CONFIDENTIEL CONFIDENTIAL

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 2007. 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

Page 2

CONFIDENTIAL

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.

Page 3

CONFIDENTIAL

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

Page 4

CONFIDENTIAL

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