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Trump victory means Canada must get serious about tax reform

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5 minute read

From the Fraser Institute

By Jake Fuss and Alex Whalen

Following Donald Trump’s victory in Tuesday’s presidential election, lower taxes for both U.S. businesses and individuals will be at the top of his administration’s agenda. Meanwhile, Prime Minister Trudeau has raised taxes on businesses and individuals, including with his recent capital gains tax hike.

Clearly, Canada and the United States are now moving in opposite directions on tax policy. To prevent Canada from falling even further behind the U.S., policymakers in Ottawa and across Canada should swiftly increase our tax competitiveness.

Before the U.S. election, Canada was already considered a high-tax country that made it hard to do business. Canada’s top combined (federal and provincial) personal income tax rate (as represented by Ontario) ranked fifth-highest out of 38 high-income industrialized (OECD) countries in 2022 (the latest year of available data). And last year, Canadians in every province, across most of the income spectrum, faced higher personal income tax rates than Americans in nearly every U.S. state.

Our higher income tax rates make it harder to attract and retain high-skilled workers including doctors, engineers and entrepreneurs. High tax rates also reduce the incentives to save, invest and start a business—all key drivers of prosperity.

No doubt, we need reform now. To close the tax gap and increase our competitiveness, the federal government should reduce personal income tax rates. One option is to reduce the top rate from 33.0 per cent back down to 29.0 per cent (the rate before the Trudeau government increased it) and eliminate the three middle-income tax rates of 20.5 per cent, 26.0 per cent and 29.0 per cent.

These changes would establish a new personal income tax landscape with just two federal rates. Nearly all Canadians would face a personal income tax rate of 15.0 per cent, while top earners would pay a marginal tax rate of 29.0 per cent.

On business taxes, Canada’s rates are also higher than the global average and uncompetitive  compared to the U.S., which makes it difficult to attract business investment and corporate headquarters that provide well-paid jobs and enhance living standards. According to Trump’s campaign promises, he plans to lower the federal business tax rate from 21 per cent to 20 per cent (and reduce the rate to 15 per cent for companies that make their products in the U.S.). Trump must work with congress to implement these changes, but barring any change in Canadian policy, business tax cuts in the U.S. will intensify Canada’s net outflow of business investment and corporate headquarters to the U.S.

The federal government should respond by lowering Canada’s business tax rate to match Trump’s plan. Moreover, Ottawa should (in coordination with the provinces) change tax policy to only tax business profits that are not reinvested in the company—that is, tax dividend payments, share buybacks and bonuses but don’t touch profits that are reinvested into the company (this type of business taxation has helped supercharge the economy in Estonia). These reforms would encourage greater business investment and ultimately raise living standards for Canadians. Finally, given Canada’s massive outflow of business investment, the government should (at a minimum) reverse the recent federal capital gains hike.

Of course, there’s much to quibble with in Trump’s policies. For example, his tariffs will hurt the U.S. economy (and likely Canada’s economy), and tax cuts without spending reductions and deficit-reduction will simply defer tax hikes into the future. But while policymakers in Ottawa can’t control U.S. policy, Trump’s tax plan will significantly exacerbate Canada’s competitiveness problem. We can’t afford to sit idle and do nothing. Ottawa should act swiftly in coordination with the provinces and pursue bold pro-growth tax reform for the benefit of Canadians.

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Can’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!

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Watch Canada’s Prime Minister tell an anti-poverty group, your ability to buy “groceries for my kids” is less important than sacrificing to pay his carbon tax.

In case you still thought there might be even the tiniest chance Justin Trudeau might come around.. well this settles it. He is as they say, ‘beyond the pale’.

Sure we’ve pieced this together over the last number of years, but it’s still SHOCKING to see him say it directly, proclaim it proudly. This week Trudeau received applause from an audience of the intellectually suffering at something called the “Global Citizen Now” panel discussion on the sidelines of the G20 Leaders’ Summit in Rio.

Much appreciation for the first short video below to Opposition Leader Pierre Poilievre who shared his ferocious reaction to Trudeau’s anti-human comments, challenging the current PM to call an immediate election.

Or course there will be no quick election call. To Justin, it’s more important to cling to the undercarriage of a taxpayer funded jet so he can fly the globe stunning audiences unfortunately already stunned by their utter terror of losing the planet.

