While the cost of business in Canada has increased, it's still the cheapest among the Group of Seven industrialized countries, according to a KPMG study.
The rising dollar has eroded some of Canada's lead over the United States — from a nine per cent difference in 2004 to a 5.5 per cent difference in 2005.
Lower wages, electricity and facility costs have helped Canada maintain its advantage.
The dollar hit a 14-year high of 88.49 cents U.S. earlier this month, sparking concern that the cost of doing business in Canada and the U.S. will essentially be the same next year.
However, the KPMG report disputed this assumption, stating that the dollar would have to rise about 13 per cent to bring Canadian cities to a break-even point with the U.S. in terms of overall business costs.
The biannual study measures 27 cost components, including labour, taxes, utilities and real estate. This year the study examined the G7 countries — Canada, France, Germany, Italy, Japan, Britain and the U.S. — as well as the Netherlands and Singapore.
Singapore is by far the cheapest place to conduct business of the nine countries with a 22.3-per-cent cost advantage over the U.S., which is ranked seventh among the nine countries. Germany edged out Japan and is now the most expensive country to do business.
Among G7 cities, Montreal, Atlanta, Toronto, Tampa, Fla., and Amsterdam, Netherlands, were among the cheapest, while New York was the most expensive.