LILLEY: Forget Trump and Washington, here’s the plan to get Canada winning

The U.S. election changes little for Canada. If we want investment, talent and growth to stay here, we need to rewrite our tax system from top to bottom.

Published Nov 04, 2026  •  Last updated 22 minutes ago  •  4 minute read

The U.S. and Canada flags fly next to the Blue Water Bridge border crossing in Point Edward, Ont., Oct. 24, 2025. Photo by Geoff Robins / AFP / Files /Getty Images

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It’s time for Canadians to look after our own house, clean up our own mess and stop worrying about what is happening south of the border. It’s time for Canada to undergo massive tax reform to make us more competitive in attracting investment and keeping talent in this country.

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The American midterms are over; the Democrats have won both the House and the Senate and, despite what many Canadians think, this doesn’t improve our situation regarding tariffs. We still need a deal with the Americans, but any deal is still going to have some level of baseline tariffs.

Expanding trade with other countries and blocs like the EU or India is a good idea, but it takes time to build up.

Laurent Ferreira, the CEO of National Bank, recently called for Ottawa to scrap its current tax code and rewrite it with one goal: “becoming the simplest, most efficient and most competitive tax jurisdiction of all developed countries.”

Here are five measures we could take to achieve that goal.

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Tax cuts that would matter

Expand personal income tax brackets and lower the rates.

For too long, politicians in this country have thought small when it comes to tax cuts. They raise the basic personal exemption or tinker with the rates at the lower end.

The tax changes we should be making would reward hard work rather than punish it, and yes, much of the benefit would go to higher-income earners. That, in turn, would encourage more of them, including professionals and company founders, to stay in Canada rather than contributing to the brain drain.

We need to raise the lowest tax bracket from $58,000 a year to $70,000 and drop the tax rate from 14% to 12%. The next rate should be 18% for income between $70,000 and $150,000. Then 22% on income up to $250,000 and 25% on income above $250,000.

Make Canada the best place to invest

Cut Canada’s corporate tax rate to 10%.

In 1986, Brian Mulroney proposed the then-controversial idea that Canada’s corporate tax rate of 36% was too high and needed to come down. He was heavily criticized.

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The fear was that the government would lose revenue and companies wouldn’t pay their fair share.

The opposite happened, as revenue from corporate taxes increased from $9.1 billion to $12.8 billion in 1990.

When Jean Chrétien took the corporate tax rate from 28% in 2000 to 21% in 2004, the same thing happened. Revenues rose from $22 billion in 2000 to $28 billion in 2004.

In Mulroney’s last budget, with the 36% rate, corporate income taxes accounted for just 11% of federal revenue. Today, with a corporate tax rate of just 15%, corporate income tax accounted for 19% of revenue in the last budget.

Yet, we aren’t as competitive as we once were, nor as competitive as we could be.

With the Americans putting up barriers to cross-border trade, we need to be the most attractive place to invest. That’s why taking the current corporate tax rate of 15% down to 10% makes sense.

The increase in economic activity and the extra investment the lower tax rate would generate would help offset the initial loss of revenue.

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Small changes, big payoffs

There are several smaller things we could do as well to keep and attract talent, such as giving special tax treatment to patents, software and other IP developed and held in Canada.

Several European countries already do this, offering preferential tax treatment on income derived from IP developed and held domestically. The goal is to reduce the amount of knowledge and IP transfer currently heading south as companies expand.

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The federal government should also roll back the 1.5% surtax that currently applies only to banks and insurance companies. This tax is a punishment on our most successful companies and signals to them that they should put investment and expansion into other jurisdictions.

The Carney government should also steal an idea from Pierre Poilievre’s Conservatives: a complete capital gains exemption for profits that are reinvested in Canada.

This would give investors a powerful reason to keep their money working in Canada instead of cashing out or moving capital elsewhere. It would unleash a fair amount of capital.

The impact of the American tariffs is a drag on our economy. The measures described here would overcome that drag and spark an economic boom.

Mark Carney likes to say that we can give ourselves more than they can take away. Tax reform on this scale would accomplish that.

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