Appendix

This document has repeatedly stressed the importance of lowering rates and broadening the tax base for the purpose of delivering the most effective tax system possible.

The broader the base, the larger the personal credits that may be allowed, given any particular tax rate, and therefore the more progressive the system.

The proposed base broadening measures are enumerated below. Virtually every income deduction or tax credit proposed to be eliminated has the effect of granting a preference to a particular group or activity or behaviour, with the net effect that everyone not in that group or not participating in that activity must pay higher taxes than otherwise. Eliminating these preferences is a matter of putting all Canadians on the same footing with respect to the federal income tax system. Each preference will clearly have its defenders with at least superficially valid claims; the argument against all preferences is simply a matter of consistency. Eliminating each preference allows us to lower the tax burden for everyone, in a fair and efficient manner.

Major Income Deductions Eliminated

• Attendant Care Expenses
• Moving Expenses
• Workers'Compensation Payments
• Employee Home Relocation Loan Deduction
• Stock Option and Shares Deduction
• Capital Gains Deduction
• Northern Residents Deduction
• Forward Averaging
• CCA on Certified Canadian Motion Pictures
• Employer Paid Health Plan Premiums
• Child Care Expenses
• Receipt of InterCorporate Dividends*

Modified Income Deductions

• Business Expenses with "Personal Consumption Element" (e.g., Meals, Entertainment, Autos (50%)

New Income Deductions

• Payment of Dividends to Canadian Residents*

Major Tax Credits Eliminated

• Age
• Spousal/Equivalent
• Pension
• Tuition
• Education
• Medical
• Labour Sponsored Funds
• Political Contributions
• Investment Tax Credits
• Scientific Research & Experimental Development
• Dividend Tax Credit*

*Consequential to full Corprate Tax integration