Canada builds its brand

January 6, 2011

While the US is stuck in an economic rut due to years of overspending and a government that keeps piling on more debt, Canada has been improving its image and appeal to business.

On the first of January, Canada lowered its corporate tax rate to 16.5%. With this action, our neighbors to the north have reduced the tax burden on businesses to less than half of that imposed by the U.S., making a chilly winter a bit warmer for entrepreneurs and investors.

In a Wall Street Journal article on Thursday, December 30th, 2010, Phred Dvorak reminded us that this is not a new phenomenon. In fact, it is the fourth such tax cutting initiative in as many years. Further, more relief for businesses is on the way; “In 2012, Canada plans to cut its corporate taxes… to 15%, bringing combined provincial and federal taxes to about 25%, from a combined average of 42.6% in 2000.”

This is an amazingly consistent and disciplined approach for building a country’s brand with the business community. Mr. Dvorak says that economists are mixed about the potential results, which is the same argument we hear a lot in the US about tax rate issues. One needs only to look at the strength of Canada’s banking institutions, its currency, and its stocks to see the effect that sound fiscal policy and a business friendly government has on a country.

Canada is quickly becoming one of the most desirable places to do business in the developed world, with one simple message: “We’re friendly to business.” What a brilliant concept.

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