Daulton in Italy

Just heard on the news that the Ontario Premier is in Turin, Italy today making the case that Ontario is the best location for the new Fiat plant that is likely going to be announced in a few months. I appreciate Daulton’s ambition but given the downturn in the US and the low value of the US dollar, I suspect that the usual U.S. suspects – Kentucky, Indiana, South Carolina, Alabama, etc. are al heavily courting Fiat. The financial deal that will win this project will be $200 million+ in incentives. Mark my words on this. But a typical auto plant will generate (direct, indirect and induced) incremental taxes of between $30 million and $70 million per year so the tax payback on a $200 million investment would be between 3 to 7 years on a plant like this.

Not to mention the 1,000 high paying jobs and the fact that the average lifespan of an auto manufacturing plant is between 25-30 years.

Corporate tax cuts
I got a couple of good emails this morning on my TJ column regarding corporate tax cuts. One said I should have mentioned that U.S. companies pay the bulk of employee health care costs whereas in New Brunswick they don’t. This is not an insignificant figure. GM estimates it is around $10,000 per employee. Even Walmart offers a basic health care plan to its U.S. employees.

Maybe that should be the pitch to Fiat. Save $10 grand per employee in health care costs by locating in Ontario (or New Brunswick?).

Someone else said I should have mentioned that most of the firms that New Brunswick might want to attract wouldn’t pay much corporate income tax here anyway so cutting the rate wouldn’t matter much. I believe that a US corporation that puts a back office in New Brunswick doesn’t pay any corporate income tax here anyway. Good points.

Finally, this AM, an old friend asked me about Moncton’s new status as ‘sin city’. He pointed out the Molson plant (booze) and the casino (gambling) and suggested the third leg on the stool should be prostitution.

I don’t see Moncton as sin city. It’s actually a fairly conservative place. 92% claimed some religious affiliation on the Census compared to 90% in Saint John, 86.5% in Fredericton and 83.8% across Canada. For crying out loud, there are 16,000 Baptists in Greater Moncton. That’s a lot of potluck suppers, sheesh.