Ottawa weighs sweeping review of tax system

The House of Commons finance committee is calling for an expert panel to conduct a wide-ranging review of Canada's personal and corporate tax systems – but any new tax cuts should wait until Ottawa balances the books.

The 152-page report tabled Wednesday is the first pre-budget report released by the finance committee since the Conservatives won a majority government in May, meaning the Tories also have full control over committees and their recommendations.

Noting that witnesses suggested a wide range of reforms for personal taxes – from extending the tax filing deadline to creating new tax brackets to make the system more fair – the committee recommended a panel be struck to "review, modernize and simplify the personal tax system." A separate recommendation calls for an expert panel to review the federal corporate tax system.

Conservative MP and committee chairman James Rajotte said in an interview he expects the panel would have a broad mandate to recommend changes, including changes that could take effect before the deficit is erased.

The final report's list of recommendations reads like a pat on the back for the government, as the vast majority of the recommendations call on the federal government to "continue" various policies that are already underway.

"It's not a time when you can advocate a lot of new spending," Mr. Rajotte said.

The recommendations from the Conservative majority will come as no surprise to those who have been listening to Prime Minister Stephen Harper or Finance Minister Jim Flaherty throughout the fall.

For instance, the report calls on the government to carry on with a plan to cut $4-billion a year in ongoing annual savings by 2014-15 without raising taxes or cutting transfers to individuals or other levels of government. It also says the government should continue working toward a new long-term infrastructure plan for municipalities.

One recommendation that will likely prompt debate calls for the government to examine the concept of a First Nations Property Ownership Act, which would allow natives to opt in to a system of private land ownership on reserve.

The NDP and Liberals –each of whom issued their own dissenting reports – both panned the process, which involved months of extensive hearings across the country to gather recommendations from individuals and organizations.

Both opposition parties said the Conservative recommendations ignored the advice of many witnesses who called on the government to do more than the status quo in the face of continued weakness in the Canadian economy.

NDP MP Peter Julian said recent Bank of Canada warnings about record household debt underscore the need for new measures to create jobs, yet that advice fell on deaf ears.

"Canadian families are suffering," he said. "I don't think the majority report reflects what witnesses were saying."

Liberal finance critic Scott Brison accused the Conservatives of turning the pre-budget hearings into a "propaganda" exercise for the government.

"Of all the pre-budget consultation processes I've participated in – and there's a lot of them over the years – this one was the most disrespectful of Parliament and disrespectful of the witnesses and their organizations in terms of ignoring the legitimate opinions of a lot of Canadians who took the time to meet with us," Mr. Brison said.

Mr. Rajotte, the Conservative committee chair, defended the process. He said many of the recommendations in the main report had opposition support, but noted a pre-budget report contains a wide range of issues on which parties will disagree.

"I think it would be very difficult to get a unanimous report," he said.