The C.D. Howe Institute isn’t particularly impressed with either of the front-running federal parties’ tax policy proposals.

“While the election has proved that tax cuts can be popular, a key issue is whether the tax relief promises of the major parties will substantially improve Canada’s competitiveness by encouraging work and investment,” it notes in a research brief.

It concludes that, “None of the tax proposals in this election would substantially improve the efficiency and fairness of the tax system.”

“The most important tax barriers to Canada’s economic growth are related to excessively high marginal taxes that deter work effort, savings and investment,” it adds, noting that the highest marginal tax rates apply to large business investments (second highest in the world), moderate income savers (tax rates up to 80%) and employment income earned by moderate income workers (tax rates up to 80%).

“To reduce these very high effective tax rates, a fundamental tax reform is needed that would lower rates and broaden tax bases to make the tax system more neutral,” it concludes. “The Liberal and, to a somewhat greater extent, the Conservative proposals move in a direction of lowering tax rates on labour and capital but far greater effort would be needed to modernize Canada’s tax system to make it as efficient and fair as possible.”