Canadian Government Gives Business $250 million Tax Break

Reuters

The pro-business Conservative Canadian government offers more corporate welfare, while real wage gains for Canadian declines by 2%. 

Canada and the United States are expected to sign a new tax treaty this month that could increase Canadian companies' access to U.S. financing, experts said on Tuesday.

The two governments will eliminate the 10 percent withholding tax on interest payments made by borrowers in one country to lenders in the other.

The long-awaited measure would mainly benefit Canadian companies that borrow from U.S. banks. The Conservative government estimates it will cost it an estimated C$250 million ($246 million) in the two fiscal years to 2009.

While the Liberal opposition supports the change, it warned that it should be accompanied by steps to plug a loophole that allows foreigners to load up on debt in Canada and avoid taxes.

Finance Minister Jim Flaherty said in a speech on Sunday that the signing of a revised Canada-U.S. tax treaty would be "soon." Finance officials would not give details.

Full Story >