Canada A Good Place To Invest, Flaherty Tells US

by Mike Godfrey, Tax-News.com, Washington

05 December 2011

Canada's economic, fiscal and financial strengths are helping to increase business investment in the country, Finance Minister Jim Flaherty has said.

Speaking at a conference in New York sponsored by the Toronto Financial Services Alliance, Flaherty told senior US and Canadian business leaders that Canada’s strong economic fundamentals, sound fiscal management and well-supervised financial sector support increasing business investment.

He said, “Based on our strong record in weathering the 2008–2009 global crisis, it is clear that Canada has the fiscal and economic rigour needed to attract savvy investors.” Flaherty went on to cite international recognition of Canada’s financial sector leadership, noting that for four consecutive years the World Economic Forum has rated Canada’s banking system as the world’s soundest. In addition, he pointed out that five of Canada’s largest banks were named on Bloomberg’s list of the world’s strongest financial institutions, more than any other country.

Minister Flaherty stressed, “In spite of the widespread turmoil in world markets, I am confident that Canada is well positioned to respond effectively to possible shocks coming from the current global uncertainty. Canada will continue to show the economic and fiscal leadership that helped us weather the global hardships we have already faced."

“By staying focused on keeping our economy growing, protecting and creating Canadian jobs, reducing the deficit and returning to balance in the medium-term, Canada will continue to be a country of choice for investment in markets across our country, and around the world”, he concluded.

Speaking to the Calgary Chamber of Commerce earlier this month, Flaherty emphasized the government's ongoing work in implementing "a bold tax reduction plan to brand Canada as a low business tax jurisdiction". He noted that Canada now enjoys an overall tax rate on new business investment that is substantially lower than the rest of the G7, and below the average of the member countries of the OECD. In January, 2012, the federal business tax rate is set to fall by a further 1.5% to reach 15%.

Flaherty added that, in addition to reducing the tax burden on businesses, the government has introduced measures targeting individuals. It has followed through on its commitment to cut the goods and services tax by 2%, and has slashed personal income taxes. Flaherty stressed that: "In total, our government has reduced taxes on individuals, families and businesses by an estimated CAD220bn (USD216bn) over 2008–09 and the following five fiscal years".

Flaherty told the Canadian Club of Toronto on November 25 that the federal government's next budget, to be delivered early next year, will remain focussed on "jobs and growth". However, it is unclear at this stage whether this will mean further cuts in business and individual taxes.

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