Federal government will review tax code, Morneau says

OTTAWA • Finance Minister Bill Morneau says the Liberal government has only begun to clean up the tax code with his first federal budget and that a more detailed review is coming.

Morneau’s big-spending, big- borrowing blueprint has fiscal hawks complaining that spiralling debt, increased taxes or both will be the inevitable outcome of projected deficits in the $100-billion range over the next four years.

Last week’s budget , cheerily titled “Growing the Middle Class,” includes speculative nods to increasing revenues through tougher tax enforcement, particularly for high-income tax avoidance schemes. There’s also a hike in federal tax rates for Canadians earning more than $200,000 a year, more than offset by a tax cut for middle-income earners.

Overall federal revenues are forecast to fall slightly in 2016-17 compared with the current tax year that ends this Thursday.

“We’re going to embark on looking at the tax expenditures in the code and making sure they are all consistent with our approach to tax fairness,” Morneau told The Canadian Press in a roundtable interview.

“Tax expenditures,” for those unfamiliar with government parlance, are targeted tax breaks — in effect, spending by another name on specific, favoured groups.

“We’ll move forward on a tax expenditure review and as we have more details on how we’re doing that, we’ll be transparent,” said Morneau.

Budget 2016 provided mixed signals on disentangling a tax system that successive governments have loved to gum up with politically useful goodies.