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Memorandum/Note de service
To/À: Conservative Caucus
From/De: PMO Communications
Date: January 23, 2010
Re/Objet: Tax Cuts for Job Creators

As we have repeatedly stated, the economy remains our Conservative Government’s top
priority. With the economic recovery still fragile, we are focussed on creating jobs and
economic growth.

That is why we are reducing taxes for job creators. In 2007, we enacted into law an
ambitious plan to reduce business taxes. Our goal was to have the lowest tax rate for new
business investment in the G-7.

We are close to achieving that goal. The latest legislated tax reduction came into effect on
January 1, 2011. As a result of our actions, as of January 1 the tax rate on job-creating
businesses is 16.5 per cent. That is down from 18 per cent last year and 22 per cent in

Next year, we will achieve our goal when the fifth round of already legislated tax cuts comes
into effect, dropping the federal business tax rate to 15 per cent. Combined with the efforts
of provincial governments across Canada — Liberal, Conservative, and New Democratic —
Canada’s business tax rate is on track to be 25 per cent.

There has been a lot of misinformation spread about why we are lowering taxes on job
creators and job-creating businesses.

The answer is simple: our low-tax agenda is continuing to create jobs and economic growth.

Stephen Harper’s low-tax agenda means Canadian job creators have more money to invest
in their businesses to help them expand and grow. For example, our low-tax agenda means
they will be able to invest in:

• new machinery and equipment to build more products

• marketing campaigns to enter new markets
• new employees to do the additional work

The benefits of these investments are felt throughout the entire economy, from the factory
floor to the kitchen table. They create jobs and growth throughout the entire economy as

businesses take advantage of new opportunities and markets. And when businesses are
growing, Canada’s economy is growing, which means more and better jobs for Canadians,
as well as higher tax revenues to fund the vital services Canadians deserve.

Another benefit is that our low-tax agenda attracts new business and investment to Canada.
In a competitive global economy, businesses look for the strongest investment climate.

Canada’s world-leading financial system, educated and mobile workforce, commitment to

free and open markets combined with our low tax agenda make Canada one of the strongest
and most stable places in the world to invest.

The world is starting to take notice:

• The Wall Street Journal says that our business tax rates are, “making [Canada] one of
the most cost-effective places to do business in the developed world.”
• The Washington Times said our business tax rate gives Canada an, “eye-popping
advantage for businesses wondering whether to locate on the U.S. or Canadian side of
the border.”

And, the results speaking for themselves:

• Tim Hortons returned its headquarters to Canada as a result of our low-tax environment.
• Spectra Energy Corp is investing $2 billion over the next two years on infrastructure
projects in Canada.
• KPMG has been moving internal marketing, technology and finance services to Toronto
from London and other locations over the past two years. They now have over 200
employees in Toronto.

However, the real result that matters is the benefit to hardworking Canadians. In this case,
the results speak volumes. Since July 2009, Canada’s economy has created over 450,000
new jobs and the economy has grown for five straight quarters.

These results are no accident. They are the result of conscious decisions made by our
Government both before and during the global economic recession. We cut taxes, promoted
trade, invested in world class infrastructure and supported key sectors of the Canadian
economy. While there is much more to be done, Canada’s economy is recovering, in part
because of the tax cuts for job creators that we’ve legislated into law.

On the other hand, Michael Ignatieff and his coalition partners of the NDP and the Bloc
Québécois are trying very hard to spread misinformation about our plan to cut taxes for job
creators and their plan to raise them. We cannot let them succeed.

Michael Ignatieff tries to say our tax cuts only benefit large corporations. This is false. What
does our low tax agenda mean? It means our tax reductions will primarily benefit businesses
on Main Streets across Canada.

Michael Ignatieff is also trying to deceive Canadians into believing he will only freeze taxes
on job creators at current levels. This is false. Ignatieff’s clear policy commitment is to freeze
rates at the 2010 level of 18%. As of January 1st, thanks to our legislated tax cuts on job
creators, the tax rate dropped to 16.5 per cent and will reduce again to 15% next year. We
must not let them get away with this deception. Michael Ignatieff’s position is clear: his plan
is to increase taxes on job creators.

Need proof: he said it himself on November 25, 2010, when he told Steve Murphy of CTV
Atlantic that “[Raising taxes on job creators is] the only tax increase that our Liberal platform
will include.” What about all the other taxes such as the GST? He will raise them too. After
all, he loves calling himself a “tax and spend Liberal” and has openly stated that he will not
take a GST hike off the table.

We know these false attacks and assertions by Michael Ignatieff are simply political
opportunism. However, they illustrate a simple fact: Michael Ignatieff has no plan to create
jobs and economic growth. Instead, he has a plan to raise taxes on families, workers,
seniors and job creators, a fact he very much wants to hide from Canadians. The Ignatieff-
led coalition will raise taxes, which will stall our fragile economic growth, kill jobs and put the
financial security of hardworking Canadian families at risk."

Raising taxes on job creators is a recipe for economic disaster. It will kill jobs and hurt
economic growth. For example, the Canadian Manufacturers and Exporters recently
released a report that said that our tax cuts for job creators will generate 100,000 jobs
between 2007 and 2012. That is 100,000 jobs gone if the Ignatieff Liberals get their way.

Respected economist Jack Mintz released a report that stated that more than 200,000 jobs
would be created over time due to our tax cuts for job creators. That is 200,000 jobs that
would be lost if the Ignatieff Liberals get their way.

Canadians have been crystal clear. They overwhelmingly want their Government to focus
on the economy. That is exactly what we are doing. We continue to consult with Canadians
on the next phase of the Economic Action Plan.

However, we will not sit back and let the Mr. Ignatieff spread lies and misinformation about
our tax cuts for job creators. That is why, this week we will take steps to illustrate to
Canadians the benefits of our tax reductions for job creating businesses by meeting with
workers and job creators at their workplaces across the country. We will highlight the
benefits of our tax cuts to Canadians. And we will force the Ignatieff-led Coalition to explain
to Canadians exactly why they are intent on implementing their agenda to raise taxes on job

creators and families, which will stall our fragile economic growth, kill jobs and put the
financial security of hardworking Canadian families at risk.