The carbon tax that Canada is planning to impose may have to be reviewed again, as low tax rates in the US may not include the carbon tax. The US attracting businesses to shift their base will not probably be as threatening to Canada as anticipated. This is because Trump’s plan of lowering tax rates to a low of 15% may not be an easy task without adjusting for other tax rates, adjusted for other revenue streams. Even though Trump goes for it, Canada can adjust it with other tax rates, such as individual tax rates, waste taxes, polluting industries tax rates, and introducing a lock-in period for new investments provided, they are offered the best governance and support in entirety (Aulthouse, 2016). Introducing new policies of attracting new businesses with a ready infrastructure and a ready market for industries will never fade away the expression of interest from prospective businesses, many of which will convert into real investments.
The OECD index ranks Canada on the third rank in terms of tax rates, and with the US expected to join the same league, if it will, it is poised to push its position to the 12th position. The immediate action for Canada is not to reduce its corporate tax rates further below 15%, but wait for the US to declare tax cuts, observe the reactions, and then take a calculated decision. If the US is going to introduce a 10% repatriation tax, it may not require reducing its corporate tax rates to a minimum of 15%, as it would have enormous revenues from taxes on foreign stashed incomes of multinationals. There are combinations of tax policies that will be adopted, so it may not be a complete whitewash for Canada, as it is also connected to other nations to do business with, the EU, China, Africa, and Asia, etc. The country can capitalise on these relations and make a new policy shift to balance its trade with these countries and with the US simultaneously.