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(October 12, 2007) Federal Liberal leader Stephane Dion said Friday that he will cut the corporate tax rate if he’s elected.

Dion, speaking to the Economic Club of Toronto, didn’t say how much he’d cut the tax but did say it would be deeper than the 0.5% promised by the Conservative government.

In explaining why he’d cut the tax rate, which is at 19% right now and slated to drop to 18.5% in 2011, he said its “good economic policy. It will help us compete with other countries. It will strengthen our economic sovereignty.”

To the first point, Dion said that lowering the corporate tax rate lowers the cost of capital for Canadian companies. “Therefore, these companies are induced to spend more on capital equipment,” he explained.

He added that cutting the corporate tax rate will allow Canadians to stay competitive on the global stage. “As a destination for investment in North America, Canada is not top of mind,” he said. “So we need a big hook to snare investment, including Canadian investment, that might otherwise go south of the border.

“Corporations are oriented to the bottom line, and one of my biggest hooks as a future prime minister would go straight to the bottom line. Come to Canada and you pay a much lower corporate tax than in the United States.”

The corporate tax reduction would also strengthen Canadian companies against foreign takeovers, argued Dion. He said the best way to avoid foreign M&A activity is to “strengthen our companies by taxing them less.”

Federal Finance Minister Jim Flaherty says his government has already committed to tax cuts, both corporate and personal. “The Liberal government had 13 years to do what they say they might do now,” he says.

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Canada’s economy expected to grow: RBC

(October 12, 2007) The markets might be in turmoil, but Canada’s economy is still expected to grow, says a new RBC economic forecast. The bank predicts that the economy will improve by 2.8% in the latter half of this year, and 2.5% next year.

“Despite recent financial market volatility, Canada should continue to sustain relatively solid economic growth for the rest of 2007 and into 2008,” says Craig Wright, vice-president and chief economist at RBC. “Strong consumer and business spending will more than offset ongoing export-related weakness resulting from slower U.S. growth and the high Canadian dollar.”

The report says prices on Canadian exports have been pushed higher, as emerging markets are increasingly buying our homegrown products. As a result, the “terms of trade” — a measure of the movement in the price of Canadian exports relative to imports — improved by 20% between 2002 and mid-2007.

Other consequences of increased trade are that Canada’s unemployment rate is at its lowest in 30 years and disposable incomes have increased dramatically over the past two and a half years.

RBC says that inflation rates are slightly above the mid-point of the Bank of Canada’s target rate. Due to recent market activity, the report expects the BoC to delay a rate increase until 2008.

It’s also expected that the rising Canadian dollar will drop next year. “The Canadian dollar appears likely to remain above parity through the end of the year,” says Wright. “However, moving into 2008, as financial market expectations shift away from further Fed easing and toward an increase in the Fed funds rate, the Canadian dollar will start to reverse recent gains.”

RBC has downgraded its economic forecast for the U.S. to an average annualized quarterly growth rate just below 2.5% because of recent credit tightening conditions and the weak housing market.

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Top 10 reasons people file their taxes late

(October 12, 2007) With only a couple of months until the winter holidays, it’s hard not to think about vacation. But for the financially conscious, the end of the year also means something else — it’s almost tax filing time.

Not surprisingly, Revenue Canada’s not on most people’s Christmas lists, but most of us get around to paying the man before April. That excludes the more than one million Canadians, though, who either pay late or don’t pay their taxes at all.

Alberta-based Personal Tax Consultants conducted a study to find out why people pay their taxes late. The answers might be surprising.

The results from 10 to one are

10. I am too young. 9. I don’t make enough money. 8. I am dead. 7. I don’t have all my information; I think my dog ate some receipts. 6. I will get to it someday; I have other priorities right now, and I’m too busy! 5. I think I owe too much money. 4. I think they owe me money, so the longer I wait, the more they will owe me. 3. Maybe they will forget about me. 2. I thought my wife did it this year. 1. You mean I have to pay taxes in this country? I did not know this.

While the “I am dead” excuse might get you out of a day of work, it’s unlikely that it’ll go over well with Revenue Canada. So PTC’s advice? Pay your taxes properly and on time.

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RBC Capital Markets hires Mike MacBain

RBC Capital Markets revealed on Friday that it has hired Mike MacBain to co-head the company’s global debt markets business.

MacBain, who starts November 1, will focus on financial products and commodities.

The former president of TD Securities will be a member of the RBC Capital Markets operating committee and, along with Richard Pilosof, will be responsible for the firm’s $2 billion global debt markets business.

“We are delighted to have an individual of Mike’s calibre and experience on our team,” says Mark Standish, head of global markets. “The size and complexity of our debt markets business have grown dramatically in the past few years and, with Mike’s and Richard’s leadership, we can look forward to continued success.”

RBC also announced that Harry Samuel, head of Global Treasury Services, will take on the role of regional head of global markets throughout Europe and Asia.

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Canadians like to save

Canadians might be on a spending spree south of the border lately, but HSBC says we’re generally a country of savers.

The bank found that 70% of Canadians have some savings, whether it be in investments or in or outside of RRSPs, while 30% are on a schedule of pre-authorized deductions.

According to the study, 55% of people will save money before buying something so they don’t have to use credit.

It was also revealed that 12% of Canadians would rather pay their credit cards off “tomorrow” and enjoy life today.

A high rate of return is important for many of us (91%), but 55% surveyed would rather have a safe nest egg than a high rate of return.

(10/12/07)