Ahead of the Ontario budget on Thursday, industry groups have floated proposals to help address the province’s economic competitiveness, and a recurring theme is reviewing the tax system.
In a pre-budget submission, CPA Ontario said two-thirds of its members believe the tax system inhibits economic growth — a pressing concern. “New competitive pressures demand a bold rethink of Ontario’s approach to taxation,” the submission said.
CPA Ontario recommended that the Ontario government work with the federal government to cut the top marginal personal income tax rate to below 50%. “Ontario’s top rate of 53.5% is more than 10 percentage points above the [Organization for Economic Co‑operation and Development (OECD)] average of 42.7% and the U.S. average of 43.7%,” the submission said. “This hurts Ontario’s investment attractiveness, work incentive and ability to attract and retain top talent.”
CPA Ontario also suggested reducing the number of tax brackets, eliminating the province’s two surtax brackets and indexing personal income tax thresholds to inflation.
The Canadian Bankers Association’s (CBA) No. 1 recommendation to the Ontario government was to support the federal government’s election promise to review the corporate tax system.
Budget 2025 in November made no mention of the Liberals’ promised review. Meanwhile, Jack Mintz of the School of Public Policy at the University of Calgary; Alexandre Laurin, vice-president and director of research with the C.D. Howe Institute; and Nicholas Dahir, a research officer with the C.D. Howe Institute, recently called for sweeping corporate tax reform to address Canada’s weak economic performance, reduce economic distortions and simplify tax compliance.
In its pre-budget submission, the CBA said a corporate tax review should ensure the tax system is “anchored on the principles of tax efficiency, neutrality, certainty and competitiveness.” The submission suggested lowering Canada’s statutory and effective corporate tax rates, and the combined rates for investors, to rank within the lowest third in the OECD by 2030.
The Ontario Chamber of Commerce suggested a tax and spending review to “eliminate unnecessary complexity, prioritizing targeted and consolidated credits and exemptions that incentivize business investment.”
The chamber also urged the Ontario government to implement mutual recognition agreements to promote interprovincial trade and labour mobility.
In a pre-budget submission, the Canadian Life & Health Insurance Association (CLHIA) said it supported the provincial government’s efforts thus far to reduce interprovincial trade barriers. For example, after recent legislative updates related to labour mobility, the Financial Services Regulatory Authority of Ontario implemented a new licensing process for out-of-province insurance advisors, allowing them to work in the province sooner, before their licensing applications are approved.
The government can build on that work with enhanced regulatory harmonization, the CLHIA suggested.
“For example, our industry strongly supports the development of a mutual recognition framework whereby insurance agents licensed in one province can operate in any province in Canada, if they meet minimum standards,” the CLHIA submission said. “Licensed agents would continue to pay licensing fees for each jurisdiction they operate in. Our industry would also ensure consumer protection rules remain in place where advisors are working across provinces.”
As part of that framework, a single licensing system could be considered, similar to that on the securities side, the submission suggested, so that insurance advisors could apply through a single portal to be licensed in multiple provinces.
The CLHIA also said it “strongly” supports harmonization of existing provincial licensing requirements.
In a letter to the provincial finance minister on Monday, the Portfolio Management Association of Canada (PMAC) urged the Ontario government to strengthen competitiveness through participation in the Canadian Securities Administrators’ passport system.
The system facilitates access to capital markets across multiple provinces by allowing registrants to deal primarily with their provincial securities regulators and operate under harmonized legislative provisions across Canada. All Canadian securities regulators participate in the system, except Ontario.
Ontario’s participation “would represent a significant step toward greater national regulatory harmonization,” PMAC’s letter said. “It would improve the efficiency of Canada’s capital markets, reduce duplication, and lower compliance costs for issuers and registrants, while maintaining strong investor protection.”
The CBA recommended harmonized regulations related to account transfers.
“Currently, regulations and procedures vary across the account transfer ecosystem, which includes financial institutions under provincial jurisdiction (e.g., investment dealers, mutual fund dealers, credit unions, trust companies, insurance companies),” the submission said. “A lack of a coordinated and harmonized approach risks creating a fragmented, two‑tiered regulatory framework that undermines competition, confuses clients, and leads to a patchwork of transfer tools, standards and processes.”
In a white paper published last summer on account transfers, the Canadian Investment Regulatory Organization (CIRO) said that in 2024, it received more than 500 complaints — the highest level in a decade — about account transfers, which can be costly and time-consuming. The paper proposed rule changes to address the regulatory side of the problem, and called for proposals from fintechs to address the tech side.
The CBA submission suggested that the Ontario Securities Commission and other provincial securities regulators, CIRO and the federal government work together on account transfer procedures and timelines.
A pre-budget submission from the Canadian Association of Retired Persons (CARP) was less concerned about account transfers and more concerned about banks’ proprietary products.
“Many CARP members report being with the same bank for 50 years or more,” the submission said. “However, many seniors lack access to financial literacy resources and alternative advisory channels, leaving them trapped in a financial system designed to favour banks over clients and are left to fend for themselves with shrinking returns and eroding nest eggs.”
CARP’s submission referenced regulators’ July 2025 report on bank sales practices. Older Canadians are “systematically steered into lower-return products by financial ‘advisors’ at the branch level,” the submission said. “These advisors are, in fact, salespeople, offering proprietary bank funds exclusively.”
CARP’s suggestions included expanded investment choices at the banks and a fiduciary standard for financial advisors.