Financial Group Pushes Major Overhaul of Canadian Tax and Savings Policy

TORONTO, ON – May 26, 2026 – A prominent Canadian financial markets advocacy group has laid down a gauntlet for Ottawa, proposing a sweeping and potentially divisive overhaul of the nation's tax, regulatory, and retirement savings systems ahead of the 2026 federal budget. The Canadian Forum for Financial Markets (CFFiM) submitted a comprehensive plan to the House of Commons Finance Committee, arguing its aggressive reforms are essential to jolt Canada's economic growth and restore its competitive edge on the world stage.

The submission outlines a vision that would fundamentally reshape how the government collects revenue, how businesses are regulated, and how Canadians save for their later years. The proposals include a controversial two-point hike in the Goods and Services Tax (GST), coupled with significant cuts to corporate and personal income taxes. It also calls for a dramatic reimagining of retirement rules and new incentives to fuel investment in high-risk, high-growth sectors.

"These are practical, pro-growth recommendations that raise living standards and keep Canada competitive," said Laura Paglia, CFFiM's President & CEO, in a statement accompanying the release. "A competitive Canada brings better jobs, lower prices, more choice, faster innovation and fairer outcomes."

While the forum frames its plan as a necessary prescription for a sluggish economy, the proposals are set to ignite a fierce debate, drawing clear battle lines between competing economic ideologies as the government weighs its fiscal path forward.

A Blueprint for Business Competitiveness

At the heart of CFFiM's submission is a strategy to make Canada a more attractive place for investment. The forum proposes a two-percentage-point cut to the statutory corporate income tax rate over two years, arguing it's a critical step to compete for global capital. This recommendation echoes the logic behind major reforms in other countries, such as the U.S. Tax Cuts and Jobs Act of 2017, which aimed to stimulate domestic investment by lowering the corporate rate.

To further spur investment in key Canadian industries, the proposal calls for expanding the popular flow-through share regime. For the mining sector, this would mean including early-stage feasibility and economic studies as eligible exploration expenses, a move that could unlock crucial funding for junior miners long before a shovel hits the ground. In a novel twist, the forum suggests extending a similar flow-through structure to qualifying R&D expenditures, directly targeting Canada's lagging innovation and productivity performance.

Perhaps most ambitiously, CFFiM is championing the introduction of a UK-style Enterprise Investment Scheme (EIS). The British model has been widely credited with channeling billions in private capital to early-stage, unlisted companies by offering investors significant tax reliefs. Adopting such a scheme in Canada could address the notorious funding 'valley of death' that starves many promising startups of the capital needed to scale up. The plan also suggests considering tax-free corporate spinoffs, another tool used in the U.S. to allow companies to streamline and unlock shareholder value.

Regulatory reform is the other major pillar of the business-focused agenda. CFFiM advocates for a public review of all banking regulations to slash red tape, a legislative amendment to force regulators to consider 'competition' in their mandates, and a firm deadline to finally get the long-delayed open banking framework operational by late 2026.

The Price of Growth: A Shift in the Tax Burden

Financing these business-friendly cuts requires a significant shift in where the government finds its revenue. CFFiM's answer is a direct pivot from taxing income and production to taxing consumption. The most politically explosive element of this plan is a call to increase the GST by one percentage point in 2027 and another in 2028, which would bring the national sales tax to 7%.

Economists often argue that consumption taxes are more efficient as they encourage saving and investment over spending. However, they are also widely criticized as regressive, disproportionately hitting lower-income households who spend a larger percentage of their income on essential goods and services. This proposal is certain to face stiff opposition from consumer advocacy groups and labor unions, who will argue it exacerbates the affordability crisis for working families.

To complement this shift, the forum also recommends compressing Canada's five federal personal income tax brackets into three. While CFFiM argues this simplifies the tax code, the specific details of the new bracket thresholds and rates would determine whether the move benefits middle-income earners or primarily favors the wealthy. This proposed tax mix—lower corporate and income taxes offset by higher consumption tax—represents a classic economic efficiency-versus-equity debate that will likely dominate pre-budget discussions.

Reimagining Retirement and Personal Savings

The CFFiM proposals extend deep into the personal finances of Canadians, recommending a significant modernization of the country's retirement savings framework. The group suggests raising the mandatory age for converting a Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF) from 71 to 74. It further recommends reducing, and eventually eliminating, the mandatory minimum withdrawal rates from RRIFs.

These changes would give affluent seniors with significant savings more flexibility to manage their assets, defer taxes, and potentially pass on more wealth. Critics, however, may argue that such policies primarily benefit the wealthiest retirees while doing little for those who rely on every dollar of their retirement income.

In a move to boost savings rates, the forum also wants to increase the contribution limit for RRSPs and defined contribution pension plans from 18% of earned income to 30%. Furthermore, in a proposal that would be celebrated by the venture capital industry, CFFiM recommends expanding the list of qualified investments for registered plans to include private capital funds. This could unlock a vast, new pool of Canadian capital for investment in private companies and startups, but it would also introduce a higher-risk asset class into the retirement portfolios of ordinary Canadians.

A Contentious Path Through the Political Gauntlet

With its submission now before the House of Commons Finance Committee, CFFiM's vision for Canada's economy enters a contentious political arena. The proposals align closely with the traditional platform of the Conservative Party, which typically favors lower corporate taxes and fiscal restraint. The call to re-establish the debt-to-GDP ratio as a firm 'fiscal anchor' will also resonate with fiscal conservatives.

Conversely, the package is likely to be met with strong opposition from the NDP, which advocates for higher corporate taxes to fund social programs and would vehemently oppose a regressive GST hike. The governing Liberals are caught in the middle. While the government has expressed interest in boosting competitiveness and has moved forward on open banking, it has remained politically cautious about broad-based tax increases on consumers. The Liberal focus on 'fairness' and supporting the middle class appears, on the surface, to be at odds with several of CFFiM's key recommendations.

As the Finance Committee continues its pre-budget consultations, it will hear from a wide array of stakeholders with competing visions. The CFFiM blueprint represents a clear and coherent, if controversial, path forward. Whether the government chooses to adopt any part of this pro-business, high-growth agenda, or opts for a more politically palatable course, will be a defining feature of the 2026 federal budget.