Canada should overhaul a decade of Trudeau-era tax policy to remain competitive with the United States, a Commons industry committee is urging, citing concerns that high rates are discouraging investment and entrepreneurship.Blacklock's Reporter says in a report titled Improving Productivity in Canada, MPs called on cabinet to undertake a comprehensive review of the federal tax system, focusing on corporate income tax, capital gains taxation, and top marginal personal income tax rates compared with Canada’s largest competitors. The committee highlighted that Canada has faced “significant and growing productivity challenges for many years.”Former Prime Minister Justin Trudeau raised the top federal personal income tax rate from 29% to 33% in 2016 and attempted a $17.4 billion increase in capital gains taxation in 2024, which was blocked after a nine-week Conservative filibuster.The report warns that Canada’s current top rates could be discouraging entrepreneurship, head office location decisions, and risk-taking. “Several witnesses emphasized Canada’s tax system should be reviewed to better encourage investment,” the report said. It noted that combined federal-provincial rates can exceed 50%, and highlighted that the United States has no capital gains tax on the first $21 million of profits and allows investors to defer capital gains taxes if proceeds are reinvested..The current cabinet has already repealed several Trudeau-era measures, including a $3.7 billion Digital Services Tax, a 10% luxury tax on private aircraft over $100,000, a luxury tax on pleasure boats over $250,000, and suspended a 1% annual equity tax on vacant, foreign-owned residences last November.“No Parliament has reviewed the Income Tax Act in 60 years,” the report noted, citing the 1966 Royal Commission on Taxation, which called the Act “a ponderous, unwieldy monster” that distorts the distribution of goods and services. Committee members say modernization is long overdue to strengthen Canada’s competitiveness and simplify a tax system that many witnesses described as overly complex.Sen. Elizabeth Marshall warned in 2017 that Canada’s tax regime has grown “needlessly distorted” and called for urgent reform — a sentiment echoed in the latest Commons report.