An expert panel might be just the right medicine to get us back on the path to a tax system that would support growth, simplicity and fairness, writes Jack Mintz in the Financial Post. Below is an excerpt from the article, which can be read in full here.
By Jack Mintz, September 3, 2021
One intriguing promise in the Conservative platform is to establish an expert panel to study comprehensive tax reform to improve competitiveness, bring down tax rates and simplify rules. I say “intriguing” because the rest of the Conservative platform is chock-full of tax credits and new tax gimmicks and wrinkles that in many instances would make the tax system less simple, fair and efficient.
I counted at least 31 tax promises in the platform. Some are sensibly temporary and aim to get people back to work, such as the “Rebuild Main Street” tax credit (a 25 per cent credit for up to $100,000 of investment in a small business) and the “Canadian Investment Accelerator” of five per cent over two years. Others are permanent, such as the “patent box” (a one-half exemption for income from patents held in Canada), the “Employee Ownership Trust” (capital gains relief for shares donated by owners to a trust for employee ownership), flow-through shares for equity investments in tech companies and a tax on digital sales of large tech companies, luxury non-electric vehicles, secondary luxury homes and frequent flyers.
What would an expert panel recommend in a comprehensive review of the tax system? I had personal experience dealing with these issues when I chaired a federal business tax review in 1997. The panel started off with basic principles. Business taxes should discourage work, investment and risk-taking as little as possible. Tax reform should lead to lower compliance and administrative costs. Business taxes should be fair and competitive, which is best achieved by having similar tax burdens on all business activities at the lowest possible rates. The panel’s recommendations, some of which were controversial, aimed to scale back things like preferential manufacturing and small business tax rates in favour of lower general corporate income tax rates. We even looked at a shift from the federal gasoline tax to a broad-based environment tax that would also help reduce business tax rates.