Thank you, Chairman.
The CBA is pleased to participate in the committee's pre-budget consultations in preparation for Budget 2013.
As many of you know, the CBA represents 54 banks in this country and their 274,000 employees across Canada.
Our banks are playing an important role in helping families, businesses and communities across Canada to weather the economic turbulence that still persists around the globe. The strength of our national banking system and the soundness of our banks are rooted in effective management, regulation and supervision.
This soundness has been recognized internationally. The World Economic Forum named Canadian banks number one in the world for safety and soundness for five years running, in large measure I think because the banks in this country are practical, prudent, and play by the rules.
I want to turn to our pre-budget submission to the committee that we made earlier this year. I'm going to provide a very brief overview. I look forward to our conversation afterwards.
The first point we make in our submission is that keeping taxes competitive is, in our view, a key tool for promoting economic growth by encouraging new investment. Higher taxes, by contrast, would discourage investment by reducing the return that entrepreneurs and businesses get on their capital. This is why we are pleased with the federal government's commitment to maintain a 15% corporate income tax rate.
While governments nowadays do face difficult decisions in their efforts to return to balanced budgets, we are concerned by proposals to postpone or reverse tax rate reductions. The reductions in the combined federal-provincial tax rate since 2000 have made Canada more competitive without reducing tax revenues. Overall, corporate income tax revenues increased by 44% from 2000 to 2010 and remained relatively stable as a percentage of GDP.
Provincial tax rates are an important part of this equation as well. That's why we are recommending that the federal government encourage the provinces to achieve and maintain a 10% targeted corporate income tax rate.
In our submission, we also have some commentary about capital taxes, but in the interests of time, Mr. Chairman, I think I'll suggest that if members have questions here, we can come back to it later.
Another point we raise in our submission is that despite the economic weaknesses we see in other countries, the Canadian economy has performed relatively well in comparison to its peers. We support efforts to continue to lay the groundwork for additional growth and job creation through the broadening of Canada's trade and investment relationships.
To that end, we agree with the federal government's initiatives to broaden Canada's trade profile around the world. Over the last several years, the federal government has actively negotiated, signed, and brought into force several free trade agreements, foreign investment promotion and protection agreements, and other international documents.
These initiatives provide for an increased level of predictability, certainty, and access for Canadian businesses, so the CBA is encouraging the federal government to consider including, while pursuing trade negotiations in the future, measures that would prevent the extraterritorial application of foreign laws to Canadian financial institutions and account holders. An example we have here, obviously, is the U.S. FATCA legislation.
Also, in our submission we note that the banking industry welcomed the passage in June of this year of Bill C-25, the Pooled Registered Pension Plans Act. PRPP would be I think particularly useful for people who do not now have access to a private sector pension plan, which we know is common among employees of small and medium-sized businesses and the self-employed. These groups have typically faced barriers to private pension schemes, given that other options are often too costly or administratively complex and contain risks that smaller employers are not prepared to take.