I'll try to keep my answer brief, but as you can imagine I could probably spend an hour talking about this in a reply.
I want to start with the point about tax reform. I do think we need tax reform. We had a major tax reform back in 1972 in the wake of the Carter report and the discussion that ensued afterwards. When I chaired the committee on business taxation, Paul Martin was the Minister of Finance at the time. That report led to a lot of corporate tax changes, which I think actually did Canada well in that we did establish a business tax advantage that I think was very important for us.
I have the philosophy that governments are actually not very good at picking winners from losers, but losers are very good at picking governments. I think what's really important is to get the macroeconomic environment right. I think tax reform does that, because you stand back and you ask what we can do to generate more growth, have a fair tax system and simplify it.
I can tell you right now that one of the things that would not be done is expensing capital or accelerated depreciation. I think that is actually quite wrong to do because it tends to favour companies with short-life assets that turn over quickly and, therefore, they get the benefits from it. In fact, if we sat down and had a real tax reform, that would not be a direction that one would go in unless one wanted to eliminate interest deductibility on debt, and no one ever argues that when they're talking about accelerated depreciation.
Instead, we have to remember that Canada has a corporate income tax rate that's close to 27% now. We think it's in the middle of the pack, but that's no longer true. The top OECD rate now is in Japan at 31%, which could be bought down with employment. France is going to 25%. Belgium is going to 25%. There are only a few countries above us now. We're actually getting near the top.
Tax reform is very complicated, but it's not just a matter of investment. It's also where your workers are going to be. High personal tax rates are a problem, as pointed out by one of the witnesses. We also have to worry about our high corporate income tax rate now, because we're going to be a patsy for companies around the world putting costs into Canada because of our high corporate tax rate. We need to start thinking a little bit more about a serious reform, and I'm afraid that expensing is not going to do the trick in order to have a better system.
In fact, we've used accelerated depreciation for manufacturing, and expensing won't do very much for the industry because of that. We've had that going back to 1972 to 1989, then from 2006 on, and it hasn't necessarily done the trick that we think it's done. That's because in the end a lot of profitable companies end up having tax losses and can't use the incentive.
I'm afraid everyone has gotten on to this bandwagon of accelerated depreciation, but I can tell you right now that it's a big mistake. We did that in the 1970s, and I'm afraid we're going to start repeating it again right now.