Poor productivity is Canada’s most pressing economic ailment – that’s because of our antiquated tax system
Steve Suarez is a partner at law firm Borden Ladner Gervais LLP, and the co-chair of the economics and taxation committee of the Canadian Chamber of Commerce.
We tax some things too much and others not enough. The allocation of taxing rights among different levels of government is completely dysfunctional, as Toronto’s current travails show . Our tax system is no longer competitive with other countries, many of whom have comprehensively redesigned theirs in the past decade.
The government is proposing a retroactively-imposed digital services tax on certain online platforms that will provoke our largest trading partner – the United States, where those web companies are based – into damaging trade retaliation. The government is also participating in a quixotic attempt to create a worldwide system of taxation among dozens of disparate countries.
By looking at what others have done and adapting it to our own circumstances, we can have the best of all worlds without starting from scratch. While there will be significant institutional resistance to major change from those with vested interests in the status quo, as a country we need to rise above the inertia of simply continuing to do whatever we’re doing just because that’s how we’ve always done it.
Beyond the right objectives, we need practical and efficient design: Rigid adherence to perceived purity of tax policy ideology is counterproductive in a real-world environment.
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