Liberal budget to ignore business calls for tax code overhaul GlobePolitics
The Liberal government will not announce a wide-ranging review of Canada’s tax system in Tuesday’s budget, as Finance Minister Bill Morneau intends to follow up his business-focused fall update with a pre-election budget aimed at individuals.
Canada’s largest business groups have called on Mr. Morneau to launch a royal commission or some other form of independent study of the Canadian tax system, to ensure that the mix of taxes and tax rates are competitive internationally and are helping to attract investment. The update followed months of consultations between Mr. Morneau and the business community as the minister asked for feedback on how the U.S. tax changes were affecting Canadian competitiveness.
“We’re not surprised. But it doesn’t change the reality that we are competing globally for talent and investment and eventually Canada is going to have to deal with this, because it is key to our economic future," he said. Liberal MP Wayne Easter, who chairs the House of Commons finance committee, said there is “no question” the backlash over the small-business tax changes is a factor that explains why the minister is hesitant to support an even larger overhaul.
The report noted that tax changes introduced in the United States in 2018 erased Canada’s long-standing corporate tax advantage. The U.S. changes dropped the combined federal and state corporate tax rate from 38.9 per cent to 25.8 per cent, bringing it below Canada’s combined rate of 26.8 per cent.
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