One Comment About Taxation – Canada’s AI “Strategy” is a Political Brochure

 

In grade school, my essay writing assignments were sometimes handed back with poor grades. “You missed the core ideas, Kim. You need to explore the topic from all important angles. Try again.” When I was honest with myself, my teachers were right. Those memories came flooding back when I sat down with Canada’s recently released National Artificial Intelligence Strategy. My teachers’ voices were loud and clear.

 

Merriam-Webster defines “strategy” as “a careful plan or method for achieving a particular goal usually over a long period of time.” Canada absolutely needs a strategy to win the AI race. Investment in AI can create jobs, drive efficiency and productivity, spawn new technologies and assist with overall economic growth. The downsides – labour market disruption, safety concerns, over-reliance by youth – are real too. A genuine strategy would grapple seriously with both sides.

 

Unfortunately, all we got was a bunch of fluff – all 50 pages of it. It does not meet the dictionary definition of strategy. Instead of focusing on important economic matters – like tax – the document is devoted to “protecting” Canadians from AI, Indigenous data governance (whatever that is), DEI in AI development, and online safety for children. While some of these may be worthy concerns, a government that leads with control rather than competitiveness has already revealed its priorities.

 

Glaringly missing is how the founders, engineers, and investors who will actually build Canada’s AI future will be incentivized to take the necessary steps and risks.

 

One of the most powerful levers any government uses to shape economic behavior is tax policy. It drives investment decisions, determines where talent chooses to live and build, and signals to the world whether a country is serious about competing. The strategy contains no corporate tax commentary – including no patent box proposals, despite two years of consultations and a Liberal Party 2025 election platform promise – no personal tax proposals, and no capital gains ideas. The sole tax gesture in the strategy document states that by “…Budget 2026, the Department of Finance will work with experts to explore mechanisms that encourage Canadians to reinvest gains earned from successful tech companies into new Canadian AI startups.”

 

Who will those “experts” be? And why only “Canadian AI startups”? AI impacts all businesses, not just startups.

 

Look at what Canada’s competitors are doing. In July 2025, the United States permanently restored full expensing of domestic R&D, reinstated 100% bonus depreciation on qualifying capital investment including AI infrastructure, and expanded the Qualified Small Business Stock (“QSBS”) exclusion to $15 million. The effective tax cost of AI investment dropped dramatically.

 

The United Kingdom applies a 10% corporate tax rate on profits from patented IP through its Patent Box regime, against a standard rate of 25%. Thirteen EU member states have similar regimes. And Estonia – ranked first on the Tax Foundation’s International Tax Competitiveness Index for twelve consecutive years – taxes corporate income only when distributed, not when reinvested.

 

All of the above ideas are worthy of consideration.

 

Instead, Canada’s competitive position on tax is poor. Our combined federal-provincial corporate rate of 23-27%, depending on province, is broadly comparable to high-tax U.S. states – but meaningfully higher than the 21% available in zero-state-tax jurisdictions like Texas and Washington, among the fastest-growing AI employment hubs in North America. It’s also far above Ireland’s 12.5%, which is why so much tech IP ends up there. A promised Canadian patent box was absent from Budget 2025, absent from the April 28, 2026 Spring Economic Update, and absent from the AI strategy.

 

On the personal side, the picture is equally concerning. Canada’s top combined federal-provincial marginal rate reaches 53.53% in Ontario – and similar in many other provinces – with the federal top rate of 33% kicking in at $258,482. In the United States, the equivalent top rate doesn’t apply until income exceeds $768,700 for a married couple. For the talent Canada most needs – people earning $300,000 to $600,000 in a sector where that compensation is routine – Canada’s tax system is a billboard that reads: “Leave.” Or “Stay Away”.

 

The founder’s exit math compounds the problem. Canada’s Lifetime Capital Gains Exemption for qualifying small business shares stands at $1,275,000 in 2026 while the U.S. QSBS exclusion reaches $15 million. That eleven-fold gap shapes where founders incorporate, where companies scale, and whether Canada captures any of the wealth its own researchers create.

