High taxes are fuelling the "brain drain," and threaten to derail Canada's future in the high-tech economy, says the head of Canadian telecom powerhouse Nortel.

John Roth has often railed against Canada's tax rate, and Wednesday he took another shot.

Speaking in Ottawa, where he announced an $10 million donation to several Ontario post-secondary institutions, Roth predicted that Canada will miss a golden opportunity to become a leader in the e-commerce market unless it does more to retain its most talented high-tech workers.

The solution, he said, is to relieve the tax burden on Canada's wealthier citizens and high-tech workers.

"The top two per cent pay 25 per cent of the income tax. If that two per cent were to diminish, then the rest of us are going to have to pay that much more tax," Roth said.

"We can see all kinds of Canadians starting Internet companies, but starting them south of the border.

"We need to create a more attractive environment for our Canadians so they can start those companies here and keep them here. And I think the best way to do that would be to address the issue of capital gains tax on stock options."

Stock options are one of the main attractions offered by new U.S. startups that are luring away Canada's brightest talents. In the States, unlike Canada, stock options are tax-exempt.

Roth admitted that much of Canada's brain drain is occurring within his own company.

"We're constituted in Canada and we keep our head office in Canada. But more and more of our people are moving their jobs to the U.S. Hundreds of people a year are moving to the U.S. within Nortel."

About one manager a week is leaving for Nortel's U.S. divisions in order to make more money, he said.

When a manager leaves, Nortel often transfers his or her entire team, sometimes as many as 100 high-paying jobs, Roth said.