Good morning. My name is Gabe Hayos, and I'm vice-president of taxation with the Canadian Institute of Chartered Accountants.
On behalf of Canada's 78,000 chartered accountants, thank you for the opportunity to appear before this committee. In my remarks today, I will cover the CICA's views and priorities for the 2012 federal budget, highlighting measures we believe will support the nation's economic recovery by helping Canadians and Canadian business prosper.
Recommendations include simplifying taxes and easing the personal income tax burden, reducing red tape, enhancing Canada's tax incentives for innovation, enhancing financial literacy, encouraging retirement savings, and continued support for international credential recognition.
With respect to red tape reduction, an element of key importance to the CICA's view is that the federal government's administrative agencies should focus first on providing compliance assistance, rather than focusing principally and perhaps almost exclusively on regulatory enforcement. We believe that a positive attitude change towards compliance assistance, motivated by a supportive tone from the top being expressed by ministers and their deputies, will contribute meaningfully to red tape reduction and enhanced efficiency in government.
Canada's domestic tax system must be simplified to lessen the regulatory burden placed on Canadian business, and we recommend that the federal government establish a national consultation process to obtain input on tax simplification initiatives.
Measures that merit consideration include pursuing greater federal-provincial tax harmonization across all tax systems, adopting a loss transfer system of taxation for corporate groups, and extending personal income tax filing dates for those with income from trusts or partnerships.
The government's commitment to reducing the general corporate income tax rate to 15% by 2012 is important to our ongoing economic recovery and should be applauded. We also encourage the continued adoption of policies recommended by the Advisory Panel on Canada's System of International Taxation.
We believe that action should be taken to improve our scientific research and experimental development tax incentives and that tax credits should be made partially refundable for all businesses.
In order to stay competitive and attract and retain human capital, Canada must stay attuned to the personal income tax burden placed on Canadians. Canada's chartered accountants favour the use of broad-based tax reductions over targeted measures.
Over time, we encourage the government to increase the top two tax thresholds and the rates that apply to them, in order to bring them in line with those of our global competitors. Key to balancing this broader approach is the need to examine the appropriate mix of personal tax and consumption taxes. Canada relies on personal income taxes to a greater degree and on consumption taxes to a lesser degree than the OECD average. Adjusting the revenue mix would improve Canada's tax competitiveness. We recommend that the government consider changing the revenue mix to bring it closer to the OECD averages.
Reducing income tax on personal savings is crucial to helping Canadians prosper over the longer term. With this comes the need to enhance financial literacy to ensure Canadians have the financial skills to make the best choices on planning for their retirement. Our research shows a clear link among financial literacy, higher rates of savings, retirement preparedness, and financial planning. We urge the government to continue its commitment to financial literacy.
The CICA is working to support a national collaborative financial literacy strategy and will soon be launching a program to provide Canadians with the knowledge and confidence required to take control of their finances.
With respect to the retirement income system itself, we support the government's commitment to increasing contribution limits to tax free savings accounts. We believe reducing the income tax on personal savings will provide an incentive for savings and make the tax system more efficient, effective, and competitive. As an example, we recommend raising the RRSP maximum contribution limits and also taxing RRSP withdrawals according to the nature of the underlying income—that's capital gains, dividends, or interest—rather than all of it being taxed as ordinary income.
Finally, skilled professionals are vital for Canada's future, and the CA profession encourages the government's ongoing commitment to easing the transition of internationally trained professionals into the Canadian workforce. We support the development of streamlined bridging programs that help these professionals resolve any educational or experiential gap, so they can contribute their full potential as quickly as possible.
To conclude, we believe the nation's economic recovery can best be supported by enacting measures that help Canadians and Canadian business prosper.
Mr. Chairman, thank you for the opportunity of appearing before this committee. I would be pleased to respond to any questions.