The man who runs one of Canada's largest banks is urging the Trudeau government to slow the rate investment capital from this country to the United States — because, he warns, it's already leaving in "real time."
RBC CEO Dave McKay discussed some of his biggest concerns about Canadian competitiveness, particularly those related to recent U.S. tax reforms. Ottawa has come under pressure from corporate Canada to respond to a U.S. tax overhaul that's expected to lure business investments south of the border.
McKay tells various media outlets that a "significant" investment exodus to the U.S. is already underway, especially in the energy and clean-technology sectors.
The flight of capital, McKay added, will likely be followed by a loss of talent, which means the next generation of engineers, problem solvers and intellectual property could be created not north of the border, but south of it instead.
"We would certainly encourage the federal government to look at these issues because, in real time, we're seeing capital flow out of the country," McKay said.
Since the election of U.S. President Donald Trump, Canada's investment landscape has been dealing with trade nerves related the ongoing renegotiation of the North American Free Trade Agreement.
But many point to Trump's recent U.S. tax measures as potentially more dangerous, fearing that dramatic corporate tax cuts in the U.S. will eliminate Canada's advantage.
McKay adds Canada's competitiveness challenges go beyond the high-level, tax-rate changes in the U.S. bill.
For instance, he pointed to another important element he said is encouraging capital to flow out of Canada — a change that enables U.S. companies to immediately write off the full cost of new machinery and equipment.
