The papers in this book draw on insights about the
nature and effects of taxation that were developed since Canada's
last major tax reform and incorporates empirical information
about the incentive effects of taxes on work, investment, and
Suggested reforms include the removal of all limits on RRSP
savings, which would increase incentives for Canadians to save
for their own retirements. In addition, the authors advocate the
replacement of the present personal and corporate income tax
structure with an integrated flat tax. The flattening of the
personal income tax structure and overall lower rates would
stimulate work effort.
Also key is the elimination of the corporate capital tax. This
last reform is particularly important because the U.S. government
has recently announced its intention to eliminate the existing
double taxation of business profits. Canada's system of tax
credits presently eliminates this double taxation only partially.
Unless these taxes on capital are eliminated, the pending U.S.
policy will do substantial harm to the Canadian economy, as even
more capital will move to the United States, the Canadian stock
market will languish, investment and productivity growth will be
harmed and the Canadian dollar will depreciate even further.
The book also presents evidence on the effects of recent tax
reforms on economic performance, using Ireland, Alberta, and
Ontario as examples. In all of these jurisdictions, lower taxes
combined with tax reform and other measures liberalizing the
economy, have resulted in higher economic growth and ultimately
higher tax revenues.