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Canada is becoming the Austin Powers of economies — increasingly passé and rapidly losing its mojo. Tax and regulatory policies have continued to heap costs onto industries and job-creating entrepreneurs. A recent survey by EY of large Canadian businesses found that more than 61 per cent of executives believe Canadian policies are having a negative impact on their businesses. Roughly the same number said that U.S. tax reform is having a strongly negative or somewhat negative impact on their operations in Canada.

We can’t do much about U.S. tax reform, but we can do something about our own business climate. Canada lost its corporate tax advantage in 2018. Recent federal and provincial policies have also resulted in much higher taxes on skilled labour, with Canada’s top personal tax rate averaging 52 per cent, about eight points higher than taxes on the top American bracket. And ours kicks in at income levels one-third below that of the top U.S. bracket.

Both the IMF and OECD have joined the chorus of businesspeople and investors calling for tax reforms in Canada. Reform is urgently required for both corporate and personal taxes for two reasons: improving the climate here for investment, work and innovation; and stopping the southward flight of investment, profits and skilled Canadians, and the tax revenue that goes with them.

U.S. tax reform, coupled with deregulation, has created a boom in American investment and GDP (with four-per-cent growth expected this quarter). The 14-point cut to the federal corporate tax rate and accelerated, 100-per-cent write-offs for new equipment have been major factors. But so has Washington’s new, much-lower corporate tax rate for intangible activities (such as services, marketing and intellectual property). Also helping are lower small-business and personal taxes.