The chief executive of Canada’s biggest bank suggested Thursday that politicians shouldn’t try to immediately recover the massive amounts being spent in response to the coronavirus pandemic with taxes, but should instead use the moment to try to attract investment and incentivize business creation.
With global spending on COVID-19-related actions amounting to around 10 to 15 per cent of gross domestic product, and with questions about how and when this money will be paid back, tax policy “becomes really important,” Royal Bank of Canada president and CEO Dave McKay said during a digital panel for the Collision conference.
“I would encourage our politicians not to tax that back right away,” he added.
Instead, McKay suggested, there should be incentives for needed “risk” capital, as well as for the formation of companies. Speed to market, the CEO added, is critical.
“There’s lots of countries that are thinking the same thing,” McKay said. “There’s an opportunity to repatriate jobs, an opportunity to build up manufacturing bases and digital capabilities. So taxation policy and regulation are really critical components for businesses to come together with government to take advantage of the opportunities before us.”