Business Executives Align On Tax Overhaul Demands For 2026 Budget
Business leaders strongly support a major overhaul of Canada’s tax system as a way of boosting economic growth, according to a survey conducted for KPMG ahead of the federal budget.
The survey asked 346 business owners and decision-makers who work at businesses in Canada with annual gross revenue of $10-million to $1-billion or more for their views on what Ottawa should prioritize in this year’s budget.
Nearly nine in 10 respondents said Canada needs to conduct a comprehensive review of the tax system.
“I think the findings are pretty clear in saying that there is considerable business appetite for tax reform in this country,” said Lachlan Wolfers, national leader at KPMG Law and KPMG’s global head of indirect taxes, in an interview.
Further, 88 per cent said the tax system should provide more incentives for investment; 85 per cent said it should be simplified to reduce complexity; 82 per cent said Canada needs to make the tax system more competitive; 81 per cent said personal taxes should be reduced and 63 per cent said corporate tax rates should be reduced.
KPMG’s 2026 federal budget survey, which was released Thursday, was conducted online by Angus Reid between Sept. 22 and Oct. 2.
The respondents were recruited from the Angus Reid Forum, a large-scale panel representative of Canadians. An online survey does not have a margin of error.
The survey findings are in line with a recent series of reports by The Globe and Mail called Tax and Effect, in which numerous business and policy experts have warned Canada’s tax code has become too burdensome and complicated. They argue that an effort to remove carve-outs and simplify the tax system would help attract capital and boost investment.
A common recommendation is to fund lower personal and business taxes by increasing consumption taxes and reducing the number of targeted tax breaks.
Such recommendations from business leaders and economists are not new. Governments of various stripes have been reluctant to trim the many “boutique” or targeted measures that have been added over the years. Targeted measures, which are officially called tax expenditures, are politically attractive to decision-makers because they can be aimed at specific voting demographics and are generally less expensive than broad-based tax cuts.
Finance Minister François-Philippe Champagne has not yet announced a date for the 2026 federal budget, but last year’s was released in early November.
The government made three budget-style tax announcements last month, beginning with an extension of a gas tax break that was set to expire on Labour Day.
Then at the Canada Investment Summit, which Prime Minister Mark Carney hosted in September in Toronto, the government announced a “productivity mega deduction” worth an estimated $36-billion over five years.
Also during the summit, Mr. Champagne announced that the Canada Revenue Agency will prioritize advance income tax ruling requests related to investments of $1-billion or more in Canada, which will help businesses better assess potential tax obligations.
The Liberal Party’s 2025 platform said that a Mark Carney-led government would “conduct an expert review of the corporate tax system based on the principles of fairness, transparency, simplicity, sustainability, and competitiveness.”
But when asked about the status of that pledge during a June interview with The Globe and Mail, Mr. Champagne was non-committal. He said he was more interested in specific proposals for change.
“I know what the issues are. I’m a man of action,” he said, as he was launching pre-budget consultations.
Mr. Champagne’s spokesperson, John Fragos, repeated Wednesday that the government is focused on action, pointing to the recent wave of tax announcements.
“We will continue to work with our partners and industry to advance measures that better advance Canada’s tax competitiveness,” he said in an e-mail.
Mr. Wolfers of KPMG said business leaders are clearly looking for a more substantial overhaul than what has been announced to date. But he said he doesn’t expect to see that in this year’s budget, given the country’s main focus is on trade tensions with the United States. He predicted any new trade deal with the Americans will likely happen after the November midterm elections, but before the end of the calendar year.
“Until this is cleared, you’re not going to see realistic discussions on major tax reforms really coming to the fore. That’s how I see the two issues linked,” he said.
This article was first reported by The Globe and Mail
