High Taxes Drive Investors Away From Canada, Says Poll

by Mike Godfrey, Tax-News.com, Washington

10 July 2002

A recently released survey has revealed that perceived high taxes, economic depression in certain regions, and a relatively sparse population discourage investors and international companies from locating in Canada.

According to a report from the Canadian Press news agency - which obtained the results of the survey under the Access to Information Act - during the period in which the poll was taking place, Canada failed to make it onto the shortlist for foreign direct investment (FDI) in some 49% of cases.

On behalf of the federal government, US marketing firm Wirthlin Worldwide polled 100 US managers at companies in Boston and Dallas as to their opinions on Canada as a potential destination for FDI.

Although three-quarters of those questioned stated that the positive factors outweighed the negative, the overall business climate was seen as more favourable in countries such as Ireland, the United States, and France, according to the Canadian Press.

The survey revealed that 12% of respondents believed that Canada's population is not dense enough to make investment worthwhile, and that 6% were put off by the country's high taxation rate. 'The tax can be frightening. It's one tax after another one. It's tax after tax,' one US businessman explained.

Others questioned cited the language barrier and separatist attitude in Quebec as barriers to investment. One executive told market researchers that 'Any time you have a region of a country that talks about secession of any sort, that scares businesses as to what that means long-term,' while another suggested that: 'They are more concerned about staying true to speaking French than to learning English so they can be competitive. Some won't even talk to you if you call and speak English. They will only speak French.'

However, responding to the results of the survey, a spokeswoman for Industry Canada suggested that the perceptions held by the United States of its northern neighbour are 'antiquated'.

'They still had a bit of an outdated image of what Canada was 25 years ago,' she told CP reporters. However, she admitted that: 'You don't change the impressions people have overnight. It takes a sustained effort.'

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