The tendency of the federal and local governments in Canada to raise taxes for companies, means that the country is losing its competitive advantage, according to a new report, School of Public Policy at the University of Calgary.
The school Report of 2015 about Tax Competitiveness created by Filip Bezel and Jack Mintz explained that the effective rate of the corporate tax of Canada on new investments raised from 17.5 percent of 2012 to 20 percent of 2015. In the report speaks that this increase, first of all, at higher provincial rates of the corporate income tax, reversals of British Columbia the governments of the previous goods and services of tax reforms, and reducing tax benefits at the federal and regional levels. The reforms brought in the federal budget of 2016 will see effective increase in a rate to 20.1 percent.
The school showed that now Canada takes the sixth place on the extreme height of an effective rate of a tax (METR) in the G7 and the highest 13th place in the G20 and OECD group of the countries.
Among the provinces of Canada the report noted that Newfoundland and Labrador increased the rates of the corporate income tax to deal with their deficits while New Brunswick increased the corporate tax from 10 percent to 14 percent in 2014-16. The increase in corporate tax Alberta in 2015, increased its effective tax rate from 2.3 percent to 19.3 percent higher than Ontario and Quebec.
“Elections Donald Trump and Republican Congress, promising for reduction of tax rates of the corporate income tax, and also recent confirmation by May of the prime minister, for lowering of the British rate of the corporate income tax to 17 percent, pressure tactics will be reduced not to increase the corporate income taxes for the following several years”, declared at political school.
The report recommends that the government should use the proceeds, which are received from the review of tax expenditures, to reduce the rate of corporate income tax.
Also, report offered: “For example, federal level could be reduced from 15 to 13 percent, having reduced accelerated depreciation and other tax preferences at the federal level without influence on the income of the state basis. Provinces could accept the unique rate of the corporate income tax on all companies which will also be financially neutral. And it would simplify structure of the business tax, and also would make it more effective and neutral”.