One Comment About Taxation – Santa Claus’s Tax Gifts, Tax Lumps of Coal and My Tax Wishes

Well, Santa Claus’s arrival is right around the corner! I can barely contain my excitement!  Throughout the year, I wrote monthly letters to Santa to present my wish list of excellent tax policy ideas that I’ve gathered over the years. 

 

I also provided a copy of my letters (and weekly Financial Post articles) to Santa Carney, ‘er PM Carney, as well. Why? Well, Santa is magic but to get good tax policy he needs the buy-in of the PM and his colleagues.

 

Throughout 2025, there were a limited number of tax gifts that were received. For example:

 

– On December 16, 2025, the Canada Revenue Agency (“CRA”) announced that “bare trusts” are not expected to file tax returns for 2025, which is consistent with proposed legislation that is before Parliament (but not yet passed). Good news!

 

– The November 4, 2025 federal budget contained an excellent gift with the repeal of the ridiculous Underused Housing Tax! Goodbye…won’t miss ya!

 

– The consumer carbon tax was eliminated. Again, see ya!

 

– The luxury tax on airplanes and boats was eliminated. Not sure why Santa Carney decided to keep it for automobiles though.

 

But the amount of lumps of tax coal that continues to pile up in my backyard is growing and the past few years were exceptional. For example:

 

– The 1% tax rate reduction on the lowest personal tax bracket was wrapped up as a gift.  However, this is not a meaningful tax reduction for the average Canadian – about $100 per person. With cost of living continuing to increase, this $100 “gift” is a lump of coal – pure retail politics.

 

– The deceptive “new” budgeting exercise of separating the federal budget into operating and capital is so brazenly deceptive it’s almost laughable. This lump of coal is designed to fool the financially illiterate voter and needs to disappear.

 

– The amendments to the alternative minimum tax that became effective January 1, 2024 were sold by Santa Trudeau as making the “rich” pay “just a little bit more”. Instead, these proposals are poor policy that include backdoor capital gains tax increases. In addition, this is causing a chill with philanthropic high-income earners. These amendments are awful lumps of coal. It is time for the AMT to be eliminated.

 

–  The “flipping tax” was introduced a couple of years ago to curb those evil people who acquire residential properties and then sell them within 365 days of acquisition. If so, any resulting gains are considered fully taxable income unless certain “life exceptions” apply.  This rule adds unnecessary complexity since our system already has provisions to deal with “flippers”.  It’s great retail politics, though, at the expense of a simpler tax system.

 

–  One of the most ridiculous tax policies ever introduced in Canadian tax history was the recent prohibition of expense deductions for short-term rental owners who operate in a municipality that prohibits such operations. Besides being intrusive and overtly political, it puts criminal activity – like drug dealers – on a better tax footing than those affected short-term rental owners since such drug dealers would be entitled to their expense deductions if they reported their earnings. This policy encourages short-term rental owners to be non-compliant for tax purposes. Santa Carney needs to eliminate this dangerous tax lump of coal.

 

–  Canada’s high personal tax rates stifle investment and act as a repellent to retaining and attracting talent. Of the 13 provinces and territories, 8 of them have personal tax rates at the highest rate that exceed 50%.  Such high tax rates have been a significant factor for many successful Canadians leaving Canada, which continues to occur at an alarming rate. This lump of coal needs to be burnt and replaced with more moderate and competitive rates.

 

–  The recent conclusion on December 11, 2025 of the politically motivated CRA “100-Day Plan” – initiated by Minister Champagne – to improve CRA call centres and other services was a big lump of coal.  Instead of looking at the root causes of poor taxpayer service, it was a political public relations exercise of the CRA telling Canadians how they were dealing with some of the symptoms followed up by a concluding self-congratulatory press release.  Embarrassing.

 

So, what about my tax wishes? Well, from a broad perspective, I wish for Canada to get back to the four tenets of a good tax system as espoused by the Father of Economics – Adam Smith – in his 1776 landmark book, The Wealth of Nations. Those four tenets – fairness (equity), certainty, convenience and efficiency in collections – should be at the forefront of every new tax policy introduction. Unfortunately, it has not been the norm for years. If it was, reduced complexity would be the result which is one of my additional tax wishes. The tax system should be approachable to the average Canadian. But it is not.

 

What we desperately need – and what I keep asking Santa for every year – is serious tax reform. Not tinkering. Not targeted vote-buying gimmicks. Actual reform. A system that rewards hard work and risk-taking. One that doesn’t drive productive people out of the country. One that follows Adam Smith’s foundational principles rather than the politics of envy.

