Business

Manufacturers: Canada Has Leg Up on U.S.

By Mike Botta

Canada and the U.S. might be inseparably joined from the neck down, but not so much at the head when it comes to corporate taxes. 

At the inaugural Canada-US Manufacturing Summit in Montreal in early September, leaders from the US-based National Association of Manufacturers (NAM) and the Canadian Manufacturers & Exporters (CME) urged both governments to “take decisive action to respond to the competitive challenges facing manufacturers and the economy.”

In a joint statement, the manufacturing groups called on policymakers in both countries to establish tax structures that encourage business investment, innovation and growth and to create stable climates for high paying jobs. 

According to NAM, the US is Canada's biggest trading partner, accounting for more than three-fourths of all bilateral trade.

Canadian Tax Rate Half That of U.S.

Canadian Industry Minister Christian Paradis, in an address as reported in The Canadian Press, said his country’s government has taken initial steps to boost manufacturing by eliminating tariffs on all manufacturing imports and on machinery and equipment, and allowing accelerated capital cost allowances for clean energy.

It also cut $60 billion (Canadian) worth of taxes, and plans to reduce the federal corporate tax rate to 15 percent by January 2012 from 16.5 percent in 2011 and 18 percent in 2010, the Canadian news organization reported.

By contrast, the U.S. corporate tax rate is roughly 34 percent, second highest in the world behind Japan.

Jay Timmons, President & CEO of NAM, called on the U.S. to emulate the Canadian government’s efforts.

Neighbor Envy

"From our side of the border, we're really looking (with) envy at Canada as the Canadian government looks for ways to reduce the cost of manufacturing through the corporate tax rate," Timmons was quoted as saying.

He added the U.S. corporate tax rate contributes to making it more expensive to do business in the U.S. than in any of the country’s major trading partners.

Both the U.S. and Canadian contingents also discussed proposed border changes to speed up the flow of goods while preserving security.

"Canada does more than just trade with the United States," CME President & CEO Jayson Myers, said. "We build things together. We innovate together. And we need our governments to work together to translate good intentions into bottom-line results."