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Canadians should be gratified that a new study shows we have some of the lowest corporate taxes in the developed world, making us an attractive place for businesses to locate. Ottawa deserves credit for eliminating capital taxes and lowering the federal corporate tax rate, and many provinces have helped with cuts to their rates. But it takes more than low taxes to draw international investment.

The study, from the consulting firm KPMG, looked at the total tax paid by companies, including corporate income tax, levies on goods and property, and taxes on capital and labour. Overall, Canada had the third-lowest taxes among the group of 10 countries, consisting of all the members of the G7 plus Australia, the Netherlands and Mexico. Only Mexico and the Netherlands had lower tax rates. Canada was the lowest of the G7, coming ahead of the United States, which finished fifth.

But the KPMG research also looked well beyond tax rates, because these are not the largest factor that businesses weigh when they look for a place to set up shop. On average, companies say that tax makes up less than one-fifth of their "location-sensitive" costs.

Other factors are more important, and at the top of the list is the expense of hiring labour. Fortunately Canada fared well on this front too, coming in at a respectable third place behind Mexico and the United States. While our wages are high, we gain from our comparatively low level of employer-paid benefits. Canada also gets high marks for our fairly low prices for electricity, natural gas and telecommunications services.

The consultants also ranked the countries by their quality of life, examining matters such as crime rates and the quality of public schools. It's those factors that help companies attract the very best employees. Canada ranks highly among the 10 countries on some of these indicators (we're number two on most education measures, just behind Australia) and not so well on others (our homicide rate is the third worst).

It's important that our political leaders remember that considerably more thought goes into choosing where to locate a business than just considering tax rates. Some of the most important features that draw investment - such as transportation infrastructure and health care for employees - require substantial government spending, and thus a strong tax base. Ensuring that corporate taxes remain internationally competitive is important, but will not be enough by itself to make a country, a province, or an individual city an attractive location.