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Corporate Income Tax: Getting the Economics Right

The past decade has seen a remarkable transformation in Canada’s business tax landscape. Starting in the late 1990s, both the federal and most provincial governments began to reduce corporate income taxes – the taxes levied on business income or profits.  At the national level, the general federal corporate income tax (CIT) rate stood at 28% in 1999; today it is 18%, and the current government intends to bring it to 15% by 2012.  Moreover, in recent years Ottawa has eliminated the income surtaxes and capital taxes that it previously imposed on large and medium-sized businesses.