The idiom “the straw that broke the camel’s back” describes a minor or routine action that causes a large and sudden reaction because of the cumulative effects of many small actions over time. This might well describe the state of business investment and entrepreneurship in Canada.After years of mounting tax and increased regulation, coupled with a decidedly anti-business rhetoric from many capitals across the country, it seems the back of business investment and entrepreneurship in Canada has been broken. The question is whether governments in Canada are interested in repairing it.
The list of policy changes that have made Canada a less-attractive place to do business is significant. In recent years, the federal and many provincial governments increased already uncompetitive personal income tax rates to the point where the top combined rate now exceeds 50 per cent in seven provinces with the remaining provinces just below 50 per cent. And because Canada’s capital gains tax is linked to personal income taxes, these rate changes have also increased our capital gains taxes.
The federal and several provincial governments—including British Columbia’s new government—have also added more complex and burdensome regulations on labour, energy, infrastructure projects, environment, health and safety, and finance, to name just a few.