In its response to today federal budget, the Investment Dealers Association of Canada called for further action on the tax front.

The IDA is calling on Ottawa to add to the multi-year staged tax reductions announced in last October’s budget update. The IDA says this action should include additional changes to the federal tax system targeted to domestic equity markets and the capital formation process. It says such action would stimulate the flow of domestic and international risk capital into Canadian equity markets and productive investment, especially to emerging and mid cap businesses..

While it commended Ottawa dedicating additional expenditures in the areas of defense and security, the IDA said it was disappointed with the magnitude of other program spending increases contained in the budget.

The association said that fiscal stimulus could be better achieved through targeted tax measures to support capital formation and growth.

The IDA renewed its call on the government for reductions on capital gains rates, the removal of impediments to capital formation in the small business sector, and the elimination of capital taxes. It also expressed regret that the government did not take this opportunity to help Canadians save for retirement by increasing the RRSP contribution limit from its present level.

IDA CEO and president Joe Oliver commented that, “While we recognize that this budget responds to a number of pressing matters arising from the events of September 11, we believe the government also needs to act quickly to build a more competitive tax system that supports economic growth and strong capital markets. We look forward to working with the minister and government in this important initiative.”