Canada’s tax system has become 72% more complicated

Fraser Institute says the extra burden costs time and money for Canadian taxpayers

Canada’s tax system has become 72% more complicated
Steve Randall

Compliance with the Canadian tax system was easier in 1990 than it is today according to a new report.

As the tax-filing deadline approaches, Canadians will need to comply with the Income Tax Act which has expanded over the past few decades. The Montreal Economic Institute recently called for the Act to be cleaned up.

In a new analysis, the Fraser Institute says that between 1996 and 2016, the number of federal personal income tax expenditures (exemptions, deductions, credits and exclusions) increased from 111 to 146, an increase of 32%; and the number of federal corporate income tax expenditures increased from 66 to 76, up 15%.

“A growing web of complicated rules and changes has made the tax system more difficult for Canadians to understand, which affects the cost—in time and money—of compliance,” said Finn Poschmann, resident scholar at the Fraser Institute and co-author of Tax Complexity in 2019: Can It be Tamed?

The Income Tax Act has also grown in area by 72% (from 974,050 in 1990 to 1,673,802 in 2018). There are also 2% more pages, which may sound small except that the size of the pages has also increased by 69% to 598

“Clearly, our tax system has grown more complex for Canadian families, businesses and even governments, so if policymakers want to make it easier and less expensive to comply with the system, they should pursue simplification,” Poschmann said.

The report says that Canada has not tried to simplify the tax system and has “demonstrated little concerted effort at regulatory reduction or simplification.”

The Fraser Institute recently reported that Canadians pay more personal income tax than those in the US at almost every income level.