David - what is happening with the dollar - My US dollars are
shrinking as I try and compete. - Should I move my business to
the USA?
==============
david ingram replies:
I have been predicating a dollar at par for some time now and am
only wondering when - not - "if" At 90 cents, our exports will
suffer while our imports get cheaper. Of course if there are no
jobs, no one can buy the cheaper imports.
According to KPMG, The Canadian economy is not too strong yet..
However, the rising dollar does make our sales to our largest
trading partner an iffy thing and jeopardizes some
$600,000,000,000 of sales per year to the US. .
As a consequence, I am extremely happy that I maintained all my
billings in Canadian dollars. It has meant that my income has
stayed rather equal while a whole bunch of people - particularly
US immigration lawyers - who were quoting in US dollars and
making a killing, are now faced with raising their prices by 35%
to stay even.
KPMG likely (in my opinion) has the best US / Canadian business
tax department in Canada as a rule (their Steve Peters
stevpeters at kpmg.ca in their Halifax office is also one of the
best US / Canada income tax consultants for personal returns as
well - for selfish reasons, I would recommend ourselves, then
Gary Gauvin Gary at garygauvin.com in Dallas and then Steve Peters -
I have never seen work by Brad Howland in Victoria but he seems
to be functioning well in the US / Canada tax business as well).
Why do I recommend others on my own site. Well, there is always
the chance that you might be getting a divorce or busting up a
business and both parties need someone competent. I would rather
that you or your erstwhile partner went to someone competent that
I have trust in, then wander into the nearest storefront office
and get someone who "thinks" that the answer "is".
For instance today, I found myself dealing with both of the
opposite sides of the same divorce.
The KPMG analysis of the Settlement surrounding the NISGA'A
Treaty was right on and prophetic. Those interested in Native
Land claims will note that there is no more wailing from the
mainstream about the NISGA'A treaty and that the BC Provincial
Government under Gordon Campbell has now adopted most if not all
of the tenants of that treaty.
---
Recently (I sound like I am pontificating here and I guess I am)
I was very impressed with another one of KPMG's financial
analysis. This analysis shows Canada (when the dollar was 85
cents) to be the most cost effective manufacturing country of the
G-7 and seemed to state that we would remain that way to a 98
cent dollar.
Read on - For those in business - show this to your comptroller,
your CFO, the owner of the business or your own accountant.
It would indicate that if your business is having trouble, it is
your own costs and efficiencies that have to improve.
I think it is fair to say that every Canadian business billing in
US dollars rode a prosperity wave from 1993 to 2003 and is now
having to tighten that belt. Show this to the Union Leaders too.
Unfortunately, it did not get a wide circulation when it came out
in March so I am pleased to circulate it again.
david ingram
---------------------------------------------
Canadian business costs lowest among G7 countries,
reports KPMG
Study says Canada maintains cost advantage over US
despite rising dollar
(Toronto, Tuesday, March 21, 2006) – Canada leads the
G7 countries as the most cost-effective location for business,
according to a 2006 study that compares business costs in nine
industrial countries in North America, Europe and Asia Pacific.
Canada ranked second out of the nine countries examined, with
business costs approximately 5.5 percent below those in the
United States.
Singapore is the overall leader among the countries
studied, with business costs approximately 22.3 percent below
those in the United States. According to KPMG’s study,
Competitive Alternatives: KPMG’s Guide to International Business
Costs, Japan and Germany rank as the most expensive countries in
which to do business.
The study results were determined using recent
exchange rates, with the Canadian dollar valued at US 85.2¢
(C$1.1735 per US$). "Even with the strong appreciation of the
Canadian dollar relative to the U.S. currency, Canada continues
to have a cost advantage relative to the United States," says
Mark MacDonald, a director in KPMG’s Advisory practice. "The
Canadian dollar would have to rise in value by approximately 13
percent, almost to par with the U.S., to bring Canadian cities to
a breakeven position with the U.S. in terms of overall business
costs. While this would vary from city-to-city and
business-to-business, this is still positive news overall for
Canada."
KPMG's 2006 Competitive Alternatives study measured
27 cost components – including labour, taxes, real estate, and
utilities – as applied to business operations in nine countries:
Canada, France, Germany, Italy, Japan, the Netherlands,
Singapore, the United Kingdom and the United States. The research
included an analysis of these costs in 128 cities worldwide. The
study's basis for comparison was the after-tax cost of start-up
and operation for 17 types of business, over a 10-year planning
horizon.
For larger cities in Canada, Edmonton and Montréal
rank as those with the greatest cost advantages relative to the
United States. While costs in Toronto and Vancouver are the
highest within Canada, and on par with such low-cost U.S. cities
as Atlanta and Tampa, these cities do still offer significant
cost advantages over most of the large US cities included in the
study. Among the smaller cities examined, Canadian cities
generally continue to offer lower cost structures than equivalent
U.S. cities, even after allowing for the higher value of the
Canadian dollar since 2004.
"The advantage seen for many of the Canadian cities
relative to the U.S. is generally the result of combination of
lower labour costs, including lower employer costs for private
medical coverage, lower real estate costs, and lower electricity
costs in Canada than in the United States, where deregulation has
seen electric costs soar in many regions.” KPMG’s Mark MacDonald
stated. “Various federal and provincial tax cuts over the last
decade have also made Canada’s tax system more competitive with
the U.S., and have contributed to the positive position of the
Canadian cities,” MacDonald concluded.
