RBC’s president and CEO Dave McKay says that the Canadian government must intervene if it wants to keep the country’s investment capital from leaving to the US.
“If we don’t keep the capital here, we can’t keep the people here.”
In an interview with The Canadian Press, McKay said that his concern with Canadian competitiveness stem from a tax overhaul in the US, which is expected to attract more investment to the country. He said that investment is already leaving the country, especially in the cleantech and energy sectors.
“We would certainly encourage the federal government to look at these issues because, in real time, we’re seeing capital flow out of the country,” McKay said.
McKay warns that a loss of talent to the US could soon follow the loss of capital.
“We see our government going around the world saying what a great place Canada is to invest — yes, it is a great country, it’s an inclusive country, it’s a diverse country, it’s got great people assets. But if we don’t keep the capital here, we can’t keep the people here — and these changes are important to bring human capital and financial capital together in one place.”
There is concern in particular for dramatic corporate tax cuts in the US; for example, US companies in all sectors can now immediately write off the full cost of new machinery and equipment. Jack Mintz, a University of Calgary professor and tax expert, believes the expensing of capital investments is encouraging a lot of companies to shift their investments to the US.
A spokesman for Finance Minister Bill Morneau defended the recent federal budget from the business community’s concerns that it didn’t do enough to protect Canada from US tax changes.
“There will be no knee-jerk reactions from this minister, and we are doing our homework,” Daniel Lauzon wrote in an email. “This includes listening to, and hearing from, the business community on how the competitive environment is evolving.”
