Report says some taxes do more harm than good and should be reduced
Working fewer days while boosting productivity should be a win-win for businesses and workers but can it be achieved under the current tax regime?
No, according to a new essay from the Fraser Institute which says that cutting certain taxes is key to economic growth.
Senior economist Jake Fuss argues that lower tax rates on business, capital gains, and personal income should be considered by governments across Canada.
“Some types of taxes do more damage to the economy than others, so policymakers should move away from the most damaging taxes to help improve economic and productivity growth and increase the possibility of a four-day work week in Canada,” he said.
Fuss’ paper is called Increasing Productivity Through Tax Reform and states that Canada’s relatively high personal income tax rates means “we’re at a competitive disadvantage in encouraging, attracting and retaining high-skilled workers and entrepreneurs.”
Meanwhile, business tax rates mean higher costs for equipment, materials, and labour.
Fuss also says that the capital gains tax rules mean that some hold onto certain investments longer rather than sell and reinvest in more productive endeavours.
“By lowering tax rates on personal and business income, governments would encourage and incentivize the very things we need more of—investment and entrepreneurship, which lay the foundations for a four-day work week through improved productivity,” said Alex Whalen, Fraser Institute policy analyst and study co-author.
By lowering tax rates on personal and business income, governments would encourage and incentivize the very things we need more of — investment and entrepreneurship. https://t.co/h8yBo1LcuW pic.twitter.com/kmLWN8aeVt— The Fraser Institute (@FraserInstitute) February 4, 2021