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Corporate head offices are fleeing Canada

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4 minute read

From the Fraser Institute

By Jock Finlayson

Canada is losing corporate head offices. Between 2012 and 2022, one-in-20 head offices closed or merged with other companies, according to Statistics Canada data, which track the number of large and mid-sized Canadian-based companies over time. Head office employment has also dwindled, dropping by around 6 per cent since 2012.

While Canadian corporate headquarters are concentrated in Ontario, Quebec, Alberta and British Columbia, almost all provinces have lost head offices since 2012. In some cases, this can be attributed to energy companies exiting, merging or scaling back their operations in Canada following the plunge in oil prices from 2014 to 2016 and the emergence of an investment-chilling federal regulatory environment. That said, the decline in corporate headquarters and related employment has been broadly-based.

Why should Canadians care?

Head offices serve as “command and control centres” for key decisions about people, products, processes, technologies and strategies for growth. They create local demand for services such as accounting, law, engineering, management consulting, finance and advertising. People who work in these supplier industries, like those employed directly by companies’ headquarters, also earn above-average wages and salaries. A robust head office sector bolsters the tax base to help pay for public services. It also has a positive impact on the extent of private-sector support for education, health care, and arts and charities.

What can be done? Canada has little prospect of “poaching” head offices from elsewhere. Indeed, there is a risk that some Canadian companies in sectors such as energy, forestry, technology, and pipelines could relocate their headquarters to the United States. Instead, policymakers should ensure that Canada has a business environment that helps retain head offices and creates opportunities for more local firms to scale into larger enterprises.

Unfortunately, Canada is hamstrung by a poor policy environment for business growth, including an antiquated tax system that defies understanding even by the most skilled tax accountants, complex and inefficient regulatory processes affecting many industries, internal trade barriers that fragment the domestic market, heavy direct government involvement in multiple sectors of the economy, and a federal government that seemingly lacks interest in doing much to improve the efficiency and productivity of the national economy.

For example, the combined federal-provincial business tax rate doubles or triples if companies grow their net income above a modest level (typically, $500,000). Provincial payroll taxes kick in at thresholds that encourage “micro-businesses” and impose higher tax burdens on mid-sized companies. Research and development tax credits are skewed to benefit very small businesses. Canada also levies high personal tax rates at relatively low income thresholds compared to most other advanced economies, including the U.S. and the United Kingdom. The most skilled employees—managers, professionals, scientists, technologists and so on—are internationally mobile. Many can and will leave Canada for better opportunities in other jurisdictions.

In truth, Canada today is not a particularly attractive location to situate head office jobs, nor to undertake the kind of high-value corporate activities that depend on the presence of senior management and deep pools of professional and technical talent.

Canada cannot afford to see the continued loss of head offices. Governments at all levels should enact policies to support a strong head office sector. And they should avoid taking steps that will spur a further exodus of successful Canadian companies and our most talented people.

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Automotive

‘Gross Overreach’: Energy Groups Urge Congress To Throw Biden-Harris Admin’s ‘EV Mandate’ Overboard

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From the Daily Caller News Foundation 

By Nick Pope

Energy-focused organizations called on lawmakers to scrap the Biden-Harris administration’s electric vehicle (EV) “mandate” in a Thursday letter.

More than two dozen energy groups sent the letter to every lawmaker in Congress, urging them to push through Congressional Review Act (CRA) proceedings against the Environmental Protection Agency’s (EPA) tailpipe emissions standards for light-duty vehicles. The CRA enables legislators to effectively overturn federal regulations provided a resolution targeting a specific rule can pass both chambers of Congress and gets signed by the president, or if lawmakers can manage to override a presidential veto, according to the Congressional Research Service.

