Canada needs a tax system that is totally transparent, simple to administer and easy to understand — one that dramatically reduces the time businesses and individuals spend filing their taxes. It should be black-and-white, with no grey areas or loopholes. And the tax forms should be simple to file — something a high school student could fill out in a matter of minutes.
But the reality is that we’re going in the opposite direction: Canada’s personal income tax code has swelled in size since it was first introduced more than 100 years ago, ballooning from six pages in length to nearly 3,000 pages today.
Every Canadian knows that our tax system is murky, convoluted, unnecessarily complicated and overly complex. I could provide hundreds of examples, but let me give you just one.
Regulation 8406 reads: “Where a person who is required to file an information return under Section 8401 requires information from another person in order to determine an amount that is to be reported or to otherwise complete the return and makes a written request to the other person for the information, the other person shall provide the person with the information that is available to that other person.”
That wording is practically unintelligible to most Canadians. But our laws are also impenetrable to many lawyers. When I was CEO of Magna International, we employed some of the country’s top corporate lawyers. I can’t count how many times we turned to our legal department with a thorny legal question, and they were unable to come up with a straightforward answer or figure out what course of action we could take.
They frequently suggested we consult other legal experts at one of the big Bay Street law firms. After countless consultations, and losing weeks or months of time and thousands of dollars in legal fees, we were often still left without a clear-cut answer. A lot of times, the best response I could get was, “Well, Frank, we’re not quite sure. Maybe we should consult another expert.”
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Jack’s Note: In one of Tom Clancy’s books (I forget which one) there is a chapter devoted to the American tax system. In it the Treasury Secretary is testifying before Congress and to illustrate his point he had his flunkies carry in and pile up on top of a very strong table set there for the purpose the entire US Tax Code. As was his intent the table collapsed from the weight of the documents and his point was “How is it possible for anyone to understand THAT mess (or words to that effect).”
Frank is bitching about exactly the same thing and in my opinion he’s correct to do so. I will add that if Canada’s tax codes (various) were piled up on a similar table not only would the table succumb to the weight of the documents, the entire building would collapse. Well done, Frank!
