Market set prices for business Canada goods producing sector jobs as % of total jobs has decreased since the Liberals took office in 2015 Liberals impose new small business tax rules (Passive Income and Income Sprinkling) Government set policies like environment laws, labour laws, trade/investment, taxation Canada new C69 will drag out approval for resource projects by years. It is not one policy that drives FDI, but many policies FDI has left Canada for other jurisdiction due to taxes and regulatory processes - http://business.financialpost.com/commodities/energy/canadian-drillers-moving-rigs-south-to-chase-better-prospects-in-texas-oilfields Canada personal taxation rates have been increased over the past few years.

1. Canada is losing its Business
Competitiveness
BY: PAUL YOUNG CPA CGA
DATE: MARCH 13, 2019

2. Paul Young - Bio
• CPA, CGA (1996)
• Financial Solutions (FOPM/FPM)
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Advance Technology and Market
Entry
• SME – Supply Chain Management
• SME – Business Strategy and
Restructuring
Contact information:
Paul_Young_CGA@Hotmail.com

3. Agenda
 Taxation
 Productivity
 Innovation
 Labor Rates/taxation burden
 Hydro Rates
 Regulatory Burden / Business Climate
 USA Manufacturing Focus
 Canada and USA PMI Index
 Labor Productivity
 Income Taxation / Personal
 Issues at Hand
 Blog - Taxation – Corporate and Business Taxes
 Blog – Competitiveness
 Blog – Oil and Gas
 Red Tape / Canada
 Blog - Unifor
 Automotive
 Forestry
 Mining

4. Cost
Competitiveness
 Market set prices for business
 Canada goods producing sector jobs as % of total
jobs has decreased since the Liberals took office in
2015
 Liberals impose new small business tax rules
(Passive Income and Income Sprinkling)
 Government set policies like environment laws,
labour laws, trade/investment, taxation
 Canada new C69 will drag out approval for resource
projects by years.
 It is not one policy that drives FDI, but many policies
 FDI has left Canada for other jurisdiction due to
taxes and regulatory processes -
http://business.financialpost.com/commodities/ener
gy/canadian-drillers-moving-rigs-south-to-chase-
better-prospects-in-texas-oilfields
 Canada personal taxation rates have been increased
over the past few years.

5. Conservative Party of Canada vs Liberal Party of Canada – Ranking Globally
Source - https://taxfoundation.org/corporate-
income-tax-rates-around-world-2016/ or
http://www.pwc.com/ca/en/media/release/canad
a-ranks-2nd-among-g7-nations-ease-of-
corporate-tax-payment.html or
https://www.expertmarket.co.uk/focus/worlds-
most-productive-countries-2017 or
https://www.investinontario.com/spotlights/kear
ney-reports-worlds-most-attractive-
destinations-foreign-direct-investment or
https://en.portal.santandertrade.com/establish-
overseas/canada/foreign-investment
Policy Area 2015 2017
Taxation 9th 17th
Productivity 18th 13th
Innovation 15th 18th
FDI 13th

6. Taxation / Ranking
Source - https://taxfoundation.org/corporate-income-tax-rates-around-world-2016/ or http://www.pwc.com/ca/en/media/release/canada-ranks-2nd-among-g7-nations-ease-of-corporate-tax-payment.html
Canada fell in 2017 from 9 to 17. Liberal Party of Canada Took over in 2016.

7. CCA – Capital Cost Write-down
@Bill_Morneau
Just how are you going to make Canada more
competitive? It is not your small business tax
reforms or C69 or hikes to CPP or carbon tax,
right?
https://www.cbc.ca/news/politics/morneau-
trump-capital-tax-fall-economic-statement-
1.4908012?fbclid=IwAR1w4mRFpyr0w5slPTpYmn
dVW74_hMU1XjU6KNcSZPqZ5J0GxqQ-
5WQvPhM
@ontarioisproud
Finance Minister Bill Morneau is unlikely to fully
match the Trump administration's pricey changes
to the way American businesses write off their
capital costs when he delivers his fall economic
statement next week, says a senior government
source.
Canadian business leaders argue the American tax
changes have created a competitiveness gap
between U.S. and Canada. But those changes also
have added tens of billions of dollars to the U.S.
deficit — something Canadian officials say they
want to avoid.
CBC article is misleading as USA states have corporate tax and/or franchise taxes. https://taxfoundation.org/us-
corporate-income-tax-more-competitive/. The issue is Morneau has increases taxes through small business tax
reforms, mandatory carbon tax, hikes to CPP along with more regulations like C69

8. Ranking / Canada Productivity
Source - http://time.com/4621185/worker-productivity-countries/
Source -
https://www.forbes.com/sites/jackzenger/20
13/01/17/the-3-forces-that-drive-improved-
productivity/#3ff2246239a8 or
http://blogs.worldbank.org/growth/what-
drives-productivity or
https://www.expertmarket.co.uk/focus/worlds-
most-productive-countries-2017
It is also called TFP (total
factor productivity) and
measured as a residual – the
difference between outputs
and a set of inputs (e.g. labor,
capital, and intermediate
goods, including energy, land
and buildings). Measurement
problems plague both inputs
(e.g. how do you account for
quality of labor or capital) and
outputs.

