Canada's Failing Tax System Threatens Sovereignty Amidst US Aggression

Canada's tax system is failing to support its economy and sovereignty in the face of aggressive international competition, particularly from the US. According to Steve Suarez, partner at BLG and co-chair of the Taxation and Economics Committee of the Canadian Chamber of Commerce, Canada's tax policy has been relatively passive, designed to tax whatever economic activity happens to occur.

Historically, very few recent tax initiatives have been economically stimulative, instead focusing on raising revenue or enacting complex OECD-inspired anti-avoidance rules. This is particularly evident in the US, which has levied tariffs on imports from virtually every other country to encourage production to move to America and join the US tax base.

A July 2026 KPMG survey of 275 Canadian manufacturers found that 29% have relocated to the US due to these policies. The US also enacted a massive tax stimulus program in July 2025, reducing the after-tax cost of business investment by expanding and accelerating expense deductibility, subsidizing exports of intellectual property-related goods and services via a lower tax rate, and exempting some profits from taxation altogether.

Canada's competitors are aggressively using tax policy to further their economic self-interest at our expense. Suarez argues that it's time for Canada to invest in its own tax base by adopting policies that actively support its broader economic objectives, rather than just waiting to take a cut of whatever develops.