Make business tax work for new firms

Start with the rate

The world chart covers all 146 places in the OECD source. It uses general rates at January 1, 2026. Canada’s provincial part is a weighted average. It is not the rate of every province. The province chart shows the general rate in each place, plus the federal 15%, checked on October 14.

Small firms and some sectors have other rates. Tax breaks, rules for costs, minimum taxes and tax on money paid to owners can change the bill. A zero general rate does not mean every firm pays no tax.

Then test a new project

The OECD tests a model project across 105 places. It holds key choices fixed: 1% inflation, a 3% real interest rate and a 20% return before tax. It uses a set mix of assets and funding. Its effective average rate tests the tax cost of a project that earns a profit. These are not tax bills taken from company accounts.

A marginal rate asks a different question: how tax changes the return a new project needs to break even. It can be below zero. Never add that rate to the general rate or call it the average tax paid by all firms.

Keep the awkward evidence

Finance Canada’s Budget 2025 model said its planned changes would cut Canada’s marginal rate from 15.6% to 13.2%, the lowest in the G7 under that model. That is evidence we need to show, not hide.

The OECD’s model for 2025 gives a marginal rate of 16.1% for Canada, 3.7% for the US and 11.5% for the UK. Its average-rate chart gives Canada 23.9% and the US 22.1%. The models count costs and tax rules in different ways. A rank from one is not a verdict on all business taxes.

Turn the comparison into a plan

Our next step is to price specific tax cuts. Test what happens when a firm buys a tool, hires a worker or builds a small site. Include sales tax on business inputs, payroll costs and local charges. Show the public cost of each change before making a savings claim.

Cutting waste and opening markets can help too. But do not count those gains twice or treat them as certain tax revenue. A credible low-tax plan must still add up.

Study Build Canada’s business tax ideas

Build Canada’s April 2026 brief seeks to make it easier to put money back into firms. We share that aim. The plan still needs a full cost and funding check.

What we want changed

1. Lower costly taxes

   Price specific cuts that let firms start, hire and build at less cost.

2. Show the whole bill

   Count national, provincial and local taxes and fees for the same test project.

3. Test the results

   Check costs, jobs and new investment after each change. Publish results that challenge the plan too.

Who can act

Ottawa and provinces set corporate tax rules. Provinces and local councils also set taxes and fees on land, buildings, payroll and other parts of a firm’s costs.

What this could cost the public

No rate cut or total cost has been set. Each plan must show lost tax revenue, costs and funding. Savings from reforms must be checked. Hoped-for growth is not cash already in hand.