City’s business tax rating drops: survey

Saskatoon has slipped from first to sixth when it comes to business tax competitiveness in Canada, according to a KPMG report.

KPMG’s Competitive Alternatives 2014: Focus on Tax report compares business tax competitiveness in locations across Canada and around the world.

Saskatoon was ranked sixth out of 15 locations in Canada, a far cry from the No. 1 ranking it enjoyed in KPMG’s 2012 report.

Tom Zurowski, partner, with KPMG in Saskatoon, said the top eight cities are very close and a slight change in one location or another has a big impact on rankings.

“(The cities) are crossing the finish line pretty close together,” Zurowski said.

Edmonton finished first followed by Moncton, N.B., Fredericton, St John’s, Nfld., Halifax and Saskatoon.

Saskatoon slipped in part because of Saskatchewan’s R & D tax credit changing from refundable for all companies to non-refundable in most situations, the report said.

“At the same time, some of the other provinces have changed some of their tax incentives,” Zurowski said.

“In Alberta they have no sales tax, and in the Maritimes they have an HST which is a refundable tax to business,” he said. “Those are the two biggest things between (Saskatchewan) and them.”

Greater Saskatoon Chamber of Commerce executive director Kent SmithWindsor says the city’s tax competitiveness is slipping against other provinces.

The chamber would like to see the Canada West Foundations 2010 report, A Tax Framework for Saskatchewan’s Continuing Prosperity, be implemented by the various levels of government.

The Canada West report’s recommendations include reforms to education and municipal taxes, capping the differentials in the effective rate of tax for nonresidential properties at no more than 1.43 of residential properties and either harmonizing the PST with the GST or lowering the corporate tax rate from its current 12 per cent to nine per cent over a period of time.

“We don’t expect these changes overnight,” SmithWindsor said. “But if you have a plan to say we are going to achieve this over time, businesses are able to make investments and plans based on expectations as to what their future tax obligations will be.”

Ken Krawetz, Saskatchewan’s minister of finance, said the decision to change the R & D tax credit from refundable for all companies to non-refundable was “all around cost.”

Krawetz said the government is “still pretty pleased with the overall report.”

“It’s a Top 10 finish for the only city in Saskatchewan to be ranked,” he said.

The government has reduced small business taxes and education property taxes for businesses, he said. The graduate retention program has a budget of $80 million this year to keep post-secondary graduates in Saskatchewan.

The KPMG report also compares business tax competitiveness in more than

“CANADA REMAINS THE MOST COMPETITIVE BUSINESS TAX ENVIRONMENT GLOBALLY MAINLY DUE TO LOW EFFECTIVE CORPORATE INCOME TAX POLICY COMBINED WITH MODERATE STATUTORY LABOUR COSTS AS WELL AS OUR HARMONIZED SALES TAXES.”

KPMG REPORT

100 cities and 10 countries.

For the second time, Canada ranked first among the 10 countries compared, with total tax costs 46.4 per cent lower than the United States.

“Canada remains the most competitive business tax environment globally mainly due to low effective corporate income tax policy combined with moderate statutory labour costs as well as our harmonized sales taxes,” the report said.

The United Kingdom ranked second with Mexico landing in third.

Toronto, Vancouver and Montreal lead international cities for tax competitiveness.