Thank you,
Mr. Chair, ladies and gentlemen.
Thank you again for the privilege to appear before you.
The last time I spoke before this committee was during the FATCA hearings, which were quite contentious. Of course, the budget is very important to all Canadians, but I suspect it might be a little bit less contentious today. Again, thank you.
In my brief comments I thought I would emphasize what I consider to be the academic tax consensus surrounding how one should form a budget. None of this will surprise you. You need a broad base, fewer loopholes.
Today I have come from my Queen's law class. It ended at one o'clock. I taught them a little bit about the 1987 budget of Michael Wilson, the former finance minister. I teach that as the high-water mark of my generation in terms of achieving a fair budget which both brings in revenues and drives the economy forward. As a very broad generality then, one should try to broaden the tax base, reduce shelters, reduce loopholes, and potentially even bring down rates at the same time.
I know this would be a very ambitious agenda that's not going to be implemented within the next budget, so my main recommendation today would be, within this budget, to appoint an independent expert panel to provide advice on the short-term and long-term options to streamline our current tax system. The problem is that since that 1987 budget, almost 40 years have passed and the amount of tax provisions have ballooned to a significant extent.
In the United Kingdom, they have a permanent independent tax simplification office. If we could allocate moneys and budgetary amounts toward that sort of independent expert panel, I think you would see a lot of good come out of it.
I recently participated in an expert panel at the Mowat Centre of the University of Toronto. This was a project directed by Matthew Mendelsohn, and it involved two years of analyses concerning how to modernize our corporate income tax system. A report was recently co-authored on this topic by my colleague Robin Boadway at Queen's, as well as his co-author Jean-François Tremblay.
Through that process one could see, because it was an independent panel, an awful lot of thought put into the long term. I think that's what Canada's tax system needs, this long-term independent perspective.
I have two specific recommendations.
I have previously testified on several different occasions about the problem of offshore tax evasion. I think you're all familiar with the 2013 data leak obtained by the International Consortium of Investigative Journalists. They partnered with the CBC, which retained me. It showed that there are thousands of Canadians maintaining offshore accounts. There was clear illegal activity taking place. I've also consulted with the Auditor General more recently on this file.
There are a lot of revenues, in my opinion, to be found in the offshore world. I should note, of course, that much of this activity is legal, but much of it is not. To the extent the government could invest funds in tracking down these offshore tax cheats, for every dollar you put into that system, I suspect you'd see a significant return.
This brings me to the final thing I'd like to mention. Again, I've just talked about the need to broaden the tax base, but I'd also highlight what I thought was a very reasonable reform effort back in 2007, when this government introduced the working income tax benefit, the late Jim Flaherty's WITB. It was based on the Americans' earned income tax credit. It's generally available to working families with a low income. It gives them a refundable tax credit. This has turned out to be a powerful weapon to fight poverty in our country. To the extent the government would see fit to extend these benefits and enlarge them, in my opinion this would be a worthwhile reform effort.
Thank you, sir.