Tax burden makes Canada less competitive: survey

Canada’s tax burden makes the country less competitive for businesses compared to the U.S., says a quarterly survey by the Chartered Professional Accountants of Canada (CPA Canada).

The “CPA Canada Business Monitor (Q2 2018)” surveyed professional accountants in leadership positions. Compared to a year ago, the survey found 68% of those polled perceive Canada as a less competitive place to invest and do business than the U.S. The finding is unchanged from the last quarter.

The top reason cited for Canada not being competitive was its overall tax burden (29%), followed by the U.S. tax reform passed late last year (14%).

“The survey findings reinforce the need for a comprehensive review of Canada’s tax system, led by an independent expert panel, that would strive to reduce complexities, address inefficiencies, improve fairness and ensure economic competitiveness,” says Joy Thomas, president and CEO at CPA Canada, in a release.

Read: How Trump’s new tax act hurts Americans in Canada

Several industry groups lobbied the federal government ahead of its February budget to respond to U.S. tax cuts by adding write-offs and other tax measures for business investment.

The survey’s findings about the outlook for the Canadian economy and companies include:

• 32% had an optimistic outlook for the economy for the next 12 months—the same as the last quarter but down from 50% in Q2 2017;
• the top two challenges to the Canadian economy were U.S. trade protectionism (39%) and uncertainty (14%);
• 53% are optimistic about the prospects for their own companies for the next 12 months; 68% think their revenues will increase in the next year; and 60% say their profits will increase.

Almost six in 10 of those surveyed (58%) say they have difficulty finding skilled workers and professionals to fill certain jobs. The positions hardest to fill in the last two years were:

• skilled trades (37%);
• skilled/IT positions (22%); and
• middle management (17%).

Threat of personal debt

Four in ten (41%) of those surveyed think the level of Canadian personal debt is a threat to the future demand for their companies’ products and services, says the release. The majority (83%) of the business leaders surveyed say the federal government should continue to warn Canadians to reduce their personal debt levels.

Methodology: For the Q2 2018 study, emailed surveys were completed by 466 of 5,922 people identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). The response rate was 9.7%, with a margin of error associated with this type of study ±4.4%, with a confidence level of 95%.

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