant friends who very hushedly admit that’s the case.