Officials in Ottawa are keeping a close eye on the tax changes taking place south of the border and Canada will remain competitive in terms of its corporate tax rates, says Finance Minister Bill Morneau.
Just before Christmas, the U.S. government passed sweeping legislation that overhauls the American tax system and provides for lower corporate tax rates. There has been hand wringing in certain Canadian business circles about the ability of firms in this country to compete. However, Minister Morneau said that the corporate tax rates in Canada will remain competitive even after U.S. reductions, and that the federal government will ensure they remain competitive for the long-term.
“We intend on staying competitive,” Minister Morneau told Bloomberg News in an interview. “It will have different impacts on different sectors, so we are looking carefully on it.”
Canada’s average corporate tax rate is currently 27% and the American reductions will lower theirs to 26%, said the Finance Minister. While stopping short of saying there will be new tax reductions in the upcoming federal budget expected in March, Minister Morneau did say that Ottawa is keeping a close eye on the situation in the U.S. regarding taxation and will ensure that Canada remains attractive for business investments.
Speaking about the latest round of negotiations related to the North American Free Trade Agreement (NAFTA), Minister Morneau repeated that he remains optimistic a new deal will get done.
“There are going to be businesses that are being cautious because of the NAFTA negotiations, but our view is we should be working diligently to get to a better NAFTA, to find ways to improve it,” said the Finance Minister.
