Comprehensive tax reform in Canada tends to take place once a generation, and we are well past the “best before” date. Our tax system has been stripped of the basic principles of efficiency, neutrality, and transparency due to myriad changes that have been added over the past two decades without regard to how the entire tax system is functioning.
This briefing highlights the need for reform and identifies where to start. The first priority would be to simplify the personal income tax system significantly and make it more transparent—and, in so doing, be able to reduce rates of income taxation. A second priority would be to shift personal taxation away from taxing earned income from work and investment and toward taxing consumption, while the third priority would be to simplify and make more transparent the system for business taxation. A public discussion on the benefits of tax reform and on the highest public policy priorities for our tax system is overdue.