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Canada: Preserving Tax Competitiveness Is Key

ByThe National Bank of Canada
Published 03/12/2013, 07:08 AM
Updated 05/14/2017, 06:45 AM
TTEF
0.39%

Ensuring that Canada maintains a competitive corporate tax system has been a salient feature of provincial and federal budgets in recent years. As today’s Hot Chart shows, the most recent calculations by KPMG indicates that the total tax burden faced by Canadian companies in 2012 was lower than that for many of our trading partners. This development has played a key role in helping offset the negative impact of a surging currency, which has gained 35% in inflation adjusted terms in recent years. As shown, Canada’s trading partners within the North American Free Trade Agreement (NAFTA) have, for their part, seen their currencies depreciate 20% in the case of the U.S., and 15% in the case of Mexico. There is clearly an imperative for Canada to preserve a competitive tax system, even more so in the current context of an unfolding U.S. energy revolution within North America, and a possible re-sourcing of factory activity within NAFTA. Even though plans to balance budgets at both the provincial and federal level have curtailed the possibility of further corporate tax cuts for the time being, Canada’s strong currency means that we must continue to strive for a more efficient tax system.
Preserving our tax competitiveness is key

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