OTTAWA — The federal government is preparing a phased overhaul of Canada’s tax code with early changes targeted at small businesses and measures intended to make the country more attractive to overseas investors, a cabinet minister involved in budget consultations told reporters.
Wayne Long, MP for Saint John—Kennebecasis and secretary of state responsible for the Canada Revenue Agency and financial institutions, said Ottawa plans to address tax code complexity “one bite at a time” as it prepares a fall budget that Liberal ministers have framed as the next step in post-tariff economic recovery.
“When you say the word tax code to people, everybody rolls their eyes. Everybody’s like, ‘Oh, the tax code used to be one book thick, now it’s two books thick. We just keep piling on,’” Long said. “Is a total review of the tax code needed? Absolutely.”
Focus on relief for small business
Long — one of several Liberals conducting pre-budget consultations alongside Finance Minister François-Philippe Champagne — described the upcoming fiscal plan as “chapter two” in efforts to attract investment and support growth after what the government has called a disruptive tariff period. He said officials have heard directly from a “major international player” that changes to Canada’s tax rules and investment governance would influence its willingness to commit capital here.
While Long did not outline a detailed reform timetable, his comments indicate Ottawa will prioritise measures aimed at reducing administrative and compliance burdens on small enterprises as an early component of broader tax-code work.
Limited reforms to date, but more coming
The Liberals have already enacted a handful of tax measures since Mark Carney became prime minister. On the corporate side, Ottawa moved to encourage capital investment by allowing immediate write-offs for new equipment. On the personal side, the government cut its lowest income tax rate — a measure Long referenced during interviews — but broader structural review of the entire tax code has yet to materialise.
Consultations this summer are intended to surface the pain points businesses and investors face, and to guide which pieces of the tax system will be tackled first. Long said the government wants to be “super aggressive” in removing barriers that discourage investment.
Implications for businesses and investors
Targeted early reforms aimed at small businesses could reduce compliance costs, simplify filing and free up cash flow for investment and hiring. For international investors, clarity and predictability in tax rules — along with streamlined governance around foreign capital — can be decisive when choosing between jurisdictions.
Officials’ decision to proceed incrementally rather than with a single comprehensive rewrite reflects political and technical realities: tax systems are deeply intertwined with fiscal objectives, and large-scale changes can produce unexpected distributional effects that require careful modelling.
- What Ottawa has signalled: phased tax-code reform with small-business changes among early priorities.
- Why now: to spur investment and growth following external trade shocks and to respond to feedback from international investors.
- Recent steps taken: immediate write-offs for new equipment (corporate); reduction in the lowest personal tax rate.
| Area | Recent or promised action |
|---|---|
| Corporate | Immediate write-offs for new equipment |
| Personal | Cut to the lowest income tax rate (referenced by officials) |
| Tax code overhaul | Planned incremental review; small-business measures prioritised |
That incremental approach will allow the government to pilot changes, evaluate effects and adjust before proceeding to more complex reforms. But it also means those seeking swift, comprehensive simplification of the tax code may have to wait as ministers address lower-hanging fruit first.
Long’s comments also underscore a political agenda: presenting the fall budget as a continuation of the government’s economic plan while signalling responsiveness to business and investor concerns. Whether that will translate into significant new incentives or administrative relief for small firms remains to be detailed in budget documents.
With consultations ongoing, businesses and advisers will be watching for concrete proposals that reduce paperwork, clarify tax treatment for common small-business situations and lower compliance costs — measures that deliver immediate cash-flow benefits and incremental improvement to the investment climate.
The government’s choice to prioritise small-business relief as an opening salvo in tax-code reform reflects both economic and political calculations: easing the regulatory burden can be a tangible win for a wide swath of voters while serving as a signal to global capital that Canada intends to be more competitive.
