The School of Public Policy Publications (Mar 2020)
The 2019 Tax Competitiveness Report: Canada’s Investment and Growth Challenge
Abstract
Over two decades, Canada gradually made its tax regime highly competitive by lowering its federal-provincial corporate income tax rate and working to improve tax neutrality and broaden its corporate tax base. That has changed. Today, Canada’s tax-policy emphasis seems to be on raising revenues while providing special breaks for politically favoured business activities. Unfortunately, that change in direction means that the government is now driving away its hard-earned corporate tax base, rather than preserving it and trying to broaden it further. While many of Canada’s competitors have been working to steadily improve their international competitiveness for investment and profits, Canada has failed to keep up. Seventeen countries have reduced corporate income tax rates since 2017 with large reductions in the United States, France and India, for example. In 2017, Canada’s corporate tax rate was well below the weighted-average corporate tax rate for OECD countries. Canada’s rate is now slightly higher than the average including the United States.
