Canada losing appeal as destination for business investment

Canada has dropped 11 spots since last year on the University of Calgary School of Public Policy’s annual review of global tax competitiveness.

Researchers Jack Mintz and Duanjie Chen examined the tax environment of 90 countries and found Canada has fallen 11 spots over the past year. Among the 34 OECD nations, Canada has dropped six places.

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“Canada’s fading advantage is the result of recent anti-competitive provincial tax policies that increased the cost of investment,” the authors write. “This includes, most notably, British Columbia’s decision to reverse the harmonization of its provincial sales tax with the federal GST, as well as recent corporate income tax rate hikes in B.C. and New Brunswick.”

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Mintz and Chen argue the trend of increasing taxes on corporations can mean major repercussions for the economy and society as a whole: “It is not only supposedly wealthy capitalists who pay, but also employees, through lost wages and jobs, and working-class people who have a stake in companies through pension plans and mutual funds.”

They advise government to broaden the corporate tax base in order to promote corporate tax rate reductions. They also recommend harmonization of provincial sales taxes with the federal GST in the provinces that are yet to do so and the elimination of inefficient tax breaks for favoured business activities, such as credits offered in the manufacturing or forestry sectors.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.