There was an important announcement in Canada yesterday. A corporate tax system, introduced with maybe misguided intent, has been extensively abused for a purpose for which it was never intended. The result is that a form of trust has been used by large businesses in Canada to save more than $70 billion, a cost Canada could clearly not afford. It's interesting to note that many such businesses claimed:
They feel compelled to seek more favourable tax treatment by capitalizing on an available tax rule.
While these decisions offer corporations short-term tax benefits, they are creating an economic distortion that is threatening Canada's long-term economic growth and shifting any future tax burden onto hardworking individuals and families. If left unchecked, these corporate decisions would result in billions of dollars in less revenue for the federal government to invest in the priorities of Canadians, including more personal income tax relief. These decisions would also mean less revenue for the provinces and territories.
It's good news to see therefore that the practice is being stopped, and that this is quite deliberately termed a 'tax fairness plan'. That's a step in the right direction. And is some indication of the absurdity of the argument that businesses are 'compelled' to act anti-socially.