This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, November 17, 2025
Today’s Liberals are not the first federal government to try to nation-build. In the weeks before the September 1984 federal election, deputy minister of finance Marshall Cohen prepared policies the new government could use, whichever party it might be, to improve Canada’s poor economic performance, including its slowly growing productivity. It was a much different approach than we see in the 2025 budget, in which nation-building will be directed by the government rather than the market. Which approach best serves economic growth?
Cohen’s platform included corporate tax reform that reduced rates and broadened the tax base by trimming exemptions and deductions. As finance minister Michael Wilson phrased it in his 1985 budget, which enacted many of Cohen’s suggestions: “The proposals advanced for discussion are not designed to increase revenues from corporations, but rather to raise the same tax funds in a simpler manner while reducing government intervention in market decisions and narrowing differences in tax burden across industrial sectors and types of investment.”
Under the government of Pierre Trudeau, the corporate tax favoured manufacturing and processing, in part to offset a manufacturers’ sales tax that hurt the industry’s competitiveness. After the U.S. had introduced an incentive for manufacturing exports in 1971, Canada had responded with both accelerated depreciation and a 10-point cut in the corporate income tax rate for manufacturing and processing. Thirty years later, the Chrétien government finally eliminated the preferential tax rate (though Ontario has kept it). But accelerated depreciation remains — even though the sector-neutral GST replaced the manufacturers’ sales tax in 1991.
***TO READ THE FULL ARTICLE, VISIT THE FINANCIAL POST HERE***
Jack Mintz is the President’s Fellow at the University of Calgary’s school of public policy and a distinguished fellow at the Macdonald-Laurier Institute.
