The last time Canada undertook a comprehensive review of its tax system, humankind had yet to set foot on the moon. In the five decades since, a slap-dash patchwork approach has left Canadian taxation uncompetitive, cumbersome and inefficient.

“By any measure, Canada’s tax system is a failure to Canadians and the businesses that employ them, deterring investment and the attraction of top talent, and wasting valuable time on compliance. It is time to acknowledge that Canada’s tax system is as useful today as a damaged floppy disk: it’s just not useful to anyone in the age of the Cloud. We need to build, from the ground up, a modernized tax structure for the economy of today and tomorrow,” said the Honourable Perrin Beatty, President and CEO of the Canadian Chamber of Commerce.

The Canadian Chamber of Commerce report, 50 Years of Cutting and Pasting: Modernizing Canada’s Tax System, calls for a comprehensive review of the entire tax system through a Royal Commission.

The Canadian Chamber of Commerce points out that many of the world’s most developed economies – and some of Canada’s largest trading partners – have implemented or are pursuing major tax reforms. From the United States to Belgium, Hong Kong and Japan, many developed countries have announced targeted tax reform initiatives since 2015. The U.K., New Zealand and Australia have also put their tax systems up for full-scale reviews over the past decade.

“Canada’s biggest trading partners are also its biggest competitors for attracting investment and talent, and we cannot continue crawling forward while other countries leap ahead in tax policy. While Canada does not control many of the factors that can influence competitiveness, we do control some and domestic tax policy is one of them,” said Dr. Trevin Stratton, Chief Economist for the Canadian Chamber and author of the report.

“The usual calls for tax reform are about reducing tax rates, but the Chamber is calling for a more thoughtful approach that focuses on getting the tax mix right and broadening the tax base,” added Stratton. The report notes that simplifying the tax system by making it easier to comply with, particularly for small businesses, should be part of a comprehensive review.

“Ultimately the report is about recognizing that that the pace of change in today’s economy requires capital investments, investments in talent, and organizational agility to keep up and compete. Fostering a tax system that promotes these prosperity drivers will help policy makers support businesses and position them for success,” concluded Dr. Stratton.

The report was based on consultations, interviews and roundtables with business leaders and senior tax practitioners, in addition to the tax policy resolutions from Canada’s chamber of commerce network representing over 200,000 businesses.

To read – 50 Years of Cutting and Pasting: Modernizing Canada’s Tax System – click here

Source: CCC