Flags flying at a US and Canadian border

The CPA Canada Business Monitor (Q2 2018), released July 17, found that 68 per cent of respondents view Canada as a less competitive place to invest and do business than our neighbours to the south. (Katherine Welles/Shutterstock)

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Is Canada less competitive than the U.S. to do business? Find out what CPA Canada’s latest survey says

The quarterly CPA Canada Business Monitor survey counts the overall tax burden as one of the reasons that makes investing in Canada less attractive

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Business leaders say Canada’s tax burden is the top reason why our country is seen as less competitive than the United States, according to a recent CPA Canada survey, reinforcing the need for tax reform. 

The CPA Canada Business Monitor (Q2 2018), released July 17, found that 68 per cent of respondents—who are professional accountants occupying leadership roles including CEOs, COOs and CFOs in private- and publicly-held companies—view Canada as a less competitive place to invest and do business than our neighbours to the south, compared with one year ago. Of all survey participants, 29 per cent cited the overall tax burden, while 14 per cent cited U.S. tax reform, as main reasons for this. 

“Canada’s tax system is fundamental to creating a competitive environment,” says Joy Thomas, president and CEO, CPA Canada. “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.”  

Airing on the side of skepticism, just 32 per cent of respondents are feeling optimistic about the Canadian economy over the next 12 months. This sentiment is down 18 percentage points from the same time in 2017. U.S. trade protectionism (39 per cent) and an uncertainty surrounding the Canadian economy (14 per cent) are the two main challenges the country faces economically right now, expressed the respondents.  

When it comes to company growth, professional accountants feel positive, with 68 per cent saying they expect revenues to increase and 60 per cent saying profits will rise over the next year. The challenge lies in finding skilled workers and professionals, particularly to fill roles in the skilled trades (37 per cent), skilled/IT positions (22 per cent) and middle management (17 per cent).  

The personal debt level of Canadians is also of concern, with four in 10 respondents saying this presents a threat to the future demand for their company’s products and services. More than 80 per cent of the total professionals surveyed feel the federal government should continue to warn Canadians about debt levels.  

 “Household debt in Canada remains the largest risk to the ongoing stability of the economy,” explains Francis Fong, CPA Canada’s chief economist. “While the debt-to-income ratio in Canada has stabilized somewhat owing to a modest downturn in housing activity, businesses are rightly wary of how this risk evolves over time. Should it unfold in a disorderly manner, this could have significant negative consequences for the broader economic outlook.” 

Reflecting on the survey results, Fong isn’t surprised, adding that despite a relatively strong economy, businesses are still cautious of what’s to come. “Ultimately, the domestic economy continues to post strong growth—the unemployment [rate] is hovering near record lows, GDP growth last year was extremely strong, for example,” he says. “However, with risks abound, businesses are benefiting from that domestic strength, but still concerned about the future.” 

LEARN MORE ABOUT THE CPA CANADA BUSINESS MONITOR

The CPA Canada Business Monitor, commissioned by CPA Canada and conducted by Nielsen, is issued quarterly. For the Q2 2018 study, emailed surveys were completed by 466 of 5,922 professional accountants holding senior positions between May 31, 2018 to June 17, 2018.