One Comment About Taxation – Beyond Tax Gimmicks, Canada Needs Big Bang Personal Tax Reform

Over the years, I have learned that to keep good physical health, it takes a dedicated commitment to good habits like healthy eating and rigorous fitness activities. The key is consistency, which spills into other benefits such as improved mental health, happiness, and confidence. I’m certainly not perfect at it, but I’m always working on it. In other words, there is no “quick-fix” or “magic pill” that can achieve all the residual benefits of good health.

 

Unfortunately, the “quick-fix” approach – “gimmicks” – is often used in politics and other aspects of life. In tax policy, it has been the tool of choice for years with no shortage of poor policy introductions in the last decade. Examples include the increase in personal tax rates for supposed high-income earners in 2016; the tax on split income rules introduced for private corporations and their shareholders in 2018; the prohibition of deductions for certain short-term rental owners introduced in 2023; and the latest tax gimmick (the ultimate “fiscal cardio-skip”), the rebranding of the GST credit – with extra cash handouts – as the so-called Groceries and Essentials benefit that comes with a $12.4 billion unfunded cost that purportedly will help with affordability matters.

 

With affordability and productivity long being a problem in Canada, is there a tax policy proposal that would be a better idea than the most recent cash handouts disguised as vote-buying schemes? Absolutely. Economist Jack Mintz’s “Big Bang” tax reform proposals are great ideas. What would Big Bang personal tax reform look like? Well, if it were up to me, such personal tax reform would encompass two broad objectives: 1. simplification and 2. reducing and flattening of rates.

 

Regarding simplification, I think the U.S. can be instructive here. They have a generous “standard deduction” that taxpayers can choose over “itemized deductions” (like mortgage interest deductions). If individuals choose the standard deduction, they forego the deduction of otherwise available specific deductions. Most Americans choose the standard deduction since it is so generous.

 

Canada could adopt a similar system, but I would go one step further. To reduce complexity, I wouldn’t allow a choice of choosing a standard deduction / credit or choosing itemized deductions. I would simply introduce a generous overall credit and then eliminate a bunch of otherwise available personal tax credits and deductions. For example, the current personal credit, spousal credit, medical expense credits and a host of others could be eliminated.

 

The bottom 50% of income earners in Canada currently contribute about 5% of overall federal / provincial income tax collections. By setting a standard credit at a generous amount, the 5% could be reduced even further, removing more low-income people from the tax rolls. With the elimination of a bunch of personal tax credits and deductions in favor of a large deduction, simplicity would be improved. Obviously, more would need to be done – such as consolidating income-tested benefits to reduce punishing “tax back” rates – but this would be a good start.

 

Next the rates. What should the maximum personal rate be? That debate could be a long one. However, it’s important to reduce the maximum combined personal tax rates below 50% in order to incentivize Canadians to work hard, keep more than 50% of what they earn and improve productivity. With maximum personal rates in most provinces exceeding 50% (and some like Ontario, Quebec, BC and most Atlantic provinces approaching 54%), that is simply unacceptable. In a world where skilled labour and capital are mobile, a top rate above 50% is self-defeating.

 

I think 45% should be the maximum combined federal-provincial rate with the co-operation of the provinces needed to achieve that objective. This would enable successful Canadians to keep more than half of their earnings and provide a magnet to attract and retain those taxpayers who pay the vast majority of personal tax revenues. A further enhancement would be to eliminate all of the tax brackets in favor of a high one – as mentioned – and one or two other lower brackets. Modeling of this would obviously need to be done to set the brackets appropriately, with consideration of family taxation models also forming part of a broader reform discussion.

 

And how would this be paid for? Approximately 45% of federal revenues comes from personal taxes; thus, any reductions in personal tax rates would cost the government significant revenues. The amendments proposed above would be very expensive. A natural starting point would be to further reduce government expenditures. For example, in 2015, the federal public service headcount was approximately 257,000. In 2024, that had ballooned to 368,000 – a 43% increase, and nearly three times faster than the population growth over that time. And over three times faster than real GDP growth. The addition of over 110,000 new employees was not scaling with demand. That’s bureaucratic bloat.

 

In the 2025 federal budget, the government committed to reducing the federal public service by about 40,000 positions – to roughly 330,000 – by the end of the 2028‑29 fiscal year. Frankly, that’s not deep and fast enough. There would appear to be significant room to cut much more with some of those savings used to fund Big Bang personal tax reform.  Would that be enough? Not likely and thus more avenues would need to be explored.

