At a time when Canada, identical to each different nation, is on the lookout for extremely expert employees, our tax charges make it harder for them to decide on to work right here. That is equally true for Canadian residents and potential new immigrants. Anecdotally, I’m listening to increasingly from purchasers and folks in my community that their kids who’ve chosen to review overseas aren’t coming again residence as a result of they will earn and hold extra of their revenue elsewhere. I’m not stunned.
Our excessive tax charges additionally make it onerous to draw funding into our nation and for current companies to increase. That’s important to enhance productiveness, innovate, create jobs and compete towards friends in lower-tax jurisdictions.
The Allan Small Monetary Present, that includes three tax consultants—Fred O’Riordan of Ernst & Younger, Jake Fuss of The Fraser Institute and Tim Cestnick, a Globe and Mail tax columnist and CEO of Our Household Workplace—initially aired on September 18, 2024.
Let’s discover a flat tax
We want a greater, extra considerate tax technique as a rustic—one that’s truthful for everybody. Canada has not taken a tough, complete have a look at our tax system since 1962, when Prime Minister John Diefenbaker appointed the Royal Commission on Taxation.
On the very least, it could be a possibility to streamline what’s a really difficult system, as I see it. At finest, it could level to a greater manner ahead. One potential option to streamline our tax system, and make it extra environment friendly and truthful, is to implement a flat tax charge throughout the board. This isn’t a brand new idea for taxation.
For the previous decade, Estonia has reaped the rewards of getting probably the most aggressive, easy and clear tax system in the OECD. Its private and company tax charges are 20%. It’s set to extend to 22% in 2025 to match its consumption tax, which elevated from 20% to 22% in 2024. Within the case of people, the tax charge doesn’t apply to dividend revenue; and companies solely pay tax on distributed income.
The outcome: the nation has been very profitable attracting startups and funding.
And we don’t have to go away Canada for an instance of a flat tax. From 2001 to 2014, Alberta had a single 10% private and enterprise revenue tax charge, dubbed the Alberta Tax Advantage. The Fraser Institute is now calling for Alberta to implement an excellent decrease flat tax of 8% on private and enterprise revenue to draw folks, companies and funding within the province and to encourage spending. When Canadians pay much less tax, they’ve extra to spend and put again into the Canadian economic system.
One other potential manner to make sure tax equity and generate income to satisfy authorities duties is to foster extra alternatives for the general public, enterprise and authorities to collaborate. For instance, why not give people and companies the power to spend money on infrastructure initiatives, corresponding to new roads and highways, and get a charge of return over time.
