{"id":15680,"date":"2018-02-15T18:59:12","date_gmt":"2018-02-15T18:59:12","guid":{"rendered":"http:\/\/www.ceo-na.com\/?p=15680"},"modified":"2018-03-15T23:32:46","modified_gmt":"2018-03-15T23:32:46","slug":"canadas-corporate-tax-cut-dilemma","status":"publish","type":"post","link":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/business\/industry\/canadas-corporate-tax-cut-dilemma\/","title":{"rendered":"Canada\u2019s corporate tax cut dilemma"},"content":{"rendered":"

Experts differ on the landmark tax cuts just adopted in the US, but agreed on one topic.<\/em><\/strong><\/p>\n

In short: don\u2019t expect Canada to engage in a corporate-tax-cut-war with the US. That\u2019s according to three prominent fiscal experts contacted by Canadian press as the US passed a bill that will make it cheaper to do business down south.<\/p>\n

Jack Mintz, Kevin Page and Kevin Milligan all agreed Canada has different policy tools to respond, and they expressed doubt the likeliest tool involves taking a chainsaw to corporate tax rates.<\/p>\n

Mintz believes Canada should worry about its neighbor\u2019s tax reform. He has expressed it in Financial Post<\/a> pieces with titles such as, \u201cTrump\u2019s tax tsunami is about to wallop Canadian jobs and investment.\u201d<\/p>\n

His view is that, for several decades, Canada had two business advantages: lower corporate taxes and free trade. Now, the taxes are about equal and free trade is in jeopardy. He said Canadian businesses also faces new challenges such as carbon taxes, while the U.S. eliminates regulations.<\/p>\n

However, he said Canadian policy-makers can respond with a variety of solutions. One is tax rates, others include simplifying regulation, or designing tax policy to benefit investment, say, by steering the proceeds of carbon taxes back to businesses.<\/p>\n

He suggests Canadians seek some clues in an annual World Bank document. In the bank\u2019s annual Doing Business report, Canada scores high in several places \u2014 it\u2019s No. 2 in the world for ease of starting a business. But it points to sore spots.<\/p>\n

Overall, Canada ranks as the 22nd-best country to run a business, sandwiched between Lithuania and Malaysia \u2014 13 spots behind its neighbor, the US. It\u2019s 57th in dealing with construction permits and 108th in getting electricity.<\/p>\n

Page, Canada\u2019s first parliamentary budget officer, also doubts copycat tax cuts are coming. \u201cI think it is unlikely Canada will try to match U.S. tax cuts,\u201d Page answered to The Star<\/a> via email.<\/p>\n

\u201cTax reform pressures will likely build in Canada over the next few years leading up to the 2019 elections but it is more likely to have a broader agenda than tax reductions, including fairness, sustainability, growth, (the) environment.\u201d<\/p>\n

Page said corporate income taxes are one important cost of doing business \u2014 but that companies look at a variety of things: dividend, capital and payroll taxes; regulations; and production costs such as wages.<\/p>\n

He said Canada might even draw some early benefit from the US tax bill. That\u2019s because economic growth in the US tends to spill into Canada. Scotiabank\u2019s models estimate that for every percentage point of growth in the US, there\u2019s a half-point growth in Canada. He offers a term to describe the temporary boost for Canada: \u201cA sugar high.\u201d<\/p>\n

Kevin Milligan, a UBC economist who has advised the Trudeau Liberals on tax reform, said he\u2019s not nearly as concerned about this bill as he would be if it gave US businesses a permanent tax advantage of, say, 5% points, rather than simply putting the countries at similar rates.<\/p>\n

\u201cThen we\u2019d be in a world where we\u2019d be really, perhaps, in trouble \u2014 where you\u2019d see firms wanting\u2026 to shift profits out of Canada. The fact that we\u2019re tied, at about the same rate, means there\u2019s no incentive to move profit,\u201d he said.<\/p>\n

\u201cThat\u2019s why I don\u2019t have apocalyptic concerns that some others might have expressed.\u201d He said businesses will continue making choices based on numerous factors, such as the cost of providing health insurance to employees, a significant issue in the US; good transit links; pleasant communities; workforce training; and the ability to attract talented immigrants \u2014 an area where Canada has gained some advantage, he said, given the current US political climate.<\/p>\n

\u201cSo that\u2019s the question. Are we best off getting into a tax-rate competition with the US, or competing on other grounds?\u201d, Milligan said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Experts differ on the landmark tax cuts just adopted in […]<\/p>\n","protected":false},"author":2,"featured_media":15681,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[700,701],"class_list":["post-15680","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry","tag-tax-cut","tag-taxes"],"_links":{"self":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/15680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/comments?post=15680"}],"version-history":[{"count":4,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/15680\/revisions"}],"predecessor-version":[{"id":15685,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/15680\/revisions\/15685"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media\/15681"}],"wp:attachment":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media?parent=15680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/categories?post=15680"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/tags?post=15680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}