Group's recommendations include tax and housing regulation concerns
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Canada should reconsider how it taxes corporations to make sure they remain competitive after US tax reductions, the International Monetary Fund said.
The Washington-based group made the recommendations Monday in its annual review of the Canadian economy, which also warned that the federal government should be prepared to introduce tougher housing regulations to keep the economy on track.
With the report, the IMF is wading into a controversial debate in Canada over how to respond to President Donald Trump’s decision to cut US corporate tax rates. While the federal government has said it’s evaluating the impact of the tax cuts on the nation’s economy, Prime Minister Justin Trudeau argues the nation’s economy remains competitive.
“It is time for a careful rethink of corporate taxation to improve efficiency and preserve Canada’s position in a rapidly changing international tax environment,” the IMF said.
The economy’s current strength won’t be sustained, the IMF said, predicting growth to slow to 2.1% this year from a Group of Seven-leading 3% in 2017. Medium-term potential growth will be even slower at 1.75% because of a loss of competitiveness and an aging population, the IMF said. Total output could be reduced by another 0.4% points if North American Free Trade Agreement talks fail and Canada-US commerce reverts to World Trade Organization rules.
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