October 25th, 2020

Tax reform needs to be centrepiece of COVID economic recovery strategy


By Lethbridge Herald Opinon on October 8, 2020.

Keith Brown

Business leaders across the country believe Canada’s post-COVID economic recovery will be driven by business and as government considers how best to address this unprecedented challenge, significant tax reform needs to be considered – and more importantly, acted upon. Unfortunately, history shows a chasm between what business leaders say and what politicians and policy makers hear.

Groups like the Canadian Chamber of Commerce have long lobbied the government to reform Canada’s tax system. Now, because of the devastating economic impact of COVID 19, everyone is being forced to think differently – including the federal government.

Many have recognized the inefficiencies of our aging tax system. In fact, there has been no significant structural reform since the Carter Royal Commission created the system in the 1960s. Instead, we have seen governments indulged in over 50 years of putting yet another coat of paint on an outdated tax machine. The result is a taxation system both the International Monetary Fund and the Organization for Economic Co-operation and Development say is smothering Canada’s economic potential.

The three most harmful characteristics of our tax system are:

– Crushingly complex;

– A hindrance to global competitiveness; and

– Grossly unfair.

Our post-COVID economic recovery, and the health of our economy for decades to come, is at stake if the tax system does not become simpler, globally competitive, and equitable.

Simpler. Competitive. Equitable.

On the surface, these reform goals may appear to be universally appealing … who wouldn’t want a system that is simpler to administer and comply with? Why not do everything possible to ensure Canada’s global competitiveness? And, who could disagree with making the system equitable for everyone?

This is the “Big If”: If the parties involved cannot agree on the meaning of these three words, tax reform will continue to be contentious, piecemeal, ineffective, and frustrating.

Take the word “simpler” as an example.

To business owners, a simpler tax system means a substantial amount of relief from accounting expenses, and more importantly, more time and money. Which translates into more freedom to innovate and accelerate business recovery and growth.

For employees, it means much the same; a simpler system would decrease accounting expenses, free up their time, and make it easier to comply … doing their share to close the tax gap as well.

Now, for politicians, when they hear “simpler,” they hear “change.” And, naturally when they hear” change,” they also hear “risk.” Advocating and legislating for change is risky; they could win or lose. And, for those politicians who are not pro-business – or do not recognize how critically important every business is to the Canadian economy in normal times, let alone when the country needs to find a path to sustainable recovery.

What if…

J.K. Galbraith once wrote, “Faced with a choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy with the proof.”

What if instead, all parties involved can agree on the meaning of a few simple words? This seemingly basic agreement is perhaps the key that will empower permanent, positive change.

For the sake of the country and all Canadians, I hope we can.

Keith Brown is a member of the campaign committee driving the Canadian Chamber of Commerce’s efforts to reform Canada’s tax system to ensure inclusive post COVID recovery and growth. He is also the chair of the Conference for Advanced Life Underwriting (CALU), Tax Policy Committee, and is based in Vancouver.

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chris

I’ve had this conversation for 20 years, and it’s been going on far longer than that. It’s not that no one is willing, but I find people pushing these goals have so little understanding of the tax system they make assumptions that don’t cover what or as much as they think they do. I’ve seen proponents of a flat tax stumped when they find out just how much work and definitions are involved into just getting to one’s income. Some can’t even argue against why most of those rules are in there once long legalese definitions reduced to plain language as a lot really is just varied ways to valuate non cash income or expenses. They have even fewer answers about dealing with regulations about international income.

I always love to hear ideas, but I wish there were more in the form of: here’s the specific area of the code. Here’s a way to make it easier. And here’s how we make sure it isn’t open to be abused by ambiguity.

Last edited 16 days ago by chris
Southern Albertan

This brings to mind the need for tax reform in Alberta, i.e.more fair taxation. Already corporate tax rates are too low, will not generate more employment, etc., as history has proven over and over, and the rest of us plebes can carry the tax load. There is also the matter of the AB UCP not tending to developing other forms of revenue now that there will not be any more oil and gas booms. And, we do not want our province being torn up by more coal activity either. Again, even our right wing government Saskatchewan neighbour recently increased their PST from 5% to 6%….sort of speaks volumes on what the AB UCP need to do. A 6% PST, for Alberta, would bring in about $11 billion/year. We did have our own carbon tax in lieu of a PST which was being reinvested back into the province but that got kaiboshed and now we’re stuck with the federal one. Alberta is not likely to win on this with a Supreme Court decision either.

biff

long been time for the .5% tax on all financial transactions, and zero income tax. it is the only way the very wealthiest will ever be forced to pay their fair share, and it might even put a dent in algorithmic trading that is sucking the life out of our economy.



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