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MoneyTimes- October 14, 2013

Posted by Jill Kerby on October 14 2013 @ 09:00

 

CANADA IS GETTING OUR GRADUATES – HERE’S WHY

 

It’s Budget Day today, so we’ll have to wait until next week for some suggestions on how to cope with this latest round of higher taxes, levies and spending cuts.

But not everyone is sticking around for the aftermath.

Graduates are leaving here in record numbers and they’re going to Britain, the US, Canada and Australia where job prospects are more plentiful, career opportunities are better, taxes are lower and, at least in the case of Canada and Australia, they won’t be brutalised by decades of high personal taxes and state debt.

“Young educated graduates and job holders are leaving [Ireland] because they see a decade, perhaps longer, of debt servitude, suffocating taxes and the thinning out of public services while the establishment continues its act of self-preservation. Families whose kids have the potential for stellar careers are encouraging them to go,” wrote Eddie Hobbs in his Irish Star column last week.

I think he’s right. My child, 19, who has just starting college, is being prepared by his father and me for a working life in Canada when he graduates: prudent Canada rewards hard work and ambition. Its taxes provide public services that reflect the needs of its society, but not at a cost that discourages personal ambition.

Compared to here, the highest tax rates apply on much higher earnings:  the 29% top Canadian rate is paid only on equivalent euro earnings over €96,675. The provinces also impose income taxes and in Ontario, where so many young Irish now live, the 13.16% top rate applies only on earnings over €364,370.

Here top rate tax of 41% applies on all income over just €32,800.

Someone in Ontario earning the equivalent of a gross salary of €50,000 will pay combined federal/provincial income taxes of €10,897(each have four tax bands.)  Here, on that income, with two tax bands, that worker pays €13,552.

However, the Canadian worker only pays 4.95% or €1,682 and 1.88% or €606 in pension and other social insurance contributions up to a €33,000 income ceiling. Compared to this €2,288, the Irish worker pays 4% PRSI (€2,000) and 7% USC (€3,500) on their entire €50,000 earnings. The Irish worker’s gross income tax and social insurance bill amounts to €19,052 compared to €13,125 if he worked in Ontario.

These gross income deductions don’t take into account tax credits and other deductions, but these are also more generous in Canada and the net effect is the same: you get to keep more of your earnings there.

Co-incidentally, on the day the UCC survey on third level emigration was published, I attended the Ireland-Canada “Gathering” of respective joint chambers of commerce and business associations. It was addressed by a former deputy prime minister of Canada, John Manley, who now heads the Canadian Council of Chief Executives.

He explained why doing business with Canada (and indirectly why emigrating there) is such an attractive prospect:

  • Canada will have the highest real growth rate (albeit only 2%) in 2013 among the G7 nations;
  • Canadian unemployment is c7.1% and falling.
  • It has the lowest debt to GDP ratio of all leading industrialised countries (c85%) with only Germany having a better record. (Ours is 123%). Canada will balance its budget again by 2015. 
  • The Canadian GDP deficit is c2%, second lowest to Germany. (Ours s 7.5%, the highest in the OECD.) If it was in the EU Canada would have the 7th largest population, the 6th largest GDP and the 4th largest GDP per capita.
  • Canada has the world’s soundest banks (the US banks rank 58th). It was ranked this year’s top global place to do business.  
  • It is 41% more tax competitive on all business, corporate, sales, and capital tax fronts than the United States. At the other end of the spectrum, France is -80% less tax competitive than the US. Only the UK nears the Canadian competitiveness rank at +27%.
  • Canada ranks in the top three global rankings for leading natural resources: potash, titanium, uranium, forest products, aluminium, crude oil reserves (it is 6th in crude oil), natural gas, hydroelectric power (6th for electrical power).
  • Canada ranks 7th in clean technology innovation (Ireland is 9th)

Canada is still too dependent – and vulnerable – to US trade; individual Canadians are carrying too much personal debt and its national health service is not delivering the care it promised.

But trade with Ireland is growing and we are now the 5th largest recipients of Canadian outward investment. 120,000 Canadians will visit Ireland in 2013 and five million Canadians claim Irish ancestry. Next spring both Aer Lingus and Air Canada Rouge will start daily, year round flights to Toronto.

I am trusting Canada to keep doing the right things so that my Irish child can build himself a future there some day soon.

 

 

 

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