In their horror at their inability to turn the switch off and let us all freeze/starve to death this winter, they applaud lovingly for their intellectual leader/sock model as he describes how hard it is to convince angry, hungry people they really need to suck it up.

If only he read a history book.. any history book.. apologies, any book at all. Truly even spending some time with the literary version of an Al Gore video rant would at lest keep JT occupied so he couldn’t speak for a few moments. I’m pretty sure every time he opens his mouth, the temperature in Canada rises as millions of frustrated hotheads (hello there) explode, spewing steam high up into the upper atmosphere where water particles do much more damage to our planet than the final exhaling of a non grocery-eating-planet-loving-Canadian.

Watch Pierre Poilievre’s video and assuage the ensuing headache by mapping out your route to a polling booth. If this doesn’t sell a couple of those ‘Axe the Tax’ shirts for the Poilievre team, well.. enjoy your stroll to the foodbank.

Here’s a link to his entire discussion. If you have a strong stomach and 20 minutes of your life to donate to a higher cause… No silly, not the intended cause of the anti-poverty group… But to the intellectual cause of understanding just how twisted the logic has become for those who fly around the world to wine and dine, only to break long enough to tell us they think it’s perfectly fine if we can’t buy groceries for our kids.

By the way, please save a bit of your shock and disappointment for the hapless host of the ‘anti-poverty’ Global Citizen. This was apparently on the sidelines of a G20 Summit.  I would expect this drivel to be called out at a respectable middle school debate. Apparently the ‘anti-poverty’ Global Citizen people aren’t overly concerned with poverty. Do we need to say that not being able to afford groceries is in fact THE definition of poverty?  Or course not. It would be much easier for them to change their name to Former Global Citizens.

You were warned.

Prime Minister Justin Trudeau sits down for a conversation with Michael Scheldrick, co-founder of the anti-poverty group Global Citizen, on the sidelines of the G20 Leaders’ Summit Rio de Janeiro, Brazil.

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Business

Carbon tax bureaucracy costs taxpayers $800 million

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From the Canadian Taxpayers Federation

By Ryan Thorpe

The cost of administering the federal carbon tax and rebate scheme has risen to $283 million since it was imposed in 2019, according to government records obtained by the Canadian Taxpayers Federation.

By 2030, the cost of administering the carbon tax is expected to total $796 million, according to the records.

“Not only does the carbon tax make our gas, heating and groceries more expensive, but taxpayers are also hit with a big bill to fund Prime Minister Justin Trudeau’s battalion of carbon tax bureaucrats,” said Franco Terrazzano, CTF Federal Director. “Trudeau should make life more affordable and slash the cost of the bureaucracy by scrapping the carbon tax.”

The government records were released in response to an order paper question from Conservative MP John Barlow (Foothills).

The carbon tax and rebate scheme cost taxpayers $84 million in 2023, according to the records.

There were 461 federal bureaucrats tasked with administering the carbon tax and rebate scheme last year, according to the records.

The CTF previously reported administering the carbon tax cost taxpayers $199 million between 2019 and 2022.

Projected costs for administering the carbon tax and rebate scheme between 2024 and 2030 are $513 million, according to the records.

That would bring total administration costs for the carbon tax and rebate scheme up to $796 million by 2030.

But the true hit to taxpayers is even higher, as the records do not include costs associated with the Fuel Charge Tax Credit for Farmers or the Canada Carbon Rebate for Small Businesses.

“It’s magic math to believe the feds can raise taxes, skim hundreds-of-millions off the top to hire hundreds of new bureaucrats and then somehow make everyone better off with rebates,” Terrazzano said.

The carbon tax will cost the average household up to $399 this year more than the rebates, according to the Parliamentary Budget Officer, the government’s independent, non-partisan budget watchdog.

The PBO also notes that, “Canada’s own emissions are not large enough to materially impact climate change.”

The government also charges its GST on top of the carbon tax. The PBO report shows this carbon tax-on-tax will cost taxpayers $400 million this year. That money isn’t rebated back to Canadians.

The carbon tax currently costs 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.

By 2030, the carbon tax will cost 37 cents per litre of gasoline, 45 cents per litre of diesel and 32 cents per cubic metre of natural gas.

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