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- Title
2020 TAX COMPETITIVENESS REPORT: CANADA'S INVESTMENT CHALLENGE.
- Authors
Bazel, Philip; Mintz, Jack
- Abstract
Canada is already at a disadvantage with lagging growth and productivity even before the massive economic destruction caused by the COVID-19 pandemic. Before the pandemic hit, Canada's corporate tax system was already becoming uncompetitive in attracting highly profitable investments relative to other developed countries. Canada's general corporate tax rate, averaging 26.1 per cent, is within spitting distance of the highest rates in the OECD. While some industries may benefit from special preferences, the corporate tax has become increasingly inefficient and complex with targeted measures, and in some cases impeding the allocation of capital to growth industries like communications and services. This was having a serious effect on Canada's economic health before COVID-19. Business investment in Canada has lagged that of many countries since 2015, well before the pandemic. Productivity has been weak and wages for workers have been depressed, particularly for unskilled labour. Additionally, the corporate tax system currently distorts the allocation of capital in the economy, favouring some sectors over others. In fact, some of the sectors least-favoured by the tax system -- including retail and tourism, which face an eight-point tax disadvantage compared to the governmentfavoured manufacturing sector -- are the very ones that had the roughest time during the pandemic and face a more difficult road to recovery.
- Subjects
CANADA; COVID-19 pandemic; CORPORATE taxes; TAX rates; COVID-19; GROWTH industries
- Publication
School of Public Policy Publications, 2021, Vol 14, Issue 21, p1
- ISSN
2560-8312
- Publication type
Article