National Bank CEO calls for overhaul of Canada’s tax code

National Bank of Canada chief executive officer Laurent Ferreira urged Ottawa to overhaul the federal tax system, saying it needs to be “scrapped” and rewritten to attract capital and talent.

The country’s tax code is overly complex, burdening companies and especially small businesses, which do not have the resources required to sort through all the rules, Mr. Ferreira said at an event held Wednesday by the Canadian Club Toronto.

The CEO of Canada’s sixth-largest bank has long advocated for tax reform aimed at boosting investment as Ottawa seeks to attract foreign capital for critical projects and diversify away from the Unites States.

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Mr. Ferreira called on the federal government to set up a small team of tax experts to write a new tax code. The goal should be to create the “simplest, most efficient and most competitive tax jurisdiction of all developed countries,” he said.

In an interview with The Globe, he said the government should give the team one year to complete its mandate because decisions on capital allocation move fast, and Canada needs to move faster to attract investment and take advantage of demand for defence and critical minerals.

“Having a goal to simplify it and and make it competitive would be something that our government and provinces should work on together,” Mr. Ferreira said in the interview.

“Our goals should be well aligned on this because it’s all about making our environment much more friendlier for capital.”

Decades have passed since Canada last significantly reformed its tax system. In that time, layers of new policies have been added – including subsidies and special provisions – which have made the rules very complex, Mr. Ferreira said.

As an example, he pointed to rules related to research and development, an area in which many of the bank’s clients have said the process to obtain certain subsidies is too complicated to navigate. In some cases, those clients opt out of applying for the subsidies altogether.

“The intention is to incentivize innovation, but the process to get the incentive is so complex that we sometimes don’t bother,” Mr. Ferreira said.

“We would send a very strong signal if we would review our code completely, get rid of it, and rewrite something that we believe will have a significant impact on growth, and make it simple.”

Mr. Ferreira is part of a chorus of experts who have called for tax reform. He has the federal government should consider adjusting tax regulations to support growth and help “recycle” capital gains into businesses.