“This EPA rulemaking is clearly beyond the scope of the regulatory power granted to the agency by Congress,” the letter states. “While this overreach will be litigated in the courts, a positive CRA decision now would ensure that consumers are protected today, rather than wait years for the issue to work its way through the court system.” CRA Tailpipe Coalition Letter Final by Nick Pope on Scribd

Specifically, automakers could come into compliance with the EPA’s rules if EVs make up 56% of their new car sales by 2032, with an additional 13% of sales being plug-in hybrids, according to The Associated Press. While the Biden-Harris administration maintains that the regulations are not an EV mandate, critics say that the rules will effectively force manufacturers to increase EV production to such an extent that they amount to a de facto mandate.

The Biden-Harris administration has set a target of having 50% of all new car sales be EVs by 2030 as part of its broader green energy and climate agenda. Despite billions of dollars of spending and stringent regulation, American consumers remain hesitant to switch over to all-electric models while manufacturers are losing large amounts of cash on their EV product lines and starting to back off of ambitious short-term production goals.

“In a move that shocks no one, the Biden-Harris EPA has once again overstepped its authority with their EV mandate. By prioritizing politics over personal freedoms, this Administration is destroying the cornerstone of our economy — consumer choice,” Tom Pyle, president of the American Energy Alliance, said. “What the Biden-Harris Administration is trying to do with his mandate is deceptive, ill-advised, and a gross overreach of power. While it will undoubtedly be litigated by those who stand on the side of consumer choice and economic freedom, passage of the CRA resolution will ensure consumers are protected today.”

Beyond the American Energy Alliance, other signatories include Americans for Prosperity, the Western Energy Alliance, Heritage Action, the Competitive Enterprise Institute and Always On Energy Research.

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Business

Feds blow $2.7 million on global film festivals

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From the Canadian Taxpayers Federation

Author: Franco Terrazzano 

At the 2024 Cannes Film Festival in France, bureaucrats spent $9,930 on “umbrella stand coordinator services”

The Trudeau government blew more than $2.7 million on high-profile film and music festivals around the world, where they made taxpayer cash rain throwing expensive parties.

All that spending occurred for events that took place during a 16-month period, between January 2023 and May 2024, according to government records obtained by the Canadian Taxpayers Federation.

Bureaucrats attended the Oscars, the Cannes Film Festival in France, the Berlinale film festival in Germany, and the South by Southwest music and film festivals in Austin, Texas and Australia – all on the taxpayer dime.

“Government bureaucrats spent $175,000 a month partying it up at international film and music festivals,” said Franco Terrazzano, CTF Federal Director. “In what world does it make sense for bureaucrats to blow millions of taxpayer dollars on festivals when the government is more than a trillion dollars in debt and record numbers of Canadians are lining up at food banks?”

During South by Southwest festivals, bureaucrats spent $35,000 on plant and furniture rentals for a “Canada House” event, as well as $5,000 on “DJ services” and “animation services.”

An additional $15,000 was spent on a “social media champion” for the Canada House. Food and drink catering costs for a reception, as well as an “opening party” came to $11,700.

The 2023 South by Southwest festival in Australia also had a “Canada House,” with costs totalling at least $97,000. Bureaucrats also expensed $17,000 for an “event coordinator.”

At the 2024 Cannes Film Festival in France, bureaucrats spent $9,930 on “umbrella stand coordinator services.”

During the Berlinale festival, the rental fee for a “Canada Pavilion” came to $74,000.

Additional expenses at the festivals included professional photographers and hundreds of thousands of dollars spent on decoration services.

“Maybe government bureaucrats should figure out how to do basic things, like answering taxpayers’ phone calls, before trying to DJ international parties,” Terrazzano said. “Taxpayers are giving this international film festival party junket two big thumbs down.”

The spending happened at the ministries of Global Affairs Canada and Canadian Heritage, with money also spent by the National Film Board.

All told, the cost to taxpayers came in at $2,798,719, according to the records. The events all occurred during a 16-month period. That means the average spending on the festivals was $174,919 per month.

The government has already earmarked spending for future film and music festivals, with bureaucrats indicating the “plan is to continue to support Canadian talent at these world-class markets,” according to the records.

The details were released in response to an order paper question submitted by Conservative MP Michelle Rempel Garner (Calgary Nose Hill).

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