 

At the end of the day, Santa can only do so much. Currently, his sleigh is weighed down with political baggage, broken economic compasses, staggering debt loads and an elf crew more focused on optics than outcomes. Given that, Canadians shouldn’t expect many tax gifts under the tree next year either.

 

Next year, instead of mailing letters to Santa, I might just fly to the North Pole to hand-deliver my tax wishes. Now that the carbon tax is gone, perhaps I can finally burn my coal pile – assuming Environment Canada doesn’t classify it as a luxury fuel or require a net-zero offset permit to get there.

 

Maybe Santa Carney will join me. But he’ll need to bring a better tax and economic policy compass. And most definitely a lighter spending sleigh.

 

One Comment About Leadership – Leaders, Get on the Train

 

This past weekend, I watched the 2004 Christmas movie, The Polar Express again. What a great movie. It had been roughly 20 years since I last watched it.

 

In one of the closing scenes, the train conductor offers a simple truth: “It doesn’t matter where the train is going. What matters is deciding to get on.”

 

That line captures a core leadership reality. Many leaders hesitate in making decisions because they believe one more report, one more meeting, or one more data point will finally deliver clarity. It rarely does. The search for perfect information often becomes an excuse to delay hard decisions.

 

Yes, I get it – making decisions is hard especially when so much is on the line.  But that’s part of the job description of being an effective and good leader.

 

Leadership does not operate in a world of completeness or certainty. Facts are imperfect.

 

Information is incomplete. Conditions change. Strong and effective leaders understand this and move forward anyway, knowing that judgment, experience, and accountability matter as much as analysis.

 

Teams don’t expect leaders to have all the answers. They expect them to weigh what is known, acknowledge what isn’t, and still make the call. Prolonged hesitation signals doubt. Decisive action signals confidence.

 

Leaders don’t wait for certainty. They create it by getting on the train. Standing on the platform isn’t leadership.

 

One Comment About Economics  – The “Sustainable” 2025 Federal Budget: Don’t Be Misled

 

On December 17, 2025, The Parliamentary Budget Officer (PBO) weighed in on the federal government’s Budget 2025 long‑term fiscal outlook. At first glance, the report claims federal finances are sustainable over the next 30 years. But let’s unpack what that really means – in plain English.

 

A central concept the PBO uses is the “fiscal gap”. That’s the amount by which government revenues would have to rise or spending would have to fall, forever, just to keep the federal debt burden from rising relative to the size of the economy. In this case, the fiscal gap is estimated at –0.1% of GDP — about $4.2 billion in today’s dollars – meaning the government could permanently increase spending or cut taxes by roughly that amount and still return the debt‑to‑GDP ratio to today’s level by 2055‑56.

 

Sounds modestly positive? Only on paper. In reality, a fiscal gap that small is essentially zero cushion. It leaves future governments with almost no room to respond to economic downturns, demographic pressures, or geopolitical developments without resorting to higher taxes or significant cuts elsewhere. A truly robust fiscal plan would have a meaningful negative gap – large enough to absorb shocks without stress. That’s not what we have here.

 

And that brings us to public debt charges – the interest the government pays each year on the money it’s borrowed. According to the 2025‑26 Main Estimates, the federal government expects to spend about $49.1 billion on debt service in 2025–26, or roughly 10% of total spending authority.

 

Those interest costs are not static. If deficits remain elevated — as Budget 2025 projects (around $78 billion this year alone) – and the government keeps issuing debt, we should expect public debt charges to rise over time, both in absolute dollars and as a share of budgetary outlays. As deficits and debt grow, interest costs consume a larger slice of the fiscal pie. That means less money available for investments Canadians care about, whether health transfers, infrastructure, or national priorities.

 

Think of it like household finance: if you keep running up credit‑card balances, your monthly interest payments eventually crowd out everything else. You might technically be paying your bills, but there’s no money left for upgrades or emergencies.

 

So no – this report is not a “clean bill of health.” It’s more like walking a tightrope with no safety net. The debt path might not explode under current projections, but there’s virtually no slack, and rising interest costs are already chewing up a significant part of the federal budget. That’s not sustainability – that’s constraint masquerading as comfort.

 

Bonus Comment – Quote From George Patton – American Military General – About Leadership Decision Making

 

“A good plan violently executed now is better than a perfect plan executed next week.”

 

Absolutely agree!! But I’d take it one step further: in my view, there are no “perfect plans”.

 

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.