Last year’s U.S. tax reform poses a substantial risk to the long-term viability of a large portion of Canada’s petrochemical and other chemical industry, as well as the Canadian economy at large, according to a PricewaterhouseCoopers report commissioned by the Business Council of Canada and released on September 12.
The impacts of U.S. tax reform on Canada’s economy, looks at numerous sectors in the Canadian economy. Key findings indicate that the U.S. tax reforms would put 635,000 jobs (3.4 per cent of Canada’s employment) at risk and potentially reduce Canada’s GDP by $85 billion (4.9 per cent of the economy).
The petrochemical sector will be particularly hard hit. The report indicates that with the U.S. tax reform, Canada is falling even further behind the U.S. in terms of competitiveness posing a “serious risk” to petrochemical manufacturing in Canada.
“The relative attractiveness of the U.S. is reflected in the fact that, capital expenditure in chemical manufacturing has decreased by 0.3 per cent in Canada over the past five years, while increasing by 10 per cent in the U.S.,” The report states.
These findings echo the concerns raised in CIAC’s 2019 Federal Pre-Budget Submission. The submission notes that although Canada used to enjoy an advantage through its marginal effective tax rate to help overcome construction, utility, labour and logistics disadvantages, that advantage is now gone with the U.S. tax overhaul. CIAC is calling on the government to take urgent action to ensure the Canadian chemistry sector remains competitive to keep business – and jobs – within Canada.
Read more in CIAC’s 2019 Federal Pre-Budget Submission
Read the full Business Council of Canada report