Policy Forum: Why Canada Needs a Comprehensive Tax Review

This article addresses the question of whether the time has come for a comprehensive tax policy review in Canada. The author begins with the proposition that periodic broad-based reviews are necessary as an alternative to piecemeal policy making done through the often politicized annual budget process, and he sets out four sets of principles or attributes that characterize a good tax system. These include fairness, equity, and legitimacy; neutrality and economic efficiency; simplicity, administrative feasibility, and certainty; and international competitiveness. The author then proceeds with an examination of the latter two sets of principles, using a number of available indicators of how well our existing tax system measures up against each of them. He concludes that evidence using these two principles alone suggests that there is sufficient scope for improvement in the existing system to merit a comprehensive policy review. He also provides some brief corroborative commentary on the first two sets of principles.