 

As a further example, if the government is prepared to make a $10 million capital gains exemption permanent for Employee Ownership Trust transfers – a regime that is structurally ineffective – then a $1,275,000 LCGE is simply not a serious number for founders in the AI era. Absorbing the fiscal cost of a gesture almost no entrepreneur will ever use, while refusing to move the one lever almost every entrepreneur can plan for, is not a tax policy judgment. It is a political one.

 

Thus, the overall Canadian tax tools to assist in achieving the AI race include a lower general corporate rate (which if it was a meaningful reduction, could make the patent box idea moot), significant reductions in top personal rates, capital gains deferral opportunities, a LCGE expanded to at least $5 million – ideally matching the $15 million QSBS regime in the United States, and overall comprehensive tax review and reform.

 

Canada’s AI strategy is long on words, safety frameworks, and consultation – and so obviously designed to achieve political objectives rather than economic ones.

 

My grade school teachers had a simple standard: did you explore the topic from all important angles and produce logical comments, alternatives and solutions to the issue at hand?  If I submitted this strategy for grading, my teachers would have told me to go back to the dictionary definition of “strategy” and try again rather than producing a political brochure.

 

And they would have provided me the glowing grade of D−.

 

One Comment About Leadership – “Do Not Be Afraid”

 

I’ve written about the power of fear and its ability to manipulate people. In one of my previous writings on this topic, I stated:

 

Fear can cause people to behave irrationally. And poor leaders can use fear to manipulate such people to behave in ways they normally wouldn’t. That type of embracement of uncertainty is simply evil and misguided.

 

Instead, leaders should embrace the fact that uncertainty is a fact of life. It can be used to capture opportunities. And provide a calming and steady influence to those you lead who cannot or will not embrace uncertainty.

 

Politicians use fear as one of their primary tools to get votes. Canadian Prime Minister Mark Carney regularly uses it in his speeches and uses words like “rupture”, “…in an ever-divided world…”, “…the world is a more dangerous place….”, etc. This is classic fear-stoking. The obvious savior from all of this fear-stoking is, of course, the person who is doing the fear-stoking. Only that person knows how, of course, to deal with uncertainty. It’s a shallow message. But it is indeed powerful. But let’s be clear: this is not leadership. It is fear management disguised as statesmanship.

 

I was thinking about this when I was listening to a recent sermon at my church. The pastor was speaking about this very topic.  And he reminded his audience that Christian teachings often use the phrase “Do Not Be Afraid”.  After that sermon, I asked my buddy – ChatGPT – to remind me how many times this phrase is used in the New Testament. This is what it said:

 

A good estimate is:

• Direct commands not to fear: about 20–25 occurrences in the New Testament.
• If you include closely related expressions such as “take courage,” “be of good cheer,” “do not worry,” and other exhortations against fear, the number rises further.

 

Some notable examples include:

1. Matthew 1:20 – Angel to Joseph: “Do not be afraid to take Mary as your wife.”
2. Matthew 10:28 – “Do not fear those who kill the body.”
3. Matthew 14:27 – Jesus: “Take courage! It is I. Do not be afraid.”
4. Matthew 17:7 – “Get up; do not be afraid.”
5. Luke 1:13 – Angel to Zechariah: “Do not be afraid.”
6. Luke 1:30 – Angel to Mary: “Do not be afraid, Mary.”
7. Luke 2:10 – Angel to the shepherds: “Do not be afraid.”
8. Luke 5:10 – Jesus to Peter: “Do not be afraid; from now on you will catch men.”
9. Luke 12:32 – “Do not be afraid, little flock.”
10. John 6:20 – “It is I; do not be afraid.”
11. John 14:27 – “Do not let your hearts be troubled and do not be afraid.”
12. Acts 18:9 – The Lord to Paul: “Do not be afraid; keep on speaking.”
13. Acts 27:24 – Angel to Paul: “Do not be afraid, Paul.”
14. Revelation 1:17 – Christ to John: “Do not be afraid. I am the First and the Last.”

