Tax reductions, improved business productivity and incentives to encourage Canadians to save for retirement — these are the common themes several financial services industry interest groups have presented to the federal government in response to its call for pre-budget submissions.

If these recommendations sound a little “been there, done that,” that’s because they aren’t exactly new. It’s no surprise that groups such as the Investment Funds Institute of Canada, the Investment Industry Association of Canada and the Investment Counsel Association of Canada risk repeating themselves.

What is fresh this year is the approach these groups have taken. Each has become a little more savvy in its presentation, offering third-party evidence as background, providing context to create an underlying theme and, in one case, hiring a professional lobbying firm to help drive its messages home.

“The [federal finance committee] gets a lot of ideas. But if you can get members behind a theme with which they can’t really disagree, the question then becomes: what are the tactics that the government needs to employ,” says Jamie Golombek, chairman of IFIC’s tax working group and vice president of tax and estate planning for AIM Funds Management Inc. in Toronto.

The main theme for IFIC’s pre-budget submissions was saving for retirement — an idea whose importance is difficult to dispute.

“You put saving for retirement forward as a fundamental need, and you come up with a list of ideas that will help,” Golombek adds.

Most of IFIC’s recommendations deal with low- and middle-income Canadians. It has asked the government to implement the proposed tax-prepaid savings plans, through which lower-income Canadians would receive matching grants from the government. IFIC also calls for the elimination of guaranteed income supplement clawbacks on dividend gross-ups and on RRSPs and RRIFs, which discourage low-income individuals from saving.

IFIC is also making its traditional request to increase the annual RRSP limits.

Another repeated IFIC request: it recommends Ottawa eliminate capital gains taxes. But, rather than simply chastise the government for failing to uphold its election promise to eliminate the taxes on the sale of assets when the proceeds are reinvested within six months, IFIC suggests alternatives, including a deferral strategy, originally proposed by the C.D. Howe Institute, that could work to implement the concept.

The ICAC’s submission also revolves around the theme of ensuring Canadians save for retirement. It has stepped up its lobbying efforts with the help of an Ottawa-based firm and has narrowed its submission down to three recommendations.

The first is a call to amend Bill C-10, which was proposed to close offshore tax havens, to ensure that the government doesn’t inadvertently penalize those holding foreign investments in their RRSPs or pension plans.

The ICAC is also asking Ottawa to reduce the number of unitholders necessary for a pooled fund to qualify as a mutual fund trust. Rules now say that a trust must have a minimum of 150 unitholders to qualify as a MFT, which has some tax benefits and also qualifies as an investment in registered plans.

The final recommendation asks the government to accelerate the process of opening up foreign stock exchanges to RRSPs or other tax-deferred plans.

Rather than making specific proposals, the Society of Trust and Estate Practitioners offers some overall guidelines in its submission that should be applied when designing taxes. Most significant is its proposal that Ottawa encourage open, public debate when it comes to making any fundamental tax revisions.

It proposes reverting to the historical practice of issuing “green papers” (government propositions designed to encourage discussion) followed by “white papers” (official sets of proposals) .

Robin MacKnight, chairman of STEP Canada’s technical committee and a tax lawyer at Wilson Vukelich LLP in Markham, Ont., says that this sort of measure could have prevented the repeated need to revisit Bill C-10: “There have been six or seven drafts of the legislation. It still doesn’t work, and people have given up. It’s so badly conceived and so badly drafted that people don’t know where to start.”

Like IFIC, the IIAC calls for the lowering of taxes on capital gains. In its case, however, it suggests doing so — at least, initially — for small and medium-sized companies only. This proposal is in line with the IIAC’s position this year that while the government has done a good job improving the business climate overall, it needs to take extra steps to help Canada’s vulnerable smaller companies.

@page_break@“We in Canada have done a pretty good job in encouraging the creation of small business and early-stage growth,” says Ian Russell, president and CEO of the IIAC. “What we have not been very effective at is growing that small-business sector into mid-sized. We get them to a certain size and then we see a collapsing of businesses.”

Besides increasing investment capital for these small companies to get to the next level (where, presumably, they won’t be picked off by global behemoths) through a reduction in taxes on capital gains, the IIAC calls for several specific measures to promote research and development and stronger links between the worlds of business and academia.

The IIAC also asks Ottawa to compensate provinces for any net loss that might stem from eliminating sales taxes and harmonizing the GST — an essential tax burden relief for manufacturing companies. This, says Russell, might bring British Columbia, Manitoba and Ontario on board in GST harmonization, joining Quebec and some Atlantic provinces.

Finally, the IIAC calls for improvements in the efficiency of Canadian capital markets. While this is actually outside Ottawa’s mandate — securities regulation is under provincial jurisdiction — the IIAC wants to encourage the federal government to continue its push toward a single national securities regulator, says Russell. Efficient and streamlined securities regulations will serve all companies, he adds.

STEP Canada’s MacKnight suggests that the questions the government asked Canadians to consider when making their submissions — covering the criteria used to make changes, corporate taxation and personal taxes — were disingenuous: “We were supposed to address three questions, and they were irrelevant.”

IFIC’s Golombek agrees it’s not always easy to be optimistic about pre-budget submissions. In fact, he says, it can feel as if you are banging your head against a wall at times. “Sometimes,” he says, “it’s frustrating.”

But IFIC feels that it has seen some success lately. Its 2007 budget submission recommended increasing the age limit for converting RRSPs to RRIFs, for instance, and the government adopted a higher age limit last year.

“Some people dismiss the whole process as an exercise in futility, but we really don’t see it that way at all,” Golombek says. “We see it as the government really [being] interested in hearing from the industry. It’s worth doing.” IE