9. Innovation Ranking
 Source - http://www.wipo.int/pressroom/en/articles/2017/article_0006.html
• Canada has fallen 3
spots in 2016 from 15 in
2015 to 18 in 2016
• Liberals ran a platform
on spending on
innovation -
https://www.thestar.com
/news/canada/2017/03/1
2/liberals-nearing-
decision-on-how-to-
spend-800m-earmarked-
for-innovation.html

10. Labor Rates / Tax Burden
 Source - https://taxfoundation.org/comparison-tax-burden-labor-oecd-2016/

11. Labor
Costs

12. Hydro Costs / Ranking
 http://www.worldatlas.com/articles/electricity-rates-around-the-world.html
• BC, MB and PQ generate the bulk of
their power through Hydro
• Ontario is out there when it comes
to high rates across North America
• Liberal Government is pushing FIT
at the federal level via their carbon
taxation policies -
http://www.torontosun.com/2017/0
7/20/canadian-youth-will-have-to-
wait-for-promised-green-jobs

13. Regulatory Burden
Source - https://www.forbes.com/sites/kurtbadenhausen/2016/12/21/sweden-heads-the-
best-countries-for-business-for-2017/#1215046c7ecd

14. Environmental Ranking
 Source – Yale University
Source -
https://issuu.com/2016yaleepi/docs/e
pi2016_final

15. Carbon Tax / Competitiveness
 Source - https://gncc.ca/business-costs-canadian-competitiveness-not-crying-wolf/?

16. USA Manufacturing - refocus
 http://mfgday.industryweek.com/2017/10/04/forty-percent-increase-in-u-s-manufacturing-is-achievable/?NL=IW-
07&sfvc4enews=42&cl=article_2&utm_rid=CPG03000001519274&utm_campaign=22234&utm_medium=email&elq2=e309b6bd6398
4baeb8d9b9f5691c9239

17. PMI Index – Canada and USA
Source - https://www.theguardian.com/business/live/2017/oct/02/uk-manufacturing-growth-hard-brexit-eurozone-monarch-airline-fails-business-live or http://www.marketpulse.com/20171002/canada-ihs-markit-manufacturing-pmi/
USA PMI Canada PMI

18. FDI – Canada
Source -
https://en.portal.santandertr
ade.com/establish-
overseas/canada/foreign-
investment

19. Canada
Labour
Productivity
SOURCE -
HTTP://WWW.STATCAN.GC.CA/DAILY
-QUOTIDIEN/171206/DQ171206C-
ENG.PDF

20. Personal
Income Tax
Source – Fraser Institute

21. Personal
Income Tax
Source – Fraser Institute

22. Personal
Income Tax
Source – Fraser Institute

23. Canada has a Competitive Problem
 Canada is less competitive today due to more regulations, new taxes (carbon tax), changes to small business,
hikes to CPP and EI and high hydro rates - https://www.slideshare.net/paulyoungcga/cost-competitiveness-
canada-april-2018
 Liberals were supposed to be about getting goods to market, right?
 http://www.cbc.ca/news/politics/tax-rate-u-s-canada-1.4714866
 http://business.financialpost.com/opinion/jack-mintz-end-the-denial-and-admit-it-canada-has-a-
competitiveness-problem

24. Blog - Corporate and Business Taxes
 http://business.financialpost.com/news/economy/major-tax-bill-passes-in-u-s-big-consequences-big-debates-ahead-for-
canada
“it reduces American corporate taxes, which were among the highest in the industrialized world, down to levels
equivalent to Canada’s when combined with state and provincial rates.
 Some observers say Canadian policy-makers will feel pressure to respond, either by reducing corporate rates or using other
policy tools to make the country a more attractive investment destination.
 Tax planning will change – Companies will look at how the managed their shared services in terms of cost sharing.
 Capital investment – Canadian companies may look at expanding their operations in the USA to take advantage of the lower
corporate tax rates
 Deferred Income Taxation will need to be adjusted to the new rates. Deferred income taxes are difference to what you report
for accounting and tax
 Canada will need to revisit its tax policies, especially R&D credits, payroll taxes, corporate taxes, etc
 Canada is moving to carbon taxation including more regulations. The USA is moving to low tax and low regulations

