Tax Reform and Competitiveness

In recent years, Canada’s tax system has discouraged the investment and risk-taking businesses need to grow while weakening incentives for skilled workers to work more or stay in Canada. Corporate tax rates and capital gains treatment have both moved in the wrong direction, signalling to investors that Canada is a less attractive place to invest. However, if passed, the proposed Productivity Mega Deduction would narrow the gap with the US on investment write-offs. Canada also relies less on more efficient consumption taxes than its peers, leaning instead on the income and investment taxes that do the most economic damage. It has been nearly 40 years since Canada’s last comprehensive tax reform, and that overdue reform is where this agenda begins.