Experts are warning that Donald Trump’s corporate tax-cutting plan could have devastating consequences for business in Canada.
The White House announced a tax reform package last week which would see the U.S. corporate rate cut from 35% to just 15% and there are fears that could pose a threat to the Canadian economy.
The move from the Trump administration would mean that that the effective corporate rate of the United States would be 7% below Canada’s and tax expert Jack Mintz reckons that would wipe out Canada’s current tax advantage over the U.S..
Once federal and provincial rates are taken into account, businesses could be encouraged to move their operations south of the border, meaning the Canadian treasury could lose out on up to $6 billion a year in revenue.
Mintz, who is a professor at the University of Calgary, told the Financial Post: “People are going to take money out of Canada and put it into the U.S.
“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.”
Mathew Wilson, senior vice president of Canadian Manufacturers and Exporters, believes Justin Trudeau’s government should consider making its own corporate tax cuts so that the rate remains competitive with the U.S.
He said: “If companies aren’t investing in Canada, the economy just grinds to a halt.
“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.”
It would seem that the Canadian government have a lot to ponder over the coming weeks.