25. Ontario / Cost Competitiveness
 Premier Wynne can bitch at business for making cost adjustment to her increasing the minimum wage by 21%
on January 1, 2018.
 Here are things ignored by Wynne:
 Hydro Rates – Ontario has some of the highest hydro rates in North America -
http://www.cbc.ca/news/canada/kitchener-waterloo/kitchener-toronto-factory-industry-electricity-rates-1.4011519
 Carbon Taxation was introduced which is just cash grab that forces up costs to consumers -
https://www.atlasnetwork.org/news/article/canada-should-learn-from-australias-failed-carbon-tax-experiment
 Sousa eliminated EHT threshold - https://www.ggfl.ca/uploads/files/Changes_Employer_EHT.pdf
 Wynne has drag her feet on getting resource projects off the ground - http://www.cbc.ca/news/canada/thunder-
bay/thunder-bay-ring-of-fire-1.4442435
 Ontario debt is a big problem - https://www.thestar.com/news/queenspark/2017/12/11/ontarios-fiscal-watchdog-
doubts-books-are-balanced.html
 Other tax increases

26. NEB – Oil and Natural Gas
https://www.canadianmanufacturing.com/manufacturing/global-
oil-production-hits-a-new-record-led-by-u-s-and-opec-219376/
“U.S. production has returned to 2014 boom levels, but the
energy agency said U.S. output will grow more slowly next year
due to bottlenecks in getting oil to markets.”
USA is also struggling with capacity including ports and pipeline
to get oil exported and/or for internal use by consumers
Canada continues to see only 4% production improvement in
2018 as compare to 2017. The bulk of Canada is export growth
has been the change in oil pricing. Oil is closing in on $71/barrel.
- https://www.slideshare.net/paulyoungcga/oil-market-analysis-
and-commentary-july-2018
C69 - https://www.bnnbloomberg.ca/video/bill-c-69-would-
create-more-energy-project-delays-senator~1480308
Trudeau’s team includes anti-oil people like Gerald Butts and Sara
Goodman (formerly of Tides -
https://www.linkedin.com/in/sarahgoodman/?originalSubdomain
=ca
Geo-Political Events are also impacting oil. USA is pushing for
tighter sanctions against Iran. Venezuela is in free-fall in terms of
its failed socialism policies. “The Organization of the Petroleum
Exporting Countries accounts for about one-third of all
production. In August, rising output in Libya, Iraq, Nigeria and
Saudi Arabia offset declines in Iran, which is about to face new
U.S. sanctions that are already hurting Iranian exports, and in
Venezuela.”

27. Unifor and GM
 https://www.youtube.com/watch?v=rzI2UHYVX40
@JerryPDias
I am so glad GM pushed back at you and your leadership. You never once called
out bad policies by govts, why?
FYI
I will buy what vehicle that I want to buy. Your statements will not change my
buying pattern.
 https://www.wxyz.com/news/unifor-canada-airs-super-bowl-ad-slamming-gm-
for-plans-to-close-oshawa-plant

28. Government / Red Tape Ranking
Source - https://www.miamiherald.com/news/local/news-columns-blogs/andres-oppenheimer/article183801461.html or https://www.cfib-
fcei.ca/sites/default/files/2018-01/2018-Red-Tape-Report-Card_0.pdf

29. Doing Business / World Bank
Source - http://www.doingbusiness.org/en/rankings

30. Automotive – Sector

31. Forestry– Sector

32. Mining Sector / Regulations
Source - http://www.mining.com/canada-the-worlds-top-mining-destination-despite-saskatchewan-
fall/

33. Summary
 Hydro Costs
 Ontario and many of the Atlantic provinces are struggling with unsustainable residential and business rates for Hydro
 The Federal Government plans to introduce FIT at the federal level. FIT was a failure in Ontario - https://www.theglobeandmail.com/opinion/a-sunny-
ontario-experiment-gone-wrong/article19890164/
 Regulatory burden varies across Canada
 New taxation using leads to more regulatory filings
 New labor policies (Alberta and Ontario)
 Innovation funds to be effective need to be open to everyone.
 Tax policies need to be revised to encourage more innovation spending by business
 Wages have been stagnant for over 30+ years.
 Small Business Tax Proposal needs to be scrapped (http://www.canadianmanufacturing.com/manufacturing/tax-reform-devastating-
small-manufacturers-cme-says-202423/
 USA Tax reforms (http://fortune.com/2017/09/30/tax-reform-three-questions-for-business/)
 USA moving to reducing business taxes while Canada is hiking various business taxes
 Business will invest where they can get their return required by the business model.
 It is not one policy that drives cost competitiveness, but many policies
 Liberal are introducing carbon taxation, hikes to payroll taxes, no reduction in time to get projects approved.

34. Contact Information
 Contact: paul_young_cga@Hotmail.com
 Other Sources
 Manufacturing - https://www.slideshare.net/paulyoungcga/manufacturing-canada-vs-
united-states
 Environment – https://www.slideshare.net/paulyoungcga/art-of-taxing-the-
environment-through-carbon-pricing
 Middle Class - https://www.slideshare.net/paulyoungcga/canada-middle-class-october-
2018
 What’s next for Oil - https://www.slideshare.net/paulyoungcga/whats-next-for-oil