Mr. Chairman, committee members, and fellow witnesses, I am pleased to be with you this afternoon representing the Chartered Professional Accountants of Canada. Thank you for inviting us.
As this is the first time CPA Canada is appearing before the committee, I would like to provide a background of our organization. CPA Canada is a national organization established to support and represent the new chartered professional accountant, or CPA, designation. It was created by the Canadian Institute of Chartered Accountants and the Society of Management Accountants of Canada to provide services to all CPA, CA, CMA, and CGA accounting bodies that have unified or are committed to unification.
The unified body will have approximately 170,000 members. As part of the unification effort, CPA Canada and the Certified General Accountants Association of Canada are working toward integrating their operations, including the development this year of a co-branded 2013 pre-budget submission, and I'm pleased to be presenting alongside our colleague from the Certified General Accountants Association here today.
At the outset, I want to underscore the crucial role that strong management of government finances plays in achieving a sustained economic recovery and enhancing economic growth. CPA Canada applauds the government for its continued commitment to balancing the budget, now estimated to happen in 2015, largely through expenditure controls.
Mr. Chairman, we made three recommendations in our written submission that would encourage economic growth, promote job creation, and help improve Canada's productivity record.
First, we call upon the federal government to undertake a comprehensive review of Canada's tax system to reduce complexities and inefficiencies. Tax simplification recommended by this committee in recent years would increase productivity, improve Canada's competitiveness, and eliminate a barrier to jobs, growth, and long-term prosperity. We recommend a two-staged approach. The federal government should undertake a comprehensive review of Canada's tax system and appoint an independent expert panel to provide advice on short- and long-term options to streamline and modernize Canada's tax system.
In addition, consider creating an independent tax simplification office to provide advice on reducing its complexity. The U.K. office of tax simplification could serve as a model. Taxpayers would benefit from lower compliance costs, businesses would face less red tape and have more time to devote to productive endeavours, and government would have lower administrative costs and more predictable revenues.
Second, we recommend that standard business reporting, specifically XBRL, be adopted for use by businesses for all government filings. This would cut the red tape and compliance costs of businesses of all sizes. Standard business reporting would enhance the government's data collection, which could be shared among departments and agencies. We were pleased that XBRL was included in this committee's recommendations in 2012.
Indeed, adopting standard business reporting would benefit business, taxpayers, and the federal government. Of note, the Canadian Federation of Independent Business identified compliance cost as a significant issue to Canadian business. We ask that the committee repeat its recommendation and issue a report and that a cross-departmental study and cost study be undertaken, with results forming the basis for developing an implementation plan.
Third, capitalizing on the creativity of Canadians by transforming their knowledge into products and services in the global marketplace—what we call commercializing innovation—can improve Canada's productivity record. Several countries encourage the commercialization of innovation by a tax incentive known as a patent box. A patent box reduces the tax rate on income derived from the exploitation of research and development and the ownership of intellectual property rights flowing from R and D. The objective is to encourage R and D activity and the commercialization and adoption of intellectual property developed from R and D by domestic firms.
Canadian businesses would benefit by paying a lower rate of tax on profits earned from commercializing their innovations. A ripple effect of high-value employment opportunities would emerge as companies increased their research, development, and exploitation of innovation in Canada. We recommend, therefore, that the federal government implement a patent box regime to incent Canadian companies to develop and commercialize their innovation in Canada.
In closing, CPA Canada continues its commitment to financial literacy, to foreign credential assessment initiatives, and to helping internationally trained accounting professionals, and we remain committed to working with you to promote economic growth, job creation, and increased productivity.
Mr. Chairman, thank you very much.