 

Impressive list. Even if you’re not a Christian, there are excellent lessons to learn here. The most foundational one is that good leaders need to encourage their followers to not be afraid but instead have courage. Courage to move forward and do the right thing.

 

If you’re a leader that stokes fear, I have one phrase for you to ponder: Shame on you. Do better.

 

One Comment About Economics / Politics  – Taxpayer Funded Propaganda: Canada’s Government Advertising Gap

 

Like me, have you been bombarded with government advertising that says how great they are? Lately, it’s been how great they are by purportedly bringing down costs for the average Canadian. Yeah, right. 🙄 Much of this bombardment has been relentless – including through my Sportsnet+ subscription during the Stanley Cup Playoffs, where the ads seemed to run every single commercial break. The ads come across as Liberal Party partisan advertising. Have you ever wondered how the government can get away with spending taxpayer dollars to essentially promote themselves?

 

The short answer: they get away with it because there is virtually nothing stopping them.

 

The federal government’s self-congratulatory ad campaign even has its own dedicated website – canada.ca/en/department-finance/campaigns/affordable.html – triumphantly listing all the ways Ottawa is “bringing down costs.” It has been plastered across television screens nationwide. No Liberal Party logo. No photo of Mark Carney. But make no mistake about what it is.

 

So, what rules exist? The Government of Canada operates under a Treasury Board Policy on Communications and Federal Identity that requires government advertising to be non-partisan. Campaigns over $250,000 undergo an external review. Sounds reasonable – until you realize this is a policy, not a law. It is an internal administrative rule that Parliament never passed as legislation. It cannot be challenged in court. Cabinet can change or waive it at will. And the body overseeing compliance reports ultimately to the same government running the ads. Fox, meet the henhouse.

 

There is no federal statute – none – specifically prohibiting the government of the day from using public funds to make itself look good between elections. Canada has remarkably detailed laws governing advertising by political parties under the Canada Elections Act – spending limits, disclosure requirements, blackout periods. But when the government itself advertises with your money outside of an election period? No comparable statutory framework exists whatsoever.

 

Ontario actually tried to address this. Its Government Advertising Act (2004) gave the Auditor General authority to reject government ads whose primary purpose was fostering a positive impression of the governing party. It worked – until the Wynne Liberals gutted it in 2015, conveniently removing that power. The Ford government has since spent tens of millions on “It’s Happening Here” and “Ontario Is Getting Stronger” campaigns that the Auditor General’s own office has confirmed would not have been approved under the original Act.

 

British Columbia has non-partisan advertising standards with independent third-party review – but again grounded in policy, not statute. Most other provinces have nothing meaningful at all.

 

The pattern is consistent and revealing: no governing party, anywhere in Canada, has ever been enthusiastic about fixing this once they hold the advertising budget. The Wynne Liberals weakened Ontario’s rules when it suited them. The Ford Conservatives promised to restore them and didn’t. Ottawa has never bothered with legislation at all.

 

This is a genuine democratic accountability gap. Canadians have a right to government communications that inform – about programs, services, and eligibility – not communications designed to make the party in power look good at taxpayer expense. The line between the two is not always bright, but the current campaigns are nowhere near that line.

 

The fix is straightforward in principle: federal legislation modeled on Ontario’s original 2004 Government Advertising Act, with genuine independent oversight – perhaps through the Auditor General or a Parliamentary officer – and real authority to reject ads whose primary purpose is political self-promotion rather than public information.

 

Will it happen? Don’t hold your breath. But it should. In the meantime, the propaganda will undoubtedly continue.

 

Bonus Comment – Attributed To Sir Winston Churchill – Former UK Prime Minister and Statesman – About Fear and Courage

 

“Fear is a reaction. Courage is a decision.”

 

Yep. Brilliant. Leaders, are you encouraging your teammates and followers to be courageous?

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing (Version 2), is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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