These eight recommendations are based on the consultations conducted through insight and input from the Canadian Chamber of Commerce network and the policy resolutions passed.
All eight recommendations should be explored in the context of a comprehensive review.
Appoint a Royal Commission to conduct a comprehensive review of the Canadian tax system
The federal government should appoint a Royal Commission to undertake a whole-of-system review of taxation in Canada. The Royal Commission’s terms of reference should be guided by the principles of tax competitiveness, simplicity, fairness and neutrality. The inquiry should have the objective of, within expedient timelines, raising sufficient revenues to fund public spending without imposing excessive costs on the Canadian economy.
Broaden the tax base to explore the most impactful tax policy solutions
The federal government should consider base-broadening measures to increase the amount of economic activity subject to taxation. Ending preferential tax treatment—such as unwarranted deductions and exclusions—would create a simpler and more equitable tax code, eliminate distortionary provisions and encourage a more efficient allocation of resources. Perhaps most importantly, broadening the tax base would provide the federal government with the flexibility to improve Canadian tax competitiveness in a fiscally sustainable way.
Adjust the tax mix to better promote business investment and economic growth
The federal government should examine what tax mix will maximize investment in the capital, technologies and skills needed to enhance Canadian economic growth and innovation. Different types of taxation have varying impacts on investment, growth and the progressiveness of the tax system. The federal government should assess how tax mixes in other jurisdictions impact investment and growth, and what best practices can be applied in Canada.
Bridge the digital tax divide to ensure a fair and equitable tax system
The federal government should require foreign digital companies to charge an appropriate value-added tax (e.g., GST/HST) on sales related to the purchase of their services in Canada. Foreign digital companies should also be required to register with the CRA and remit the revenues from these taxes to the proper tax authorities. Bridging the digital tax divide will require the federal government to examine how to apply value-added taxes evenly and predictably across provinces and sectors in a digital world, including an assessment of potential revenue from foreign digital companies.
Further simplify the tax filing experience with digital filing solutions
The federal government should facilitate further collaboration and digital innovation between the tax preparation and software industry and the CRA. This would involve further clarifying the respective roles and commitments of each party, as well as ensuring that a comprehensive review does not affect the sustainability of the ecosystem where vendors compete on the ease of their user interface and features provided. Innovative, secure and convenient digital filing services should continue to result in federal government savings, as well as free up CRA resources to focus its efforts on critical issues such as investigations and tax evasion.
Legislate a taxpayer charter of rights to hold CRA accountable
The federal government should replace the Taxpayer Bill of Rights with a legislated taxpayer charter of rights that provides recourse for taxpayers in the case of CRA wrongdoing. Any review of the Canadian tax system must also look at those responsible for enforcing it. A taxpayer charter of rights would provide remedies in cases where protocols are proven to be unnecessarily cumbersome or costly, or where the taxpayer is mistreated. Establishing a legislated taxpayer charter of rights would promote fairness and accountability, including clearer guidelines and better training of CRA staff.
Provide a representative for small business to resolve conflicts with CRA
The federal government should provide small businesses with some form of intermediary assistance to understand and navigate tax compliance. This assistance should be structured to enable greater effectiveness and should not require the additional expense of a tax accountant or lawyer to resolve. While a chief service officer has been appointed at CRA and a service advisory panel is being established, small businesses have unique informational and service needs that require a designated representative. By assigning a case officer with the appropriate training to small business files, the federal government can make tax compliance faster, cheaper and simpler.
Conduct regular comprehensive reviews to keep the tax system up to date
The federal government should ensure the tax system is reviewed at regular intervals to prevent it from becoming overly complicated, uncompetitive or outdated. The speed of change is accelerating and Canada’s tax system must reflect ongoing economic developments. An independent, impartial body of tax experts should conduct regular reviews to determine whether the tax system is keeping pace with advancements in global tax policy, tax competitiveness trends and new technologies.