Canada’s tax system is simply not working anymore. Businesses say it is deterring investment and driving it elsewhere. It is affecting our ability to bring labour, talent and skills to our economy which impacts the ability to expand and compete, leading to slower economic growth.
It has been five decades since Canada undertook a comprehensive review of its tax system (the Carter Royal Commission in the 1960s). Since then, the repeated cutting and pasting of tax policy has left Canadian taxation uncompetitive, cumbersome and inefficient.
Small businesses in particular do not have the dedicated departments to deal with complicated tax filing or manage the onerous burden of dealing with the Canada Revenue Agency (CRA).
Today, technologies, supply chains and competition are completely different and have disrupted entire industries, if not our entire economy. Every country is trying desperately to harness innovation as well as cope with artificial intelligence and the sharing economy as they reshape how we live and work — and how we tax.
Given this competitive environment that we’re in, it’s time for Canada to create a tax system that helps ensure Canada is a preferred destination for the talent, skills and investment needed to compete with new global economic realities.
According to a recent report released by the Canadian chamber “50 Years of Cutting and Pasting”, if one were to measure overall economic performance against three critical pillars — the ability to attract capital, investments in talent and skills, and organizational agility to keep up and compete — Canada would fail on all three counts.
Overall, Canada ranks 41stin the world in the time it takes to prepare and paying taxes. Meanwhile, many of the world’s most developed economies and some of Canada’s largest trading partners are enhancing their competitiveness through targeted tax reforms and thorough reviews of global tax systems.
As the Oakville Chamber has long advocated for on the national stage, now more than ever a royal commission on taxation is essential.
Such a royal commission’s terms should be guided by the principles of tax competitiveness, simplicity, fairness and neutrality. The inquiry should explore the following aspects:
- Broadening the tax base to explore the most effective tax policy solutions
- Adjusting the tax mix to better promote business investment and economic growth
- Bridging the digital tax divide to ensure a fair and equitable tax system
- Simplifying the tax filing experience with digital filing solutions
- Legislating a taxpayer charter of rights to hold CRA accountable
- Providing a representative for small business to resolve CRA conflicts
- Conducting regular comprehensive reviews to keep the system up to date
Given the global tax environment we are in, a royal commission focused on modernizing Canada’s tax system provides a great opportunity. Now more than ever a Royal Commission on taxation is crucial. A modernized tax system is needed to align Canada’s tax system with the economy of today and tomorrow.
