The table below the fold summarizes the major tax changes introduced in Part I of Bill C-59, this year's omnibus budget bill:

The question I wish to address is: which of the tax measures announced in the 2015 federal budget help build a good Canadian tax system, and which ones fail to promote economic efficiency and/or equity.

There is nothing inherently good about low taxes. What's important is to have a well-designed tax system, which raises revenue equitably and efficiently - providing both income security, and the foundation for economic growth.

US experience shows that low taxes are no guarantee of jobs and growth. In fact, a recent study by the IMF found equality matters more for growth than low taxes. I quote: "lower net inequality is robustly correlated with faster and more durable growth."

The 2015 federal budget is intended to be "a balanced budget, low tax plan for jobs, growth and security."

Two of the Budget measures are particularly praiseworthy.

The first is the measures taken to prevent the use of synthetic equity arrangements. The OECD, in its Base Erosion and Profit Shifting Action Plan, wrote, and I quote:

Fundamental changes are needed to effectively prevent ...cases of no or low taxation associated with practices that artificially segregate taxable income from the activities that generate it.

Base erosion and profit shifting seriously threatens the ability of OECD countries to tax economic activity. It is good to see this Budget taking steps to forestall the erosion of Canada's tax base.

The second welcome change is the reduction to required RRIF withdrawals. Life expectancies have increased; rates of return on investment have fallen A change was needed.

Unfortunately the budget also contains tax measures which have more limited potential to create jobs and growth.

The first is the reduction in the small business tax rate. Advocates of lower taxes on small business would have us imagine a future Bill Gates, building the basis of a world-class enterprise out of his garage.

Yet, as University of Calgary economist Jack Mintz and co-author Duanjie Chen have pointed out, reductions in the small business tax rate could actually discourage a future Bill Gates from growing his business, by creating, as they put it, a "'threshold effect that holds back small business from growing beyond the official definition of 'smallness."

Moreover, low small business tax rates create possibilities for tax avoidance - the well-paid self-employed professional who uses a corporate structure to reduce personal tax liabilities rather than grow a business.

The reductions in the small business tax rate are projected to cost 2.7 billion dollars over the next four years. There are far better uses for 2.7 billion dollars. For example, reforming the corporate tax base. Or raising the GST threshold so more small businesses would be exempt from the GST under the small suppliers rule. Or working with the provinces to reform provincial business taxes.

The other tax measure introduced in this budget that causes me grave concern is the doubling of the TFSA contribution limit. TFSAs were a welcome addition to Canada's savings system. They provide tax-sheltered savings opportunities for many who are not well served by RRSPs, such as students or low-income people.

However there is no case for an increase in the TFSA contribution limit to $10,000 per year. The long-term revenue cost is too great, there is too much potential for abuse of TFSAs.

Many economists advocate consumption taxation, on the grounds that taxing investment income discourages saving and has serious efficiency costs. If this government wishes to move towards consumption taxation - and there are good reasons for doing so - it be better served increasing RRSP contribution limits, or relying more on the GST to raise revenue, and less on income taxes.

At the very least, there should be a lifetime limit on TFSA contributions.

The Home Accessibility Tax Credit is one final tax measure worth commenting on. I am not convinced that this is the best way of helping the disabled, or helping seniors remain in their homes.

First, it is not refundable, so it will not provide help to those who need it most.

Second, I have concerns about the implementation of this credit. Which kind of home renovations count? Who decides whether or not any given bathroom or kitchen renovation improves accessibility? Furthermore, linking the home accessibility tax credit to eligibility for the disability tax credit is problematic. My own research suggests that the disability tax credit is not well targeted. Some people with disabilities fail to receive the credit; at the same time, there is some evidence that it may be abused.

It would be more sensible to help seniors and the disabled through direct program expenditures: on housing, on community living programs, and on home supports.

Canada doesn't need a low tax plan for jobs, growth and security. It needs a good tax plan for jobs, growth and security.

This is a draft of the remarks I plan to make at the House of Commons Finance Committee on May 28th. Comments welcome.