10 tax-related policies that would help Canada win

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Mark Carney and Pierre Poilievre are significantly different, but the former seems to have no shame about copying taxation policy proposals from the Conservatives.

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Recent announcements by Carney about eliminating the GST on certain new housing builds, cancelling the capital gains proposals, eliminating the consumer carbon tax and now a one per cent personal tax cut for the bottom personal tax bracket are all previously announced signature policies of the Conservatives.

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The celebration by the Liberal Party about these announcements is a master class in hypocrisy and short-term memory.

Given the newness of Carney’s leadership, let’s unpack what we can expect from many of his policies, especially taxation, along with his leadership credentials.

While Carney likes to brag that he was born in the Northwest Territories and grew up in Edmonton, such facts don’t make one more empathetic to the average Canadian’s struggles to put food on the table. His entire career has been carried out in the halls of central banks, advisory positions with various governments, the United Nations and most recently in the boardroom of one of Canada’s largest companies (where he was part of the executive team that made the decision to move its headquarters from Canada to the United States).

Carney’s world of central banks and corporate boardrooms feels distant from the daily grind of most Canadians.

I have worked with some of the most credentialed and well-experienced people over my long career. Do those credentials make one automatically well suited to lead, particularly a country? Hardly.

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Many of those excellent professionals make poor leaders. Leadership is a complex art and science that takes years and years of practice and improvement to be good at. Without such practice and a self-awareness of the need for empathetic personal growth, many turn arrogant rather than evolve into good leaders. Recent press conferences by Carney seem to indicate that he might fall into that latter camp.

While many are hailing his educational achievements and impressive career positions as moments of economic credibility and as a saviour for the Liberal Party, the reality of his achievements is far less inspiring.

Carney’s track record, writings and speeches suggest a future of big government, more income and wealth redistribution and policies that prioritize climate ideology over economic growth should the Liberals get elected.

Carney’s tenures as governor of the Bank of Canada from 2008 to 2013 and the Bank of England from 2013 to 2020 have shown him to be a big believer in government-led economics.

In particular, during his time in the United Kingdom, he pushed for aggressive climate-related financial regulations, which, of course, come with increased compliance burdens and costs. His policies supported excessive government stimulus spending combined with low interest rates that ultimately did nothing to deal with productivity challenges.

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Carney has repeatedly emphasized redistribution over wealth creation, which, again, signals a preference for government intervention over free markets. With his preference for large government intervention, we can expect more taxes, regulation, government bloat and economic intervention. Will we see tax reform? Highly doubtful.

If you liked the Justin Trudeau government’s tax-and-spend, debt-fuelled approach, you’ll love Carney’s because it’s likely going to be more of the same, but with a slicker presentation.

For example, his proposal to separate “capital” amounts from the “operational budget,” an old accounting trick designed to hide increased spending, is slick and nontransparent. He is a bureaucrat’s dream and a taxpayer’s nightmare.

With that in mind, I expect the Liberals’ upcoming policy platform to feature more spending and targeted tax hikes. Their targets? The usual bogeymen: wealthy Canadians or climate-killing businesses. Or the introduction of some other politically motivated tax measures that the current prime minister’s office is famous for.

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What I’ll be looking for is taxation and economic policies that:

• Put money back in the pocketbooks of hard-working and average Canadians;
• Enable and encourage entrepreneurs and large businesses to expand and reinvest in Canada;
• Encourage less government, not more, so our country’s excellent entrepreneurs — and budding new ones — feel empowered and emboldened to risk and invest capital to create jobs for the benefit of our country;
• Encourage successful Canadians to want to stay in Canada, invest here and not leave;
• Attract other successful people and businesses from around the world to invest in Canada to help create jobs and benefits for all;
• Simplify the tax system to encourage Canadians to truly understand their tax affairs and help improve their overall financial literacy;
• Promote interprovincial free trade by eliminating unnecessary barriers that make it harder for Canadian businesses to expand across our country;
• Encourage savings and investment through tax incentives, such as expanded tax-free savings account contribution limits or creative use of such plans to make housing purchases more approachable;
• Rein in government spending to reduce deficits and debt, ensuring future generations aren’t burdened with today’s reckless fiscal policies;
• And, of course, encourage tax reform with big bang ideas to unlock growth and help to improve productivity.

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As economist Milton Friedman warned, “When government — in pursuit of good intentions — tries to rearrange the economy, legislate morality or help special interests, the costs come in inefficiency, lack of motivation and loss of freedom.”

That’s the choice Canadians face: a nation of ambition and prosperity or one stifled by bureaucracy and mediocrity. The answer will determine whether Canada returns to being a competitive, prosperous nation or whether we continue down the path of economic mediocrity.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody. 

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