|Newsletter
Kim G C Moody’s Musings – 1-1-1 Newsletter For March 19, 2025
One Comment About Taxation – Canada Needs Tax Reform; Not to Get “Fooled Again”
Another tax season, another tax filing debacle.
On March 11, 2025, the Canada Revenue Agency announced that its systems were not yet ready for personal tax filings that include capital gains with the following statement:
“The CRA recommends that those impacted by this situation wait until the updates are completed in the coming weeks before filing their income tax and benefit return. The CRA will grant relief in respect of late-filing penalties and interest until June 2, 2025, for individual filers and until May 1, 2025, for Trust filers to provide additional time for taxpayers reporting capital gains to meet their tax filing obligations.”
So, basically, affected Canadians won’t be able to file their returns until the beginning of April. Accountants, who are always swamped at this time of year, will be even more backed up. This is the third year in a row that some issue has affected tax preparation. For the 2022 filings, there was massive confusion involving the new Underused Housing Tax. Last year, it was the bare trust debacle. And now, the capital gains confusion and delay.
For this year, one has to feel for the CRA. Like most Canadian taxpayers, the CRA was at the mercy of the current government who was managing the capital gains proposals. First announced in the April 16, 2024 federal budget, the management of the proposals became a textbook example of how to not introduce taxation policy in Canada.
The final spike in the proposals came on January 31, 2025 – three months before the general April 30, 2025 filing deadline for individuals to file their personal tax returns – when the government announced they were “deferring” the proposals to January 1, 2026. Combine the “deferral” with the fact that newly crowned Prime Minister Mark Carney has said his government will not support the proposals and Conservative Party leader, Pierre Poilievre, has long been on record stating his government would not support the capital gains proposals and these proposals are dead.
This means that the CRA, who was administering the proposals as if they were law pursuant to their long-standing administrative policy, had to change their systems back to the “old” system for capital gains. While I’m not a computer programmer, I can only imagine it’s not easy to do that.
One can logically question why the CRA was administering the proposals as if they were law when a bill was not even before Parliament. When the dust settles, this very fact needs to be reviewed for appropriateness to consider an adjustment to CRA’s long-standing policy to accommodate unusual circumstances like that.
We also need a significant rethink of how taxation policy is developed and implemented.
However, the recent tax debacles are just one piece of a much larger puzzle. Our country’s economy has been extraordinarily mismanaged for years. And our tax policies and systems have done nothing to help / address such mismanagement.
As Jack Mintz mentioned in a recent article, Trump or no Trump, we can’t afford another lost decade. Our country risks economic stagnation if we don’t address our structural issues. As Dr. Mintz highlighted, our economy has been stagnant with virtually no growth in real per capita GDP for the last 10 years. Our productivity, as measured by GDP per working hour, is 11th-lowest among 36 OECD countries and just three-quarters of Ireland’s and 80 per cent of Poland’s.
Regarding taxation, here’s a list of suggestions to help fix the mess we are in:
Future governments need to stop announcing significant tax changes by news releases. The introduction of significant tax policy changes should go through proper legislative and stakeholder review, with clear timelines and structured implementation.
Recognize that good tax policy matters. It’s not all about politics. Instead, good tax policy drives investment decisions and attracts successful and talented people (which our country desperately needs). As our country has seen in recent years, high tax rates and continued attacks on successful people drive those people and investment capital out of Canada. We need to stem the tide of those departures and reverse it quickly.
Genuine efforts need to be made to simplify the Income Tax Act and its related administration. It has become way too complex for the average Canadian to navigate. Ideally, it would be great if the average Canadian would understand their tax affairs without requiring a team of experts. Of course, that would require Canadians to increase their financial literacy, something that is desperately needed to help make informed choices, especially at the ballot box.
Ensure the CRA is prepared before changes take effect. The last 3 years of horrible tax filing seasons should never happen again.
Overall, we need significant tax reform to deal with the above challenges. It’s long overdue.
None of the above fixes are rocket science. It’s just good governance, something that has been sorely lacking in Canada.
The next federal election will be an important referendum on Canada’s economic future. The choice is clear: keep heading down the path of reckless tax policy and economic mismanagement, or elect leadership that actually understands how tax policy impacts the economy.
On October 21, 2019, Canada’s Election Day in that year, I was in the audience at a Vancouver tour stop of the classic rock band, The Who – one of my favourite bands. I loved the concert but despised the election result. Five and half years later, I’m hoping Canadians “Won’t Get Fooled Again”. As the famous song says, “Meet the new boss, same as the old boss”.
If we don’t demand real tax reform, we won’t just get fooled again—we’ll get fleeced again.
So, to those who find comfort in shouting “Elbows Up,” I understand the assertive Canadian patriotism. But empty slogans—what we’d call “all hat, no cattle” in my home in Calgary—won’t fix our broken tax system or our mismanaged economy. Instead, we need real leadership, meaningful tax reform, and a clear path out of this lost decade. It’s time for action, not just words.
