The corporate capital tax is lowering Canada’s standard of living and reducing our prosperity by discouraging investment and business development concludes a new study released today by the Fraser Institute.

The study found that the corporate capital tax lacks efficiency, fairness, and simplicity, and is rarely used by other industrialized countries because it impedes economic growth. “Although few people know of this tax, it is easily the most detrimental tax in Canada because of its impact, both direct and indirect, on investment, productivity, and economic growth,” says Jason Clemens, director of fiscal studies at the Fraser Institute, and co-author of the study.

The study calls upon other Canadian jurisdictions to follow Alberta’s lead and stop relying on corporate capital taxes due to the costs associated with their use, and “the rarity of their use by competing nations in the OECD.” The study recommends corporate capital taxes be replaced with what it labels more efficient taxes such as payroll or sales taxes.

“There can be little doubt that if Canada truly wants to embark on a path of prosperity characterized by investment, risk-taking, innovation, and entrepreneurial activity, then the corporate capital tax must be eliminated immediately by the federal government and the nine provincial governments which still maintain capital taxes,” concludes Clemens.