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Liberal MP Wayne Easter says he’s not advocating for any specific changes to the tax system but wants to hear a broad analysis from independent experts.Sean Kilpatrick/The Canadian Press

A promised review of Canada's tax system should be taken out of the hands of the public service and MPs and led by an independent group of experts, the chair of the Commons finance committee says.

Liberal MP Wayne Easter says the review should be broader than what was suggested in the budget and should even tackle the sensitive issue of whether to raise the GST.

"I think it needs to be quite a comprehensive tax review," said Mr. Easter, who was not speaking on behalf of the committee. "Because it has become extremely complicated and we all know that people who have the means can find approaches to perhaps limit their taxation more than others."

Finance Minister Bill Morneau's 2016 budget promised a review of the tax system but few specifics were offered. In a postbudget interview with The Globe and Mail, Mr. Morneau suggested the review would be limited to examining tax expenditures, the various boutique tax credits that have been added to the tax system over the years that now have a total value of more than $100-billion a year.

The budget also gave an extra $444.4-million to the Canada Revenue Agency over five years to hire more auditors and specialists to crack down on tax evasion and avoidance. The government is counting on raising an extra $2.6-billion during that period from the added enforcement.

Mr. Morneau said no decision had been made on whether the tax review would be led by the federal government, an independent panel or the House of Commons finance committee.

"There will be more details to come. We don't currently have a definitive plan on the approach," he said.

The ultimate decision on how to implement the budget pledge belongs to Mr. Morneau and his cabinet colleagues, but Mr. Easter is an influential voice as a senior member of the Liberal caucus. The finance committee could choose to conduct its own study independently of what the government decides, but Mr. Easter says he will argue in favour of having an arm's length panel review the issue before the committee weighs in.

The minister has insisted the Liberals are not considering changes to the federal sales tax, which the Conservatives reduced from 7 per cent to 5 per cent. However, some fiscal experts predict that debate may come up again if the Liberals struggle to erase the string of deficits created by the 2016 budget. The Parliamentary Budget Office estimates that a two-percentage-point increase to the GST would raise about $11-billion a year in additional revenue.

Officials with Finance Canada and the CRA regularly review the various tax credits and watch for evidence that any of them may be open to abuse via aggressive tax planning. Annual budgets regularly make changes to tax credits to address concerns that may have never been widely known.

But Mr. Easter says the government's promised review should "absolutely not" be left in the hands of public servants.

"We do not need the bureaucracy doing any more reports on itself," he said. Mr. Easter said he is not advocating for any specific changes regarding the GST or any other aspect of the tax system but said he wants to hear a broad analysis from independent experts.

"Personally, I think you've got to look at the taxation as a whole and that includes everything from consumption taxes, to income taxes, to corporate taxes to boutique tax breaks," he said. "I want to hear the evidence."

During its prebudget hearings, the finance committee heard from numerous witnesses – including the Conference Board of Canada and the Business Council of Canada – who called for a broad-based review of the tax system.

Former Liberal finance minister John Manley, who now heads the Business Council of Canada, argues Canada's overly complicated tax system is bad for investment and any federal review should be broad.

"The whole area of tax expenditures is due for a cleanup, so in that sense the government is on the right track. But what we really need is a wide-ranging review of the entire tax code," he said in an e-mail Monday. "It's time to step back and look at the big picture."

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