Mr. Chair and members of the committee, on behalf of the Certified General Accountants Association of Canada and our 68,000 members, we wish to thank you for this opportunity to appear before you and give voice to our thoughts and concerns regarding Canada's economic competitiveness, productivity, and prospects for growth.
By way of background, most of you know me from previous appearances. For those who don't, my name is Everett Colby, FCGA, and I'm chairman of CGA-Canada's tax and fiscal policy committee. I'm also a public practitioner here in Ontario. My client base is principally small and medium-sized businesses, as well as individuals across Canada and around the world.
Accompanying me today is Carole Presseault, vice-president of governmental and regulatory affairs.
You've received copies of our brief, as well as my remarks. They're available in both official languages.
We'd first like to congratulate the government, past and present, for one of the largest debt repayments in the history of Canada. The recently announced $13.2 billion payment will reduce the debt-to-GDP ratio to its lowest level in 24 years. Bravo Zulu to all of you for doing that.
This huge debt repayment is a testament to how well Canada has done in recent years. Truth be told, Canada has enjoyed a stellar performance in terms of inflation, economic growth, and employment, and we're leading the G7 in several macroeconomic categories. In fact, Statistics Canada recently released a notable report stating that employment has increased by 1.3% since the beginning of this year.
Notwithstanding these great achievements, we believe Canada can and must do better in order to remain competitive. We believe the best way that one can ensure the creation of real new wealth in an economy, both for individuals and families, is through the enhancement of productivity, which has been a focus of this government. In an increasingly globalized world where we're competing with everyone from China to Russia, Brazil to the United States, we have to be smarter, better educated and trained, and more productive. Frankly, we're not there yet.
In a recent study released by the World Economic Forum, Canada slipped from fourteenth to fifteenth place in the measure of business competitiveness. In 2001, we were eleventh. In 1988, we were in sixth. This is not a good trend. Since we've drifted down in the rankings, our trading partners have stepped up their competitiveness. We believe this is the main reason for this reversal.
We must ask ourselves the important question: how do we reverse this trend and re-establish ourselves as a world leader?
Mr. Chair, although our brief contains detailed recommendations on a number of areas, all of which would help restore Canada's economic competitiveness, my comments today will focus specifically on the need to reduce business tax and the need for regulatory efficiency.
In a recent address in Kingston, the Minister of Finance acknowledged the need to liberate the forces of investment in Canada, as well as the need to reduce federal taxes. The high effective tax rates that businesses must pay are, in our opinion, the most important issue to address at this time.
In 2006, Canada laid claim to having the sixth highest effective tax rate among the world's 36 leading industrialized economies. Although an improvement from 2005, this is hardly a stellar performance when it comes to going toe to toe with our leading competitors.
High taxes on capital pose a serious impediment to investment, and thus to future growth and productivity. Paradoxically, government's attempts to help the corporate sector with a host of policies, subsidies, and special programs actually inhibit a number of sectors of the economy. Many agree that lowering taxes on corporate investment and reducing subsidies and tax expenditures is a better approach. We agree.
Our second proposal addresses the growing consensus that to increase productivity, we must remain globally competitive. We have to reform the regulatory structures. Accordingly, we recommend to the committee these specific measures.
Simplify the tax structure while introducing consistency into the tax compliance system.
Regulate smarter. The government should streamline the regulatory regime in a concerted effort to reduce the compliance burden on business.
Finally, the government, along with the provincial and territorial governments, should address labour and trade barriers within Canada. Indeed, the Agreement on Internal Trade should be reinforced to include sanctions that would ensure that governments respect their internal trade obligations.
We thank you for your time. As always, we appreciate the opportunity to participate in this process, and we welcome any questions that the committee might have on these or other recommendations contained in our brief.
Thank you.