Royal Commission on Taxation

Taxation, Royal Commission on

Taxation, Royal Commission on, under Kenneth Carter, appointed (1962) by PM John Diefenbaker to examine and to recommend improvements to the entire federal TAXATION system. In 1966 the 6-volume report declared that fairness should be the foremost objective of the taxation system; the existing system was not only too complicated and inefficient, but under it the poor paid more than their fair share while the wealthy avoided taxes through various loopholes. The commissioners proposed that the same tax be levied on increases in economic power of the same amount however acquired, for as Carter reputedly said, "a buck is a buck." If its recommendations were implemented, the commission estimated, nearly 50% of taxpayers would have their taxes reduced by more than 15%; 10% would face increased tax liabilities of more than 15%, and the remaining taxpayers would notice little change. The wealthy, paying more taxes, would nevertheless share in the benefits of an efficient taxation system. A White Paper was released (1969) proposing implementation of some recommendations. Opposition, however, especially from several provincial governments and from oil and mining companies and small business groups, was so vociferous, as it had been to the report, that the Trudeau government retreated from any major reform. The new Income Tax Act contained many special exemptions and incentives which the commission had found objectionable and removed the federal Estate Tax Act, which had been a significant obstacle to the increasing concentration of wealth. Nevertheless, while the post-1972 federal taxation system bears little resemblance to that advocated in the Carter report, the report's influence is reflected in the partial taxation of capital gains and changes in tax administration.