CFFiM - Canadian Forum For Financial Markets

As Canada looks to improve productivity and competitiveness, tax reform remains central to the conversation.

Canada relies more heavily on personal and corporate income taxes — and less on value-added taxes — than the OECD average. Tax composition matters for economic growth.

Corporate income taxes are considered the most harmful for growth because they discourage capital investment and productivity, followed by personal income taxes, which reduce incentives to work, save, invest, and pursue entrepreneurial activity. By comparison, value-added taxes such as the GST/HST affect work, saving, and investment decisions less.

In its pre-budget submission to the House of Commons Finance Committee, the Canadian Forum for Financial Markets Priorities (CFFiM) recommended that the federal government:

- Rebalance the tax mix toward consumption taxes.
- Reduce the federal corporate income tax rate from 15% to 13% over two years beginning in 2027.
- Compress the five federal income tax brackets into three by reducing the second-lowest personal income tax rate (20.5%) to 14% over six years starting in 2027; reducing the fourth bracket rate (29%) to 26%; and lowering the top rate (33%) to 29%.
- Increase the GST by 1 percentage point in both 2027 and 2028, restoring it to its original 7% rate.