Canada's Tax System Under Fire: Economists Push for Radical Overhaul

Canada's economy is under attack from U.S. tariffs and trade disruptions, but economists say long-term policy moves can help inoculate it against the Trump tariffs.

The most powerful policy play would be an overhaul of Canada's tax system, specifically cuts to personal and corporate income taxes, which would improve national competitiveness and fuel economic growth.

Economists argue that these two taxes touch every inch of the economy, making them crucial for improvement. Despite some previous personal income tax cuts, Canadians still pay too much, with tax revenue accounting for 13% of GDP in 2023 compared to 11% in 2010.

Lowering personal and corporate income taxes would encourage increased investment, exports, and economic growth. Corporate income tax cuts are particularly beneficial, as they lower the costs of investments and lead to more productive employees and lower business costs.