 

Just like building lasting personal health, effective tax policy doesn’t come from gimmicks. It takes consistency, discipline, and a commitment to long-term outcomes. Canada’s so-called “Groceries Rebate” is a perfect example of the gimmick-first approach – a cash handout wrapped in good intentions, but with no structural benefit or lasting value. That’s not policy. That’s vote-buying. If we want real affordability and improved productivity, we need to stop lurching from one political band-aid to the next. Instead, let’s focus on a tax system that rewards effort, simplifies compliance, and actually grows the economy.

 

There’s a difference between Big Bang tax reform and tax gimmicks. One is a plan. The other is a panic button with a price tag. Let’s get fiscally fit – and stay that way.

 

One Comment About Leadership – Leaders Have a Duty to Simplify

 

One of my favorite lines from the 1993 movie Philadelphia is “explain this to me like I’m a six-year-old.” I’ve used that line often during my 30+ year tax leadership career to encourage people to explain concepts to me that are complex. Why? Because understanding demands clarity. If the words are foggy, the ideas probably are too.

 

Complexity is everywhere. Tax law. Trade policy. Compliance. Regulatory frameworks. Politics. Financial concepts. And yet, one of the most underrated skills in leadership – whether in business or politics – is the ability to take complexity and make it understandable.

 

Simplifying doesn’t mean dumbing down. It means clarifying what matters and helping your team (or your country) focus. Good leaders don’t hide behind jargon or dense PowerPoint slide decks. They make things make sense.

 

One of the most powerful ways to do that? Tell a good story.

 

A well-told story turns abstract strategy or concepts into a relatable idea. It gives context to a decision. It helps people remember what you’re trying to say – and why it matters. I’ve seen technical professionals try to impress with complexity. The ones who actually influence? They explain the issue in plain English, then anchor it with a real-life example or metaphor. Every time. My parish priest does that. His sermons are always memorable since he always tells a story to make the dense concept relatable. It’s impressive.

 

If your team – or your audience – doesn’t understand what you’re doing or why, you have a leadership issue. It means you haven’t done the hard work of thinking clearly enough to explain it simply.

 

Leaders, your job isn’t to show how much you know. It’s to help others understand what matters, why it matters, and what to do next.

 

Simplify. And tell better stories.

 

One Comment About Economics / Politics  – “No Deal” Is Not Better Than a Bad Deal

 

With the Canadian government – and many in the media – still clinging to the tired slogan that “no free trade deal is better than a bad deal” the Bank of Canada recently offered a welcome dose of reality: losing CUSMA could push Canada into recession.

 

As reported in the Financial Post:

 

“The Canadian economy would likely fall into recession if the country loses preferential trade access to the United States under the Canada-United-States-Mexico Agreement (CUSMA), but that is not the Bank of Canada’s base-case scenario despite a recent flare-up in trade tensions, governor Tiff Macklem said this week.”

 

“In an interview with the Financial Post following a speech in Toronto, Macklem reiterated that though recession is ‘a possible outcome,’ the bank’s base forecast is still that Canada retains its exemptions under the current agreement but that U.S. tariffs currently in place stay in place. Under those assumptions, the bank is projecting 1.1 per cent growth in 2026 and 1.5 per cent in 2027.”

 

“We also assume that the uncertainty that businesses are currently facing, given the erratic, unpredictable nature of U.S. trade policy … gradually dissipates,” he said.”

 

In my experience, Canadian businesses have shown remarkable resilience despite years of erratic U.S. tariff threats and implementation. As the Financial Post correctly observed:

 

“So far, the Canadian economy has proven to be more resilient in the face of trade uncertainty with the U.S., but that is due to nearly all Canadian exports to the United States remaining exempt from tariffs under CUSMA.”

 

Exactly. That resilience is not permanent – it’s contingent on continued preferential access under CUSMA. If that access is lost, the “resilience” story quickly unravels.

 

The CUSMA agreement is up for review this year. If preferential access to the U.S. market is curtailed or lost, the economic consequences for Canada will be swift and severe – no matter how loudly the “no deal is better than a bad deal” crowd shouts.

 

Preferred access to the U.S. market is not a political talking point – it’s an economic lifeline. Canadians deserve trade policy rooted in reality, not slogans.

 

Bonus Comment – Quote From Richard Feynman – American Physicist – About Complexity and Simplicity

 

“If you can’t explain something in simple terms, you don’t understand it.”

 

Exactly. Leaders, again, simplify. And tell better stories.

 

Hope you enjoyed this edition of 1-1-1. If you’re not already part of the In the Mood Network, now’s the time. Please sign-up today.  Whether it’s through consulting, coaching, speaking, or writing, my work is about planting acorns: deliberate, principled actions that challenge the status quo and grow into something far bigger. The goal? Bold reform. Stronger foundations. And a country that values hard work and common sense.