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Canada's Tax System 'Too Complex' Say Accountants

by Mike Godfrey,, Washington

12 August 2011

Canada's "overly complex" tax system imposes unnecessary and significant hidden costs on businesses and consumers, the Certified General Accountants Association (CGA) of Canada has said, calling for the launch of a debate on tax simplification.

In a new study commissioned by CGA-Canada, "The Need for Tax Simplification – A Challenge and an Opportunity", key issues of tax simplification are highlighted. The study shows that consumers, businesses and the economy feel the effect of an overly complex tax system in more than just tax bills; the time and money spent to comply with the system adds up to a significant hidden cost. In addition, it is pointed out that few attempts have been made to simplify the tax system since its creation in 1917. As a result, CGA-Canada is promoting the need for a review of both the personal and corporate income tax systems.

The Association is hoping that the study will stimulate discussion on the subject, and has said that with the economic recovery still very much fragile, now is a good time to open such a dialogue. Tax simplification is seen as opportune, given what CFA-Canada calls increasing fiscal pressures from demographic trends, and the threat of Canada lagging behind trading partners like the UK, Australia and the US on tax modernization.

Commenting on the findings, CGA-Canada's President and CEO Anthony Ariganello said: “Canada’s tax system is among the most complex in the world, which hurts our economy and adversely affects small and medium-size enterprises and individual taxpayers. We believe tax simplification is good for taxpayers, businesses, governments and our economy. Our members – CGAs in business, industry and private practice – overwhelmingly tell us it’s the top issue they want governments to tackle. We’re looking beyond the numbers to see what’s in the public’s best interest.”

“In our view, the benefits coming from a policy of reducing the tax burden on Canadians will be much greater with tax simplification and reform, but we need more public debate on the issue ... Now’s the opportunity for robust debate and for the federal government to look at how Canada’s tax regime can be simplified and streamlined to help build a strong, competitive 21st century economy,” Ariganello concluded.

TAGS: individuals | compliance | tax | business | corporation tax | small and medium-sized enterprises (SME) | Canada | tax reform | individual income tax

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