Business Leaders Press Ottawa for Top-to-Bottom Overhaul of Tax System
A coalition of business groups, including the Canadian Chamber of Commerce, are calling on Ottawa to commit to a comprehensive review of the tax system when the federal budget is released in two weeks.
The letter, penned to Minister of Finance, François-Philippe Champagne, on Friday, calls for a full-scale review of Canada’s tax system, with the aim of simplifying taxes to support small businesses, creating incentives for entrepreneurs and increasing Canada’s global competitiveness for corporate investment.
“Tax is a critical part of enabling the country to put itself on the right economic footing, and we just can’t wait another decade to modernize our tax system,” said Carol Wilding, president and chief executive of the Chartered Professional Accountants of Ontario.
Led by CPA Ontario, the national coalition consists of eight organizations representing 700,000 professionals and businesses, including the Canadian Federation of Independent Business, Ontario Chamber of Commerce and others.
Ms. Wilding said the trade conflict with the United States has increased the urgency for Canada to address its business competitiveness and productivity.
A July study by KPMG Canada found four in 10 manufacturers have moved, or have considered moving, production to the U.S.
David Pierce, vice-president of government relations for the Canadian Chamber of Commerce, said that while Canada doesn’t attract businesses just on tax policy, “in the end, the CFO has to sign off, and so the numbers and cents have to have to line up.”
“That’s really, I think, the case that our group is making on this,” he said.
Canada has not undertaken a comprehensive review of its tax code in decades. In the interim, critics of the tax system say it’s become overly complex and difficult for businesses and households to navigate, incentivizing some industries and individuals but punishing others.
Ahead of the Nov. 5 budget, several organizations and executives have called for a review or overhaul of the tax system. On Wednesday, National Bank CEO Laurent Ferreira said the federal system needed to be “scrapped” and rewritten.
Daniel Tisch, president and CEO of the Ontario Chamber of Commerce, said the urgency of the economic climate has created momentum for many organizations, such as the coalition, to come together on these calls.
“The biggest thing we can do right now to grow Canada’s economy and its resilience is incentivize businesses to invest in themselves,” Mr. Tisch said.
“Everything, I think, in this call to action is aligned towards that objective.”
CPA Ontario and the Canadian and Ontario chambers of commerce said they have been in discussions over tax reform with different levels of government for several months.
They said they are confident that next month’s budget will include some sort of signalling for tax reform.
“I am hopeful that the government is going to really drill into red tape in tax compliance. I’ll be disappointed if they really don’t take a big swing there,” Mr. Pierce said.
He added that with previous governments, talking about businesses being subject to higher taxes in Canada “was just a non-starter, and the economic activity of our economy suffered as a result.”
In September, Prime Minister Mark Carney introduced a new “productivity mega deduction” that allows companies to immediately write off 100 per cent of the costs of a broad range of capital investments in the first year, marking an expansion from a temporary – and more narrow – policy.
“The productivity mega deduction is something that we welcomed,” Ms. Wilding said, adding that CPA Ontario advocated for such a reform a year ago.
While Mr. Pierce said the mega deduction puts Canada “back on the map” for global investment, “it’s impossible for the business community to just sit back and say we don’t still have work to do because there is.”
This article was first reported by The Globe and Mail
