Tuesday, March 30, 2010

Canada Most Competitive Country in G8

Sorry for the repetitive theme, but it's not my fault we see more evidence, supporting the Liberal position on corporate tax cuts. This time, international accounting firm KPMG release their bi-annual analysis, and they put Canada at the top of the G8, second only to Mexico, in terms of competitive business climate. This headline says it all, from the Liberal perspective:
"Tax cuts turn Canada in to a cost leader"

A decade’s worth of tax cuts at the federal and provincial levels is beginning to bear fruit as Canada has emerged a cost leader among industrialized countries in terms of doing business, says a competitiveness analysis conducted by KPMG...

The last time KPMG did such an analysis, in 2008, it found the cost of doing business in Canada was virtually identical with that in the United States. Tax cuts account for part of the reason why Canada’s competitiveness has improved, says the report...

“Cumulatively this has had quite an impact on competitiveness for Canada, to a point where [with the dollar] close to parity, Canada is able to hold its own in terms of having a competitive edge over the U.S.,” said Glen Mair, co-author and head of MMK Consulting in Vancouver.

“Go back to the early days of this study, in the mid-1990s, and that definitely wasn’t the case.”

The Conservatives only real argument for further corporate tax cuts is the competitive angle. Unfortunately, we are starting to see a counter picture, which clearly shows we've already made great progress on the tax front, further reductions aren't required to keep us competitive. Factor in some common sense, namely that other nations face a much higher debt load, which will preclude further tax cuts, and Canada is in a very enviable position indeed.

This from the Toronto Star:
Canada world leader in competitive business: KPMG

The report offers some ammunition to Liberal Leader Michael Ignatieff’s proposal to scrap the remainder of scheduled corporate tax cuts, which the Conservative government has said will improve Canada’s international competitiveness.

Yesterday I posted a survey of the business community, which showed they overwhelming rejected further tax cuts. This latest study, does provide Ignatieff "ammunition", the Liberals are on VERY solid ground, they've captured the current mood and they have ample non-partisan backing for their position.

The Conservative arguments operate in isolation, whereas the Liberals are finding allies. Further, we still have many economists on board with actually raising taxes, so expect to see some endorsement from that crowd, relating to a corporate freeze. The FACTS are Canada has the lowest corporate taxes of the G8, and now we see overall competitiveness has never been stronger. I don't want to be dismissive, but the Conservatives have a daunting task, if they hope to paint Ignatieff as reckless and anti-business, a "job killer", all that other nonsense. The Conservatives will surely try, and I don't under-estimate the capacity for CRAP, but it is comforting to know the Liberals find outside affirmation.

This looks to be a lonely fight for the government, and when you consider the added lunacy of tbelieving Canadians will rally behind perceived cuts for the "rich", I'd say it's a loser in the end. The Liberals job is to use the outside "backing" to demonstrate their sensible, responsible and competitive approach to the economy and the deficit.


Tomm said...


Interesting series of posts. You clearly had a great weekend.

We'll see if this policy announcement will have resonance. This would be a good time for Ignatieff to grab this whole policy pillar. He could make more fiscal policy announcements.

I am not joking. Just like Preston manning essentially forcing Chretien/Martin to respond, Ignatieff could get in front of the Tories on this topic area. It would also round out the single policy announcement he has already made.

Given what I am reading about negative comments from the weekend (mostly re: Fowler) it would seize the headlines.

Or, he could step into the shadows and watch how the Hilary/Helena left right combo affects Harper. There is a school of thought that says to not interfere when your opponent is punching.

Eugene Forsey Liberal said...

Vancouver Sun article had an odd conclusion, and it wasn't clear whether it was KPMG or the reporter speaking: "This is largely because the country’s big rivals are no longer developed countries but emerging low-cost economies, such as Mexico."

That's one of the sillier things I've read. Canada can't compete with low-value low-tax countries, that's long established. No developed country can. We're competing against other developed countries, in the high-value game, where tax rates are important, but not all-important, and in fact less important than all the other factors (workforce, connectivity in all senses, proximity to resources, proximity to markets, quality of life so as to draw talent, etc.)

Something to remember, in case Cons & others try it on.

bubba said...

I think people would support the plank if it wasn't enabling Iggy to play Santa Claus.If the 5-6billion was for Debt reduction or lowering taxes on the lower tax brackets it would gain widespread support. But now is not the time for new social programs. 3 years from now when economy is flying , then float those ideas. Otherwise I dont think there is such a thing as too competitive, do you?

Gene Rayburn said...

the problem is bubba there doesnt seem to be a limit for too stupid under this government either.