Canada's Turnaround from a High-Debt, High-Tax, High-Deficit Country to Lowest Tax Rates in G7
KPMG said one key reason for Canada's high standing is that federal and provincial governments have been cutting taxes and reforming tax laws in recent years. Indeed, Canada now has lower business taxes than any other G7 country.
"It's really over the last 10 years Canada's tax position has changed quite significantly from being a high-tax jurisdiction to now actually leading the G7," said Glenn Mair, director of MMK Consulting, which assisted in preparing the KPMG study.
Since 2000, the overall corporate income tax rate in Canada has fallen to about 31 percent from about 43 percent, said Jack Mintz, chair of the University of Calgary's School of Public Policy. It will fall further, to about 26 percent, over the next few years.
When it comes to attracting business, "there is no question that the tax system helps a lot," Mr. Mintz said. Fifteen years ago, "we were viewed as a high-debt, high-tax, high-deficit country," he said. "Today we look like a much better country, and certainly we had a much better balance sheet going into the recession.""
MP: The Heritage Foundation chart above shows that Canada's corporate tax decrease to 26% over the next few years, will put it 12.7% below the U.S. rate of 39.3%, and bring it below the 26.6% average corporate tax rate in 2008 for non-U.S. OECD countries. In quite a turnaround, it looks like Canada and the U.S. have traded places - the U.S. is now the high-debt, high-tax, high deficit country, and Canada has become the low-debt, low-tax, and low-deficit country.