The Investment Industry Association of Canada is calling for lower taxes and more efficient regulation in the upcoming federal budget.

In its’ pre-budget submission the IIAC recommends several initiatives to encourage more risk-taking and productive investment in the economy.

On the tax front, its recommendations include: lowering taxes on capital gains; encouraging research and development spending by extending the Scientific Research and Experimental Development tax credit program from private firms to small companies listed on the TSX Venture Exchange; encouraging R&D partnerships; and compensating provinces for any net loss from eliminating sales tax and harmonizing with the GST.

It also calls for measures to improve the efficiency and competitiveness of the Canadian capital markets by: encouraging provincial regulators to adopt more principles-based regulation, streamlining rules and moving towards a common regulatory structure; mandating filing on the CDS Innovations Inc. website of all non-client-specific tax information; and, facilitating a modern securities transfer law system.

Additionally, the IIAC calls for amending the Income Tax Act to allow investment dealers to transfer RRIF minimum payment information electronically to the receiving institution to avoid the existing unfair penalties on seniors when errors occur.

These foregoing policy recommendations will help businesses seize unfolding opportunities in a rapidly globalizing world and build on Canada’s economic success, the group says.

The IIAC adds that provincial governments and regulators should make corresponding changes, such as: mirroring federal reductions in the corporate income tax to achieve a combined federal/provincial rate of 25% by 2012; harmonizing provincial sales taxes with the GST; and, streamlining and eliminating duplicative and ineffective financial sector and securities-related laws.

“The passport system does not go far enough to achieve competitive markets,” it maintains.