Comparison of Cost Indices Among Selected Cities in
Canada
City Cost Index
Sherbrooke, QC 90.1
Moncton, NB 91.1
Charlottetown, PEI 91.7
Halifax, NS 92.2
Quebec City, QC 92.6
Saskatoon, SK 92.8
Edmonton, AB 93.3
Chilliwack, BC 94.0
Winnipeg, MB 94.1
Montreal, QB 94.3
St. John’s, NF 94.3
Waterloo Region, ON 94.3
Calgary, AB 94.7
Ottawa, ON 95.1
Toronto, ON 96.5
Vancouver, BC 96.9
* Source: KPMG’s 2006 Competitive Alternatives
Study
* Business Costs are expressed as an index with the
United States being assigned a baseline index of 100.0. A cost
index less than 100 indicates lower costs than the US. A cost
index greater than 100 indicates higher costs than the US. For
example, an index number of 95.0 represents a 5.0% cost advantage
relative to the US. Cost index is determined by averaging
variables from various industries and operations.
Canada and International Comparison
Canada
a.. Canada ranks second overall and first among the
G7 countries for low business costs, with a cost advantage of 5.5
percent over the United States.
b.. Combining salary and wage costs along with all
benefits, total labour costs are lowest in Singapore, followed by
Canada. However, expressed as a percentage of payroll, benefit
costs in Canada are lower than in any of the other countries
studied.
c.. Industrial facility costs, including land
purchase and factory construction costs, are lowest in Canada,
followed by Italy, the United States, and France.
d.. Canada, along with the United Kingdom and
France, are the countries that offer the greatest tax incentives
to encourage research and development (R&D) activities.
e.. Canada offers the lowest electricity costs
among all countries studied.
Other Countries
a.. Singapore ranks first among the countries
studied, with business costs 22.3 percent lower than in the
United States. With GDP per capita now on par with some western
European nations, Singapore is the first newly industrialized
country to be included in Competitive Alternatives.
b.. France and Netherlands ranks third and fourth
respectively, with overall business costs lower than in all other
European countries, and a cost advantage of approximately 4.4
percent over the US.
c.. Italy and the United Kingdom rank fifth and
sixth respectively, with business costs approximately 2 percent
below the seventh ranked United States.
d.. Japan and Germany were the most costly places
to set businesses, with business costs approximately 7 percent
higher than in the United States.
e.. Singapore, the United Kingdom and the
Netherlands offer relatively low effective corporate income tax
rates for the widest ranges of operations.
f.. Office leasing costs are lowest in Italy,
followed by Germany, and the Netherlands.
* Source: KPMG’s 2006 Competitive Alternatives Study
International rankings and relative cost indices are
illustrated in the following chart. The benchmark cost index
(U.S. = 100) is defined as the average of nine representative
U.S. cities.
Cost-Competitiveness: 2006 Rankings by Country
Country Cost Index Rank
Singapore 77.7 1
Canada 94.5 2
France 95.6 3
Netherlands 95.7 4
Italy 97.8 5
United Kingdom 98.1 6
United States 100.0 7
Japan 106.9 8
Germany 107.4 9
Source: KPMG’s 2006 Competitive Alternatives
Study
To access copies of the full report, please go to
www.competitivealternatives.com
Media Contacts:
Sharon Godsell
Media Relations, KPMG
(416) 777-3533
sgodsell at kpmg.ca
Julie Bannerjea
Senior Manager, Media Relations, KPMG
(416) 777-3243
jbannerjea at kpmg.ca
About Competitive Alternatives
KPMG's 2006 Competitive Alternatives study provides
an independent comparison of international business location
costs in 128 cities around the world. The study enables
businesses executives to take a quick, initial scan of how
business costs compare among a variety of cities in leading
industrialized countries. It also assists KPMG professionals and
economic developers in their work with businesses considering
relocation, and enables policy makers to help determine the
impact of a proposed tax and/or incentive policy change on the
cost-competitiveness of their jurisdiction in relation to others.
The study is available online at
www.CompetitiveAlternatives.com
About KPMG in Canada
KPMG LLP is the Canadian member firm of KPMG
International, the global network of professional services firms
whose aim is to turn knowledge into value for the benefit of
their clients, people and the capital markets. With nearly 94,000
people worldwide, KPMG member firms provide industry-focused
audit, tax, and advisory services from more than 717 cities in
148 countries.
KPMG assists clients as they consider expanding,
relocating or consolidating their business activities. More than
100 KPMG professionals throughout the world offer a variety of
global location and expansion services, ranging from strategic
planning, to site analysis, to determining the availability of
business incentives.
KPMG Information
About KPMG
Information about KPMG in Canada, including
mission, history and office locations.
KPMG Careers
Thinking about your next career move?
Opportunities abound at KPMG.
Contact KPMG
For more information contact a KPMG
professional.
© 2006 KPMG LLP, the Canadian member firm of KPMG
International, a Swiss cooperative. All rights reserved.
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---------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
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Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA)
time - (please do not fax or phone outside of those hours as
this is a home office)
email to taxman at centa.com
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed
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Be ALERT, the world needs more "lerts"
----------------------------------
David Ingram gives expert income tax & immigration help to
non-resident Americans & Canadians from New York to California to
Saudi Arabia to Mexico to China or Chile - Cross border, dual
citizen - out of country investments are all handled with
competence & authority.
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