Now here's a headline I never expected to see:
Canada's cost advantage second only to Singapore
KPMG's global competitiveness study ranks country top among G-7 industrialized nations despite rising dollar
STEVEN THEOBALD, BUSINESS REPORTER, TheStar.com
Despite reports to the contrary, a strong dollar and perceived high corporate taxes are not hurting Canada's global competitiveness, says a new study from an international consultancy firm.
Canada remains the most cost-competitive economy among the G-7 group of industrialized nations, and second overall to Singapore, according to the latest KPMG Competitive Alternatives survey of nine countries released yesterday.
It's a "misconception" that the strong loonie is marring Canada's ability to offer cost-effective opportunities to potential investors, said Mark MacDonald, who led the study."We can't say the value of the Canadian dollar is not important, but it is not as important as some people make it out to be," he said in an interview following a news conference in Toronto.
KPMG's current report is based on an 85-cent (U.S.) exchange rate. The loonie would have to approach par with the U.S. dollar, "or certainly somewhere in the high 90s," to erase Canada's cost advantage, said Glenn Mair, a director of MMK Consulting Inc., which contributed to the study.
The report shows the currency rose 13.6 per cent since the 2004 survey, yet, Canada still enjoys average operating costs 5.5 per cent below the United States. That's down from a 9 per cent advantage two years ago when the loonie averaged 74 cents.Canada held the top spot in both 2004 and 2002, when the 65-cent exchange rate gave the country a 14.9 per cent cost advantage over the U.S.
This is the first year Singapore was included in the survey. Low labour costs gave it a clear victory. As for Canadian taxes, it's simply not true that corporate tax rates are scaring businesses away, MacDonald said, adding that researchers claiming the contrary may have "vested interests" in the matter. In reality, the combined federal and provincial effective corporate tax rates in Canada are on par with U.S. federal rates, and that doesn't include state-level taxes, MacDonald said."The evidence is very clear."Canada's policy of offering tax breaks to promote investment in research and development has been especially successful, Mair said. "Personal taxes are another story, and not part of this study."
The study's conclusions:
Singapore
Canada
Wednesday, March 22, 2006
Canada's cost advantage second only to Singapore
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