The last of five annual corporate tax cuts took effect Sunday, reducing the federal rate by another 1.5 points to 15 per cent.
The move comes as corporate Canada, from multinationals to midsize businesses, squirrels away hundreds of billions of dollars as it rides out a second storm of global economic turbulence in the past three years.
The latest figures from Statistics Canada through the third quarter of 2011 show Canadian business sitting on more than $583 billion in Canadian currency and deposits, and more than $276 billion in foreign currency.
Those cash reserves have climbed nine per cent since last year and 27.3 per cent since 2007, when the Canadian economy was booming and new corporate tax cuts were announced.
Even after removing Canada's banks from the equation, non-financial corporations saw their currency and short-term paper assets climb $33 billion in the third quarter of 2011.
Harper referred to all that stagnant capital at the end of a frustrating G20 summit in November in France, where global leaders failed to find much consensus.
"I should be clear on this: you know, I see every reason that markets ... there's a lot of money sitting on the sidelines, looking for opportunities," Harper said in Cannes.
"And I see every indication that markets are constantly searching for good news and opportunities."
In an effort to deliver good news and opportunities, the Conservatives have been cutting corporate taxes.
From 22.12 per cent in 2007 to 15 per cent on Jan. 1, federal corporate tax rates have been in steady decline. In fact, federal corporate taxes have been cut almost in half since 1990, when they stood at 28 per cent.
Provinces have also been lowering corporate tax rates.
Back in 2000, the combined federal-provincial corporate tax rate in Canada averaged 43 per cent — the highest among OECD countries.
Jack Mintz, a tax specialist who is chair of public policy at the University of Calgary, says Canada's combined federal-provincial corporate rate in 2012 will be around the world average of 26 per cent.
Mintz argues profits are being shifted back to Canada due to the tax cuts, a move that benefits provincial tax bases in particular.
Besides, he adds: "In an open economy, most of the corporate tax ends up impacting on labour and tends to be either shifted to higher consumer prices or lower wages. So it tends to be a regressive tax, the corporate tax."
"But the public doesn't perceive that," Mintz said in an interview. "They look at (corporations) as powerful and that if you cut corporate taxes you're making the rich more rich."
But whatever the long-term merits of the policy — and governments of all partisan stripes have got on board — the fact remains tax cuts have not sparked business investment in an ugly market.
And even the staunchest corporate tax cutters agree more cuts won't produce short-term investment.
"Businesses don't invest for political reasons," Perrin Beatty, the CEO of the Canadian Chamber of Commerce, said in an interview.
"They invest because they feel the climate is such they'll get a return on the investment. You're not going to go off and hire somebody if you think you're going to be selling less stuff next year than you did this year."
Federal Finance officials suggest that the $2.85 billion revenue hit in 2012 from the tax cut "does not account for the positive impact of a rate reduction on economic activity or corporate behaviour."
But with all that corporate cash sitting in reserve, the argument can be a tough sell.
"Companies aren't spending the cash they are taking in now," says Jim Stanford, an economist with the Canadian Auto Workers. "So why would government, during a time of deficit, go deeper into debt in order to supplement corporate cash flow which is sitting idly, rather than being reinvested in the economy?"
Mintz agrees "this whole issue of cash on hand for corporations, it plays very well for the people who are critical of corporate tax cuts in terms of helping the more powerful."
"Yet on the other hand, that liquidity has helped us avoid a much more severe recession because Canadian companies have good balance sheets," he said. "If they didn't, they would have got into a lot more trouble."
Canadian companies suffered fewer bankruptcies and cut fewer jobs, for shorter periods, relative to American companies, Mintz notes.
Others say riding out a recession is no reason to offer profitable businesses more tax breaks.
Reducing corporate tax rates is not a new policy, says Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives, and the policy "has given ample opportunity for business to actually rise to the occasion."
"But businesses are individually doing things that are perfectly rational in a world that is this uncertain right now, which is to keep your powder dry for when things are better."
Yalnizyan argues that in the current economic environment, corporate tax cuts should be rescinded, taxes should rise on profitable sectors and wealthy individuals, and governments should spend.
"Austerity does exactly the opposite of what businesses need. They want certainty not only in financial markets but they want to make sure people can buy their stuff. After all, everything flows from: 'Is anybody buying my stuff?'"
There are certain areas, said Yalnizyan, where government investment now will provide "years upon years upon years of high returns on your investment. Things like childcare, thinks like a dental care program for kids, things like infrastructure."
Where economists from the left and right meet is in agreeing tax cuts are not the primary driver in convincing businesses to re-invest earnings.
"Around the world, there are large pools of capital waiting for the opportunity to invest, but lacking confidence that the economy is going to warrant that kind of investment today," says the Chamber's Beatty.
Added Mintz: "The good news down the road is that I expect there will be some pretty significant investments taking place."