Between 2012 and 2021, one in 25 Canadian head offices closed or merged with other companies, according to Statistics Canada data
, Ontario and Quebec, while the largest percentage declines were in Nova Scotia and Saskatchewan. In some cases, the loss of headquarters can be attributed to energy companies exiting, merging or scaling back their operations in Canada after the plunge in oil prices over 2014-16 and the chillier federal regulatory environment that developed thereafter. Nonetheless, the decline in corporate headquarters and head office jobs has been broad-based.
Head offices are especially important as “command and control centres” for major decisions about people, products, processes and technologies. They create “downstream” demand for high-value services such as law, accounting, engineering, consulting, finance, advertising, design and human resources. People who work in these supplier industries, like those employed directly by corporate head offices, also tend to earn above-average wages that are in turn spent at other local businesses.
For example, the combined federal-provincial corporate tax rate doubles or triples if a company’s net income grows above $500,000. Provincial payroll taxes also punish companies that grow beyond being micro-businesses. Over all, the business tax system sends a clear message: Don’t scale, stay small.
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