The big-government approach is failing. Canada needs tax cuts to compete in a tough economic environment.
In fits-and-starts, the United States is making their economy far more competitive. Even without big legislation, the Trump Administration is reducing regulations and creating a better business environment.
Those regulatory changes already put Canada in a tough situation, as it makes competing with the US for investment more difficult. Now, with the release of the US tax plan, Canada faces what may be the most significant competitive risk in decades.
Currently, Canada has about a 4% advantage over the US when it comes to the business tax rate (factoring in both federal and provincial business taxes). While that doesn’t account for the rising carbon tax and our much higher personal income taxes, it does help us compete for investment and jobs.
However, as Canadian tax expert & University of Calgary Professor Jack Mintz told the Canadian Press, Trump’s tax plan would give the US a 7% point advantage over Canada. As Mintz says, “People are going to take money out of Canada and put it into the U.S.”
Adds Mintz, “And it’s not just the American companies. There will also be Canadian companies with operations in the United States…. So, this is a real negative for Canada, no question.”
Investment has been “terrible” in Canada
There is growing concern in Canada about the investment environment. Mathew Wilson, senior VP of Canadian Manufacturers and Exporters has been urging Ottawa to “ease regulations” while keeping our business taxes “competitive” with US rates.
As noted by the CP, “Canadian investment has been “terrible” under current conditions and a major tax cut in the U.S. would only make things worse, Wilson said. “If companies aren’t investing in Canada, the economy just grinds to a halt.”’
Adds Wilson, “It’s got to be a top-level concern and if we don’t get the economic fundamentals right in Canada, to have a competitive investment climate, we’re in deep trouble.”
The Canadian Manufactures and Exporters represent over 10,000 Canadian companies, so their voice certainly carries a lot of weight.
Tax cuts are needed now
Those who understand business and understand the economy know that Justin Trudeau’s wait-and-see approach to the Trump Administration is failing miserably. That failure is being compounded by his big-government elitist ideology. Instead of letting taxpayers keep more of our own money and make our own decisions, Trudeau is concentrating power in the hands of the government.
The government can never react as quickly as millions of individuals in the market, and the more the government taxes and regulates the weaker our economy will become. This is already happening, and it is devastating our competitiveness.
We will pay a severe price for this. Every time we fall behind competitively we lose jobs, we lose investment, and we lose wealth. In return, we get more poverty, more debt, and more suffering.
Action must be taken now, through big personal and business tax cuts, a reduction in out-of-control government spending, the elimination of the carbon tax, and a reduction in regulations.
Unfortunately for Canada, Trudeau is unlikely to do any of those things. Instead, he continues to passively sit back and hope for the best, all while taking more of our money and putting it under government control.
That’s why our economic future depends on Justin Trudeau being defeated and replaced by leaders who will take the shackles off our economy and empower Canadians to prosper.