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Canada urgently needs a cleaner, simpler and more efficient tax system, one that promotes growth and strengthens our country’s competitive advantage in the global economy, says The Honourable John Manley, President and CEO of the Business Council of Canada.
“For the most part, revisions to the Canadian tax system over the past 50 years have been piecemeal,” Mr. Manley said today at a conference in Toronto organized by the University of Calgary School of Public Policy and the Canadian Tax Federation. A copy of his remarks is available here.
As one illustration of increasing tax complexity, Mr. Manley pointed to the results of a recent study by global accounting firm PwC, which found that large corporations in Canada pay – or collect and remit – at least 68 different kinds of taxes to the three levels of government.
On average, each of the 89 companies that participated in the study employed 19 full-time-equivalent staff and spent $4 million annually to comply with Canadian tax regulations.
“The billions of dollars that companies across Canada spend each year on tax compliance is money that does nothing for our economy. It’s money that can’t be invested in new factories, equipment or employee training,” Mr. Manley said.
“High compliance costs make our industries less productive, not more. And of course, tax complexity imposes higher monitoring and enforcement costs on government – costs that are passed on to individual and business taxpayers in the form of higher rates.”
He added that Canada could learn important lessons from the recent drive for tax reform and tax simplification in the United Kingdom. Among other measures, the UK has harmonized the standard business tax rate and the rate paid by small firms, ensuring that the tax system does not favour one type of company over others. “The purpose of this is not to penalize small business,” Mr. Manley said, “but to reward growth and the attainment of scale from which our economy benefits.”
He noted that Liberal MP Wayne Easter, the Chair of the House of Commons Finance Committee, recently added his voice to the growing number of economists and policy specialists who favour an arm’s length, comprehensive review of the tax code led by an independent group of experts.
“The question I ask is simply this: What are we waiting for?,” Mr. Manley said.
“We should be asking ourselves whether the tax system that successive generations of Canadians built, revised and amended in the 20th century is still the right one to meet the challenges our country faces today and is likely to face in the future.”
Copies of the speech are available on the Business Council website.
About the Business Council of Canada
Founded in 1976, the Business Council of Canada is the senior voice of Canada’s business community, representing 150 chief executives and leading entrepreneurs in all sectors and regions of the country. Member companies employ 1.4 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development. Through supply chain partnerships, service contracts and mentoring programs, Business Council members support many hundreds of thousands of small businesses and entrepreneurs in communities of all sizes across Canada.