Why high corporate taxes could lead to less tax revenue

CALGARY – A University of Calgary study warns that increasing corporate taxes can hurt provincial economies.

The university’s School of Public Policy has released a paper that suggests some provinces are actually sacrificing tax revenue because their taxes are too high.

Author Bev Dahlby, who looked at data from 1972 to 2010, found that Saskatchewan raised corporate taxes to a point where it sabotaged the government’s goal of raising more revenue.

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Dahlby says a government could raise more money by lowering taxes and broadening the tax base.

His paper says five other provinces, including Alberta, undermined economies by raising corporate taxes, when they would have been better off cutting them and bringing in a revenue-neutral sales tax.

The study says the one exception was Quebec, where the culture and language may make it less likely for people and investors to leave the province.