US tax cuts could affect Canadian economy

VANCOUVER (NEWS 1130) – Companies in the U.S. are licking their chops — this after that country’s senate has pushed through with a bill that will bring big corporate tax cuts.

Already, some experts here are calling on our government to respond in order to remain attractive to foreign investment.

Walid Hejazi, an associate professor with Toronto’s Rotman School of Management, says if our government doesn’t bring in tax changes of our own, we could see some companies choose to set up shop in American cities instead of Canadian ones.

“I would recommend very, very strongly that our policymakers, our minister of finance, look very, very seriously about the impact these changes are going to have on the Canadian economy, and get out ahead of them,” says Hejazi.

However, he doesn’t expect these changes to bring about a mass exodus of companies moving offices to the US.

“I don’t expect it to be disastrous,” says Hejazi. “I don’t expect hundreds of thousands of jobs to leave Canada, but in terms of the growth of the economy, I would expect this to not be helpful.”

Hejazi expects companies will bring overseas cash back to the U.S. as a result of these changes — which he says could push our dollar lower relative to the greenback.

Other economists like Kevin Milligan with UBC’s Sauder School of Business feel the tax changes will bring rates largely level between the two countries, depending on the states and provinces in question, and don’t anticipate a large shift in investment south of the border.

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