CPA Canada Business Monitor: Canadian tax reform and balanced federal budgets

A review of the country’s tax system and setting a target date for a return to balanced federal budgets are endorsed by professional accountants in leadership positions, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

Toronto, January 15, 2018 – A review of the country’s tax system and setting a target date for a return to balanced federal budgets are endorsed by professional accountants in leadership positions, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

The latest CPA Canada Business Monitor (Q4 2017) shows a strong majority (71 per cent) of business leaders agree a comprehensive review of Canada’s tax system is required. CPA Canada has repeatedly called for an extensive independent review of Canada’s tax system aimed at reducing complexity, ensuring economic competitiveness and enhancing overall fairness.

Such an approach was recently called for by the Senate Committee on National Finance.

“Canada’s tax system is an essential tool to improve our competitive position, to attract and retain the best and brightest minds, and to support inclusive economic growth,” says Joy Thomas, president and CEO, CPA Canada. “An extensive review will help identify where changes can be made to ensure all Canadians are paying into and benefiting from the tax system in an equitable way.”

Seventy-five per cent of those surveyed also agree the federal government should set a target date to return to a balanced budget.  Sixteen per cent disagree while eight per cent are neutral on the issue.

“Canada needs a plan for fiscal stability – a plan that demonstrates leadership and includes a return to budget balance over the medium term,” adds Thomas. “Establishing a target date would guide the government’s fiscal and economic planning, instill greater confidence among consumers and investors, create opportunities for growth and enhance Canada’s competitiveness.”

Economic Challenges

For the fourth straight quarter, protectionist trade sentiments in the United States are viewed as the top challenge to growth of the Canadian economy cited by 29 per cent of business leaders. Uncertainty in the Canadian economy (12 per cent) comes next, followed by the state of the U.S. economy (11 per cent).

Economic Optimism

Optimism about Canada’s economic outlook over the next 12 months remains essentially unchanged from last quarter at 48 per cent. Just over a third of respondents (36 per cent) report feeling neutral while 16 per cent are pessimistic.

Company Specific

Company optimism is sitting at 61 per cent, up slightly from 59 per cent last quarter. These findings reveal how the survey respondents view the prospects for their own companies over the next 12 months.

Focusing on revenues, 72 per cent of respondents are projecting growth over the next year, compared to 65 per cent from Q4 2016. For profits, 64 per cent of those surveyed anticipate an increase.

Turning to employee numbers, 50 per cent of those surveyed predict growth at their company, similar to the previous quarter. Thirty-four per cent of the respondents anticipate no change in employee numbers while 15 per cent expect a drop.

Methodology

The CPA Canada Business Monitor is issued quarterly, based on a survey commissioned by CPA Canada and conducted by Nielsen. The report draws upon business insights of professional accountants in leadership positions in privately and publicly held companies.

For the Q4 2017 study, emailed surveys were completed by 377 of 4,676 identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). The response rate was 10 per cent, with a margin of error associated with this type of study ±5.0 per cent, with a confidence level of 95 per cent. Further information regarding response rate calculations can be found in the survey’s background document. The survey was conducted from November 29th to December 18th, 2017.

A background document is available online at cpacanada.ca/businessmonitor.