IDA Calls For Capital-Promoting Tax Policies

by Mike Godfrey, Tax-News.com, Washington

25 September 2003

The Investment Dealers Association of Canada released its federal 2004 pre-Budget submission this week which calls for a greater emphasis on tax policy by the government to promote capital investment and economic growth.

Whilst the IDA praised the government for its leadership in "putting Canada’s fiscal house in order" and commended its "prudent fiscal track record" which has led to a sixth consecutive year of budget surplus, it warned that more must be done to make capital markets operate more efficiently.

In its pre-budget submission entitled 'Opportunities For Growth', the IDA's key recommendations are to:

• Reduce the capital gains inclusion rate from 50% to 25% on shares of small publiclylisted companies.
• Lower corporate income tax rates and accelerate the elimination of capital taxes.
• Enhance the RRSP program through higher contribution limits.
• Clarify the income tax treatment for the lending of mutual fund trusts.
• Increase the dividend tax credit.

"The IDA believes that the federal government, following years of sound economic and fiscal management, is now in a position to invest in the Canadian economy through measures which will have the greatest positive impact on future productivity and competitiveness of our economy," states the report. "This can be enabled through tax policies which support Canada’s productive capacity through more efficient and healthier capital markets," concludes the IDA.

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