Accelerate Business Tax Reform to Boost Canadian Competitiveness

Canadian firms face two principal and interrelated challenges to their ability to compete globally: lagging productivity performance compared with many of the developed nations, and a strong currency that has been pushed up by higher energy prices. Signal49 Research argues that helping Canadian firms strengthen investment and improve their competitiveness requires business tax reform in a number of areas. Recommended actions include:

• eliminating capital taxes in all jurisdictions as soon as possible;
• cutting corporate income tax rates to position Canada near the bottom of the G7 range;
• smoothing the adjustment in corporate tax rates for small businesses;
• limiting the accelerated capital cost allowance to a three-year window;
• introducing an environmental technology investment tax credit; and
• maintaining federal interest deductibility for investments abroad.