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What does a good tax reform review to develop a 21st-century tax system for Canada look like?

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First, it’s thorough, not the political cherry-picking of voter-friendly policies.

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Second, a review starts by reminding Canadians what a good tax system looks like. It is well accepted that economist Adam Smith’s four canons of a good tax system, laid out in The Wealth of Nations in 1776, are good principles for a country to strive towards: equity/fairness (but not the definitions that many politicians like to adopt), certainty, convenience and economy (efficiency).

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This exercise alone would no doubt reveal that Canada has strayed mightily from those core principles.

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Third, it requires bold thinking; surgical fixes are not the solution. Instead, the tax system needs new and bold thinking — or, as economist Jack Mintz likes to say, Big Bang tax reform — to deliver overall economic benefits that Canada needs.

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These big ideas should generate direct or indirect benefits for all. Ideas that punish one group of Canadians to the exclusion of others should generally be off the table unless there are compelling reasons why it should be so.

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Fourth, it requires courage by political leaders to undertake such an important exercise. Such courage has lately been in short supply by politicians around the world, especially our Canadian governing party.

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That leads me back to my opening comment: why should the average Canadian care about tax reform?

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Because taxes are not just about the money you pay on your paycheque. Instead, taxes are one of the most powerful levers affecting your ability to build and preserve wealth. A reformed tax system should be fair, efficient and growth-oriented, as well as resilient to help with wealth building and preservation.

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Canada’s current system is a patchwork mess that is unable to withstand the shocks that our country is facing, with recent examples being the tariff threats from the United States, rising global tax competition and retaliatory proposals such as section 899 of Donald Trump’s “Big Beautiful Bill.”

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Without bold, principled reform, Canadians will continue to bear the cost of short-term political thinking while long-term prosperity fades.

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Edmund Burke, the 18th-century political philosopher, once said society is a partnership between those who are living, those who are dead and those who are to be born. That partnership is betrayed when we allow tax policies to drift into incoherence and incomprehensible complexity. We need to work hard to preserve a system worthy of future generations.

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Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

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