Canada's Economists Urge Tax Reform to Protect Economy

Economists are urging the Canadian government to overhaul the country's tax system as a way to protect the economy from US tariffs and fuel national growth.

The federal government has been offering short-term support payments for companies and workers affected by American tariffs, but economists say long-term policy changes are needed to inoculate the economy against future threats.

Jack Mintz, president at the University of Calgary's School of Public Policy, believes a major overhaul of Canada's tax system is necessary. 'Canada really needs to do something large on tax reform,' he said. 'I think it's even more crucial today.'

The most powerful policy play would be reducing personal and corporate income taxes, which could improve national competitiveness and encourage increased investment and exports.

Economists point out that Canada now relies heavily on personal income taxes for revenue, with this source of income accounting for 13% of GDP in 2023, up from 11% in 2010. They argue that reducing these taxes would boost economic growth by putting more money into people's pockets.

The Liberal government may be leaning towards making changes to the tax system, having promised a review of corporate taxes during last year's federal election campaign.