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It seems everyone these days is talking about cutting corporate income tax rates. The provincial government has an expert studying the issue. Editorial pages in our newspapers demand cuts. Even the impressive sounding Rotman School of Management at the University of Toronto has sent down emissaries to convince us of the need to cut the income taxes paid by industry.

There are a number of reasons to advocate corporate tax cuts. One, you may believe that individuals should pay a higher percentage of the total tax burden in a province because they take more out than businesses do. Businesses don't directly use the health care system. Businesses don't directly use the education system. People do. So let them pay, so the argument goes. Another reason some may push for corporate tax cuts is the argument that the government doesn't need the money. Alberta might be one example of this scenario.

However, by far, the most cited reason by those calling for tax cuts is that they will stimulate economic growth. It is the clarion call for the tax cutter crowd. The problem with this is that I see limited evidence that cutting corporate income tax rates - particularly in a place like New Brunswick - would actually lead to economic growth. Now, before you throw down your newspaper and start to write a vicious rebuttal, at least read over my rationale for drawing this conclusion.

Firstly, New Brunswick companies don't pay much tax as a percentage of the total budgetary needs of the provincial government. Corporate income tax only amounts to about three per cent of the total revenues of the provincial government ($183 million in total in the 2008/2009 budget). By contrast, in Ontario, more than 17 per cent of total revenues come from corporate income tax and employer-paid health premiums. New Brunswick companies also do not pay sales tax (the Harmonized Sales Tax). Companies collect HST from clients and then deduct their HST payments from HST collection. Companies in New Brunswick do pay property tax but, again, the total amount represents less than three per cent of the total revenues generated by the provincial government.

In fact, it seems as though governments in New Brunswick have intentionally placed the bulk of the tax burden on individuals, rather than corporations. I am not making a moral or value judgement about this. I am just stating a fact. In 2008/2009, the New Brunswick government is expecting to raise almost $7 in personal income tax for every $1 raised in corporate income tax. In Ontario, the ratio is $2 in personal income tax for every $1 in corporate income taxes.

In addition, I can't find any recent examples where across-the-board corporate income tax cuts worked in a place like New Brunswick (as a broad economic stimulus). Take the example of the small-business tax cuts put in place by former premier Bernard Lord. Those tax cuts were heralded by business associations and chambers of commerce far and wide. They were the centrepiece of government stump speeches for years. However, nobody bothered to ask if they actually work. I asked the question and didn't like the answer. According to a Fraser Institute study of new business startups, New Brunswick was 59th out of 60 U.S. states and Canadian provinces for the rate of new business startups in the years after the small-business tax cuts. In addition, I reviewed employment growth during the years after the tax cuts and found it to be concentrated in the government sector and in larger businesses such as customer contact centres (which were not eligible for the tax cuts). You never heard this from any business association or government official, however.

The reality is that, if your objective is economic growth, there are far better ways to invest tax dollars than in marginal corporate income tax cuts. Take the recent closure of the UPM Kymmene mill in the Miramichi. That one mill closure sucked well over $100 million in economic activity out of New Brunswick. In fact, the economic activity lost from the recent decline in the forestry industry as whole is estimated to be in the hundreds of millions of dollars and impacting thousands of jobs.

Retaining those forestry companies or attracting new large business investments would have far more impact on economic growth in New Brunswick than attempts to tweak the corporate income tax rate.

We need our government to spend our tax dollars more wisely. We need smart investments in infrastructure, education, research and development and other efforts designed to make New Brunswick an attractive destination for business investment. For example, investing in smart energy policy that leads to competitive power rates in New Brunswick would be far more important (particularly to the forestry sector) than tinkering around with tax cuts.

If we foster a positive business environment, we will attract business investment and jobs and generate more corporate taxes paid. That's Ontario's secret. Not higher income tax rates, but a far broader base of industry from which to extract taxes.

Finally, if the tax cutting advocates are so convinced that cutting corporate income will stimulate economic growth, why not explicitly tie the two together? Why not offer tax cuts for actual new business investment and job creation? This has been done, successfully, in a number of jurisdictions. Instead of across-the-board tax cuts, governments provide tax relief to firms that make business investments and hire new staff. Targeted tax cuts such as this might have a better chance of success than any broad-based tax rate reductions.

Don't raise corporate income tax rates. Corporations actually make business investment decisions on emotional factors as much as on concrete factors and a significant increase in tax rates right now would send the wrong signal at a time when we are looking to stimulate more business investment and job creation in the province. But don't precipitously cut corporate income tax rates, either. There are far better ways to spend the money if your goal is a dynamic and successful economy in the 21st Century.

David Campbell is an economic development consultant based in Moncton. He writes a daily blog, It's the Economy Stupid, at www.davidwcampbell.com. His column appears Wednesdays.