Canadian Business Costs Lowest Among G7 Countries, Reports KPMG

The study results were determined using recent exchange rates, with the Canadian dollar valued at US85.2 cents (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 startup 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. http://www.newswire.ca/en/releases/archive/March2006/21/c3812.html

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