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Maximum personal rates in most provinces exceed 50 per cent (and some, such as Ontario, Quebec, British Columbia and most Atlantic provinces, approach 54 per cent), which is simply unacceptable. In a world where skilled labour and capital are mobile, a top rate above 50 per cent is self-defeating.

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Instead, 45 per cent should be the maximum combined federal-provincial rate, with the co-operation of the provinces needed to achieve that objective. This would enable successful Canadians to keep more than half their earnings and provide a magnet to attract and retain those taxpayers who pay the vast majority of personal tax revenues.

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A further enhancement would be to eliminate all the tax brackets in favour of a high one and one or two other lower brackets. Modelling this would obviously need to be done to appropriately set the brackets, with consideration of family taxation models also forming part of a broader reform discussion.

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How would this be paid for? Approximately 45 per cent of federal revenues come from personal taxes, so any reductions in personal tax rates would cost the government significant revenues.

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A natural starting point would be to further reduce government expenditures. For example, the federal public service headcount in 2015 was approximately 257,000. That ballooned to 368,000 in 2024, a 43 per cent increase that was nearly three times faster than the population growth over that time and more than three times faster than real gross domestic product growth. The addition of over 110,000 new employees was not scaling with demand; it was bureaucratic bloat.

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The federal government in its latest budget committed to reducing the federal public service by about 40,000 positions — to roughly 330,000 — by the end of the 2028-29 fiscal year. Frankly, that’s not deep nor fast enough. There would appear to be significant room to cut much more, with some of those savings used to fund Big Bang personal tax reform. Would that be enough? Not likely, so more avenues would need to be explored.

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Just like building lasting personal health, effective tax policy doesn’t come from gimmicks. It takes consistency, discipline and a commitment to long-term outcomes. Canada’s so-called groceries rebate is a perfect example of the gimmick-first approach: a cash handout wrapped in good intentions, but with no structural benefit or lasting value. That’s not policy; that’s vote-buying.

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If we want real affordability and improved productivity, we need to stop lurching from one political Band-Aid to the next. Instead, let’s focus on a tax system that rewards effort, simplifies compliance and actually grows the economy.

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There’s a difference between Big Bang tax reform and tax gimmicks. One is a plan; the other is a panic button with a price tag. Let’s get fiscally fit and stay that way.

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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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