The Finance Department has been trying to plan for Trump's potential tax reforms since the election, but months later, there are no answers
OTTAWA—From day one, the Trudeau government has been monitoring the potential impacts on Canada of Donald Trump’s tax agenda.
An internal briefing document shows Finance Department officials took particular note of several tax pledges Trump made on his way to winning the presidency.
The analysis obtained by The Canadian Press was released as Finance Minister Bill Morneau heads to Washington to meet new Trump appointees and senators and deliver a speech at Georgetown University.
It also comes as the Trudeau government grapples with significant economic uncertainty surrounding other possible changes in the U.S.-Canada relationship, including a potential border-adjustment tax and the renegotiation of the North American Free Trade Agreement.
The “preliminary assessment”, prepared for Deputy Finance Minister Paul Rochon, highlighted key Trump vows on taxation, from cutting corporate and personal taxes to a one-time tax break for multinational corporations on the repatriation of their overseas profits to the U.S.
The document, dated Nov. 23, also underlined Trump’s pledges to repeal the federal estate tax and eliminate the alternative minimum tax on individuals and corporations.
However, sections of the briefing note outlining the potential implications for Canada were blacked out.
“We will continue monitoring developments in U.S. tax policy over the coming months and provide you with updates as needed,” reads the document, which was obtained under the Access to Information Act.
Morneau is to meet Thursday with senior White House economic advisers Gary Cohn, Kenneth Juster and Dina Powell. He also has appointments with Sen. Orrin Hatch, chair of the finance committee, and Sen. Mike Crapo, chair of the banking, housing and urban affairs committee.
Months after the election, the eventual U.S. tax reforms remain an unknown.
Experts, however, have warned that the ramifications for Canada, particularly when it comes to competitiveness, could be severe.
Some have said significant reductions in taxes for companies and higher-income earners would give the U.S. an edge over Canada in terms of business investment and attracting top professional talent.
“The competitiveness issue for Canada is going to be an important one in 2017,” said Jack Mintz, a tax-policy expert from the University of Calgary.
“Not knowing where everything is going to settle in the United States, probably the best thing for (Ottawa) is to stand pat.
“Don’t raise taxes, because you could be completely out of synch with what’s going to happen in the United States and that will make things harder here.”
Mintz said the Trudeau government should also hold off on cutting taxes until there’s more clarity on the direction of the U.S. reform.
He added it’s all very much up in the air and that the eventual tax changes will likely draw input from the plans of both Trump and Republican House Speaker Paul Ryan.
The briefing document noted there were some “significant” differences between the Trump and Ryan tax plans.
Morneau has said the goals of his trip to Washington will be to emphasize the economic ties between the two countries and to build new relationships.
The finance minister isn’t scheduled to meet his soon-to-be counterpart, financier Steven Mnuchin, because he has yet to be confirmed as treasury secretary.
However, his meeting with Hatch is very important because the Senate is going to play a crucial role in determining the eventual tax reform, Mintz said.
“He’s probably the most-critical person on the Senate side,” Mintz said of Hatch.