CALGARY, Sept. 11, 2012 /CNW/ - As a result of business tax reform since
2005, Canada has become the most tax-competitive jurisdiction in the
G-7 according to a report released today by The School of Public
Policy. In their 3rd Annual Global Tax Competitiveness Ranking, authors Jack Mintz and
Duanjie Chen contrast the business tax regimes of 90 countries
worldwide in terms of their impact on growth.
"Thanks to recent reductions to the corporate tax rate, Canada now has
the most competitive tax system for business among the G-7, the 20th most competitive in the OECD and it ranks 57th among the countries we surveyed," Mintz said today. "The result has
been greater investment and improved economic growth despite
Mintz and Chen's report includes a cross-reference of corporate tax
rates versus government revenues from these taxes. They find that
despite reductions to the corporate tax rate since 2000, revenues have
grown with the economy. The authors attribute this to profit-shifting,
or more investment into the Canadian economy by companies looking to
capitalize on favourable tax rates.
While Canada is reaping the rewards of its 19.9 percent Marginal
Effective Tax Rate (METR), the U.S. is perilously lagging behind. Their
METR sits at 35.6 percent: last among the 34 OECD countries.
But this large gap is not something Canadians should be happy about
according to Mintz. "The U.S. is our largest trading partner and our
economies are so closely linked that we really do need the U.S. to get
their act together and reform their tax system," he said. "After all,
when they lose out on investment, we lose out too."
The authors warn, however, that in the past year, Canada slipped back
somewhat. Mintz and Chen identify B.C. and its decision to renege on
the Harmonized Sales Tax as hurting Canada's competitiveness. They also
issue a warning to Ontario whose planned general corporate tax rate
reduction is stalled until it can be accommodated fiscally. "Ontario
will lose $7.5 billion in capital investment in the long run by
forgoing plans to reduce the general corporate rate to 10 percent by
mid-2013," the authors write.
The report can be found at www.policyschool.ucalgary.ca/publications
SOURCE: The School of Public Policy - University of Calgary
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