Vote wisely.
One Comment About Leadership – The Use of Rallying Cries For Leaders
Last week, I posted on LinkedIn that the phrase “Elbows Up” is a vacuous rallying cry—an emotional slogan (now popular amongst many Canadians as a result of recent U.S. attacks on our economy) with little to no substance. I made that post because it’s frustrating to see people rally around phrases that provide a sugar rush of motivation but lack any meaningful direction.
A number of people disagreed, some vehemently. A well-known influencer also engaged in the discussion, and while our debate was constructive, we ultimately agreed to disagree. I welcome these kinds of debates, but my position remains the same: rallying cries can be powerful leadership tools, but only when backed by strategy, tangible next steps, or confirmation that the current actions are effective.
Consider Winston Churchill’s “We shall fight on the beaches…” speech. It wasn’t just an emotional appeal—it was paired with military planning and real action behind the scenes. The words reinforced the mission rather than replacing it. In contrast, empty slogans like “Elbows Up” serve as emotional placeholders, creating a false sense of momentum without real progress. You can chant it at rallies or post it on social media, but without a strategy, the phrase will fade, leaving nothing behind.
Slogans should never become a substitute for leadership. They should inspire action—not distract from it. When leaders rely on empty phrases without real plans, they create false comfort and enable inaction.
We’ve just witnessed a decade of that in Canada. A government that speaks in slogans without delivering results erodes credibility. Canada is not an empty, powerless nation. We don’t just say things—we do things. That’s who we are. But reclaiming that identity starts with individuals choosing to educate themselves—not by passively consuming legacy media but by reading history, improving financial literacy, and making informed choices at the ballot box.
Leaders, words matter. But without action, they mean nothing. If you deploy a rallying cry, make sure there’s strategy behind it. That’s what separates real leadership from empty noise.
One Comment About Economics – Canada’s Lost Decade
In the taxation section above, I reference a recent article by Dr. Jack Mintz on Canada’s “lost decade” of poor economic performance. For those who have been paying attention, none of what Dr. Mintz highlights in the article is a surprise. Notwithstanding, below are some highlights from the article to refresh your memory:
As I wrote here last November, Canada is not broken, but it has been badly mismanaged. Our economy has been stagnant with virtually no growth in real per capita GDP in 10 years. Our productivity, as measured by GDP per working hour, is 11th-lowest among 36 OECD countries. To add salt to the wound, it’s just three-quarters Ireland’s and 80 per cent of Poland’s. Our incomes have dropped relative to the United States by almost a third. If we did become the 51st state, we would only be richer than Mississippi and would qualify for federal grants as a have-not state.
Non-residential business investment has fallen so much that we now lag most of the world’s rich countries. In research and development, we’re 17th among OECD countries, at 1.6 per cent of GDP (as of 2022), just above Italy and well below the OECD average of 2.3 per cent. Net direct capital outflows have averaged 4.2 per cent of GDP since 2015, a quarter more than the previous decade’s average of 3.4 per cent. That’s an additional $240 billion in annual capital outflows compared with the previous decade.
Our historically successful immigration policy has been badly mismanaged. Excessive inflows have kept the wages of unskilled wages down and put health care and infrastructure under serious stress. The current course correction is forcing post-secondary institutions that were encouraged to take on international students to scramble to make up for lost revenues. Outflows are also a problem. Over 650,000 Canadians emigrated between 2015 and 2023, as the gap widens in after-tax incomes between Canada and other countries, especially the United States.
Since the pandemic, inflation caused by deficit spending and monetary expansion has hit the pocketbooks of less well-off Canadians. Relative to income, housing prices are 40 per cent higher than the world average, exceeded only by Portugal, as of 2023. Federal taxes have taken another big bite out of Canadian budgets, rising from 12.4 per cent of GDP in 2015 to 14 per cent in 2023, according to the World Bank.
The combined spending and revenue of all our levels of government is now more than two-fifths of our economy, without any real improvement in public services. Canadians wait excessively for medical procedures, our once top-rated education standards are slipping and we have weakened our military preparedness. Though we made big strides in controlling deficits in the 1990s and after, federal debt has risen from 57 per cent of GDP in 2015 to 70 per cent in 2024. COVID is part of the explanation, but only part.
Dr. Mintz goes on in the article to discuss his views on what has to happen. The short answer is Canada needs to take rectification measures NOW. As Jack states, we cannot afford another lost decade.
Without positive change, our country’s standard of living will decline significantly.
Bonus Comment – Quote From the 20th Century Author and Playwright – Aldous Huxley – About the Dangers of Slogans
“Words can be like X-rays if you use them properly—they’ll go through anything. You read and you’re pierced. But one of the things that’s so bad about slogans is that they’re not words used properly—they’re just noises.”
Absolutely agree if not deployed correctly.
Hope you enjoyed this edition of 1-1-1…please sign up for my mailing list today.
