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Remarks to the Standing Committee on Finance for pre-budget consultations

Date: September 26, 2017

Publication Type: Submissions

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Publications Archives: Submissions

Remarks delivered by Brian Kingston, Vice President, International and Fiscal Issues


Mr. Chair, committee members, thank you for the invitation to take part in your pre-budget consultations.

The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies, in all sectors and regions of the country. Our member companies employ 1.7 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.

In the Council’s pre-budget submission to this committee we urged the government to boost Canadian productivity by increasing female labour force participation, supporting women in STEM, enabling seniors to work for longer and helping Canadians navigate the changing job market. While no single policy or program would boost labour productivity across the board, I will highlight two specific policies:


  • The government should replace the existing Child Care Expense Deduction (CCED) with an income-tested, refundable tax credit.
  • Increasing the eligibility age for Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) to 67 from the current 65 would address the reality of an aging society and longer life expectancy.


In our submission we also called on the government to adopt a competitiveness agenda that includes simplifying the tax system and streamlining the regulatory environment. Doing so would position Canada as a more attractive investment destination.

On that point, I would like to share with you the results of a survey we conducted over the summer of our member companies. Sixty-one of Canada’s largest companies took part in the survey. Almost two-thirds – 64 per cent – said that Canada’s investment environment has worsened over the past five years. Only 20 per cent said the investment environment has improved.


To reverse this worrying trend and improve business confidence we recommend the following:

  1. Reforming Canada’s tax system. Our country’s tax competitiveness is slipping, in part because provincial corporate tax rates have crept higher. Canada’s combined federal and provincial corporate tax rate is above the OECD average with the 13th-highest tax burden on investments among the 34 OECD countries.


Mr. Chair, committee members, I know that earlier today you held hearings on the government’s plan to rewrite the tax rules for private corporations. Our President and CEO, The Honourable John Manley, will be submitting our views to Minister Morneau later this week, but one thing is sure: the proposals would do nothing to help Canada’s tax competitiveness.  In fact, they risk driving investors and entrepreneurs away.

Rather than making incremental changes to an already complicated tax system, now is the time for comprehensive review aimed at strengthening fairness and efficiency. In our view, the best way to achieve both objectives is to broaden the tax base and lower rates.  Of equal importance is the need to ensure that the tax system does not favour certain kinds of businesses over others.


  1. Enhancing regulatory certainty. Delays in approving new projects, as well as compliance costs associated with regulations, can impede investment and innovation. To fully support private and public investments in innovation and infrastructure the federal government must make regulatory approval processes more transparent, predictable, fact-based and capable of rendering decisions in a timely manner. Where possible, we urge the government to develop new regulations collaboratively with industry and undertake regular reviews to identify out-dated rules for elimination.


  1. Achieving fiscal sustainability. While the Business Council supports moderately expansionist fiscal policy that allows for investments in productivity-enhancing infrastructure, we are concerned by the federal government’s failure to set a clear target for balancing its budget. The government’s own long-term fiscal projections suggest that it will run deficits through 2050. The next time Canada enters a recession, tax revenues will decline while demands for higher spending will increase. Balancing the budget now would help ensure that Canada is positioned to weather the next downturn.


Thank you for the opportunity to address your Committee. I would be happy to answer any questions.

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