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 risk taking.
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.
