Proposal to establish Canadian Tax Certificates of Deposit.

On May 25, 1993, Tax Executives Institute fled the following comments with the Canadian government, outlining a TEI proposal to establish tax certificates of deposit. The comments, which took the form of a letter from TEI President Bob Perlman to Minister of Finance Donald Mazankowski and Minister, Revenue Canada Otto Jelinek, urged the Canadian government to adopt a mechanism similar to that in place in the United Kingdom and issue Tax Certificates of Deposit analogous to those issued by Inland Revenue. The submission was prepared under the aegis of the Institute's Vice President-Region I, J. Lawrence Martin of Mobil Oil Canada, and its Canadian Income Tax Committee, whose chair is Vincent Alicandri of Xerox Canada Limited.

On behalf of Tax Executives Institute, I am writing to highlight the problems experienced by taxpayers with the financing of tax payments and the nondeductibility of interest paid on tax deficiencies, and to propose a solution that TEI believes properly balances the legitimate interests of both government and taxpayers.

Background

Tax Executives Institute is an international organization of approximately 4,800 professionals who are responsible - in an executive, administrative, or managerial capacity - for the tax affairs f the corporations and other businesses by which they are employed. TEI's members represent more than 2,400 of the leading corporations in Canada and the United States.

Canadians make up approximately 10 percent of TEI's membership, with our Canadian members belonging to chapters in Calgary, Montreal, Toronto, and Vancouver which together make up one of our nine geographic regions. In addition, a substantial number of our U.S. members work for companies with significant Canadian operations. In sum, TEI's membership includes representatives from most major industries, including manufacturing, distributing, wholesaling, and retailing; real estate; transportation; financial; and resource (including timber and integrated oil companies). The comments set forth in this submission reflect the views of the Institute as a whole but more particularly those of our Canadian constituency.

Tax Certificate of

Deposit Proposal

Current law generally provides for payment of interest by the federal government on overpayments of income tax. Applicable interest rates are adjusted quarterly and approximate prevailing market rates. There are, however, limitations on the payments of interest, and these limitations - coupled...