Author Description

This paper discusses the available room for federal tax reductions, drawn from a set of fiscal assumptions that seek to establish the available scope for tax decreases that would keep the federal government on a prudent fiscal course. The purpose of the paper is to establish a reform schedule that is consistent with the room available to cut the overall federal tax take without returning the treasury to a precarious fiscal position. The schedule also assumes restraint in launching major new spending programs. The paper reviews the current fiscal environment and the principles that would govern the practice of tax reform, including fairness, horizontal and vertical equity, economic efficiency, and low administrative and compliance costs. The following candidates for tax reduction are considered: corporate and personal income taxes, employment insurance premiums, and the goods & services tax. Finally, a full package of personal (and some business) tax reform measures and a schedule for introducing these changes are proposed.