Tax changes in the U.S., the Auditor General’s report on the Canada Revenue Agency and domestic tax reforms announced by Prime Minister Justin Trudeau’s government, are new reasons why the Liberals should immediately appoint a royal commission on taxation.
Its results and recommendations need to be ready before the next federal election, so we can have a proper debate about how and when to tax Canadians.
Last July, Finance Minister Bill Morneau kicked the hornets’ nest of taxation by attacking small business owners in an announcement making changes to the way private corporations are taxed. Unfortunately, he did so in in a way that pitted Canadians against each other.
In November, I wrote that it was time for “Carter Deux.” It has been 55 years since then-prime minister John Diefenbaker appointed Kenneth Carter to review Canada’s taxation system and more than a half century since it reported in 1966 that “a buck is a buck.”
Given the massive and transformational changes to the economy, technology and the very sophisticated tax planning today that can yield unwelcome if not illegal results, I argued we should start considering what our tax system should look like in the 21st century.
Now there are three new reasons why the government needs to act urgently.
First, mid-November saw the release of Auditor General Michael Ferguson’s report, which included a rebuke of the Canada Revenue Agency (CRA). The audit of the CRA’s call centres found that customer service is abysmal.
Ferguson reported that taxpayers had to call about four times in a week just to get through to the CRA. He found only 36% of callers were able to connect and that 30% of the answers by staff were incorrect. Ferguson concluded: “When I look at these audits together, I find that once again, I’m struck by the fact that departments don’t consider the results of their programs and services from the point of view of the citizens they serve.”
Second, in December, the U.S. Senate enacted drastic tax code changes President Donald Trump achieved his first major legislative victory. Canada has lost many of the tax advantages it once had over the U.S. when it comes to business and investment because the Americans have lowered and changed many of their taxes.
It’s time for Canada to make its own changes to compete with the U.S. and other countries in order to attract new investment and jobs.
Third, in mid-December, we saw the Liberals announce their own tax changes…