Thank you very much, Mr. Chair, and good afternoon to the committee members. Thank you very much for this opportunity to present today and to participate.
Our association represents a full range of organizations that make up the financial services sector, from banks and insurance companies to investment firms and mutual funds, as well as the professional organizations that support them, such as accounting and law firms. We also have representation from the post-secondary education sector. In short, we seek to present one voice that speaks on behalf of the whole financial sector in the Toronto region.
Our goals are to work with our partners to support growth in financial services jobs; to grow to be one of the two pre-eminent such centres in North America--we're currently the third-largest and the fastest growing; and to be in the top ten internationally--we're currently ranked 13 out of 50 such centres.
Our purpose today is to encourage the committee to make recommendations to the government that will support further sector growth, but not to the exclusion of other sectors--quite the contrary, as some of the tax initiatives we have raised benefit other sectors as well. This sector is the single-largest contributor to our nation's GNP; it's one of the largest employers; and its activities underpin the financial security of the rest of the economy, whether you are a consumer, an investor, a pensioner, an entrepreneur, or an employer.
The key is to ensure that our financial sector remains internationally competitive. Today we are the 13th most important financial centre in the world, not far behind Tokyo and Geneva. This ranking was prepared through the cooperation of the City of London, arguably the top financial services centre in the world, closely followed by New York.
We invited the authors of this survey, which is the Global Financial Centres Index, to Toronto to help us understand ways to help us rank even higher and make us more competitive. What would move Toronto up the scale into the top ten?
They focused on five key factors: people factors, or the quality of our workforce; the business environment; market access; infrastructure; and general competitiveness. Of the five, Toronto was the strongest on the people factors; however, on some of the others we are lagging, particularly in the business environment, which reflects where we stand on tax rates and regulation.
Notwithstanding government efforts to reduce taxes, Canada remains a highly taxed nation. It's not enough to look at just one tax; one has to look at all forms of taxation and the overall level of taxation by all levels of government. When looked at in this fashion, Canada remains a country where government continues to take too big a share of our country's income. On a national accounts basis, general government tax and non-tax revenue can account for over 40% of our GDP.
TFSA has been recommending to governments, provincially and federally, that taxes, particularly corporate, need to be lowered. Tax rates that allow program spending to increase by 8% a year are clearly too high. We're pleased that Minister Flaherty, in his economic update last month, announced that corporate tax rates would be lowered. We've also been encouraged that the Leader of the Opposition has indicated that he too believes cutting corporate tax rates makes good sense.
We encourage the members of Parliament to provide relatively quick tax relief, and obviously there has to be a balance. Mr. Flaherty suggested that our corporate tax rate will eventually be the lowest among industrialized countries, which is a good thing. But we need to remind ourselves that other countries are moving in the same direction, and some of them are moving faster than we are. We continue to encourage Ontario to do what it can to bring down their corporate rate as well.
I won't go into some of the points and principles we made in the submission we sent to the committee earlier in the summer. Let me simply mention that not all taxes are created equal. The greatest increase in economic well-being comes from reducing taxes on capital by either increasing capital cost allowances or reducing capital tax rates. We have argued for both.
We also recommend you strive for tax neutrality and tax efficiency. Decisions made by businesses or individuals should be based on economic conditions, not preferential tax treatment. In pursuing tax reform, you should focus on those taxes that impose the greatest economic penalty on the economy, such as capital taxes. We also encourage efforts to work with the provinces to harmonize the GST and the PST.
The second major influence on the business environment, of course, is the regulatory environment, and we're very supportive of the government's efforts to reduce the regulatory burden, most importantly pushing for a common securities regulator.
Finally, Mr. Chairman, I'd like to suggest that the committee could play a leadership role by spearheading an effort to benchmark Canada's performance on tax policy. As I mentioned, it's not about absolute levels of tax but about relative levels of tax, not just about tax rates but also about tax mix. We believe that Canada should set goals against competing jurisdictions and measure our progress towards attaining those goals, and we think this committee could certainly play a role.
Finally, Toronto has much to offer as a financial services location, but international competition is growing, as many other regions and countries try to build global financial centres. When London and New York, the top two centres in the world, invest time and resources to defend their positions against that competition, Canada needs to ensure our sector is ideally positioned to withstand that pressure too. The factors that drive such success are clear.
Thank you very much for this opportunity, and I look forward to discussing it further with you.