Canada’s Income Tax Act Needs Reform
April 4, 2019
Canada’s Income Tax Act is an inefficient mess that needs to be radically reformed. It’s too complicated.
There are 40,000 employees at the Canada Revenue Agency. Based on Canada’s population versus the United States, we employ five times more people collecting tax than our American neighbour, on a per capita basis.
A simplified method of collecting taxes would make the process more efficient and staffing requirements would be greatly reduced.
In a survey done by the Chartered Professional Accountants of Canada, seven out of 10 accountants think our tax collection process needs reform.
The Fraser Institute reported that the initial income tax act in 1917 was six pages long and now, 100 years later, it has grown to 1,412 pages.
In our increasingly complex world, most people are aware of the advantages of simplifying things.
The complexity of our current system could be the cause of why almost one-third of taxpayer calls to the CRA helpline were answered incorrectly. This information comes courtesy of the Auditor General of Canada. Their study also found that calls to the CRA call centers were not answered almost two-thirds of the time.
If many trained government employees cannot understand the rules of our current income tax collection process, how can it be assumed Canadian citizens should understand those same rules.
The CRA admits that in 2014 it collected $8.7 billion less than it should have raised in theory. Could one of the reasons for this be that our income tax act has become obsolete?
If the same inefficiencies that occurred at the CRA happened in a business, that business would have gone broke decades ago.
One of the problems is the act was created by our federal government. Governments take pride in adding extra complexities in an effort to affect our economy, and in some cases additions are done purely for political reasons.
Our elected politicians should start with the specific instructions that our new income tax act would be limited in size, easy to understand, and efficient to implement.
Canada’s tax collection system is a mess. It needs to be overhauled