BMO CEO Darryl White Urges Canada to Cut Taxes Even If Deficit Widens
In a bold intervention amid fiscal debates, Bank of Montreal (BMO) CEO Darryl White called on the Canadian federal government to slash corporate and personal income taxes to bolster economic competitiveness, even at the cost of expanding the country’s already sizable deficit. Speaking at the Toronto Global Forum on October 15, 2025, White—typically a fiscal conservative—argued that Canada has “a little bit of fiscal capacity to play with” and should “throw a preference for balanced budgets out the window and take a little bit more risk” to attract investment during a period of global trade uncertainty. His remarks, echoed across Bloomberg and Financial Post, come as the Parliamentary Budget Officer (PBO) projects a $68.5 billion deficit for fiscal 2025-26, with economists like National Bank’s Stefane Marion forecasting up to $100 billion, deeming current trajectories “unsustainable.” White’s push highlights growing anxiety among business leaders over Canada’s lagging growth (projected at 1.2% for 2025) and uncompetitive tax regime, especially with U.S. tariff threats looming ahead of CUSMA renegotiations in 2026.
Background: A Wake-Up Call on Competitiveness
White’s comments build on recent government backpedaling: Prime Minister Mark Carney’s administration scrapped a proposed hike to the capital-gains inclusion rate on annual gains over $250,000, a move hailed as relief for investors but dismissed by White as insufficient. Canada’s debt-to-GDP ratio, at around 42%, remains enviable compared to G7 peers (e.g., U.S. at 123%), giving White leeway to advocate risk-taking. Yet, with unemployment at 7.1% and expected to peak near 8% before easing, he warned that trade frictions could exacerbate slowdowns, urging a pivot from “a little less conversation and a little more action.”
Broader context: Canada’s corporate tax rate (15% federal, plus provincial averages of 11-12%) trails U.S. effective rates post-reforms, while personal top marginal rates hit 53% in Ontario—among the highest in the OECD. White ties this to capital flight risks, noting investors are “fooling ourselves if we think those people are going to get on the field” without incentives.
White’s Key Proposals and Rationale
White outlined targeted reforms to supercharge investment:
- Accelerated Write-Offs: Allow immediate expensing of capital assets and R&D spending to spur business expansion.
- Direct Tax Cuts: Lower corporate and personal income taxes, prioritizing competitiveness over immediate deficit reduction.
- Holistic Overhaul: Pair with removing interprovincial trade barriers, which he says could “overwhelm almost any negative impact” from U.S. tariffs.
His core pitch: “Are we competitive on tone? Are we competitive on tax? I know the answer to that is absolutely not, and that’s not being talked about enough.” White framed this as essential amid a “high-stakes” North American reset, where Canada could leverage its resources if it acts decisively: “Capital is not that sophisticated. It’ll flow to the point of least resistance.”
Economic Implications: Growth vs. Fiscal Prudence
Proponents like White see tax cuts as a growth catalyst, potentially adding 0.5-1% to GDP via investment inflows, per aligned reports from CPA Ontario, which echoes calls for simplifying high-bracket taxes. Critics, however, warn of ballooning debt service costs—already $43 billion annually—and inflation risks if Bank of Canada cuts (forecast at 25 bps in December) lose potency. White downplayed rate relief as a “minor piece of the puzzle,” noting a 25 bps mortgage drop won’t move the needle for those on the edge. In banking, BMO’s Q3 earnings beat expectations, but White flagged U.S. “Main Street” cracks (slow loans, credit woes) spilling north, underscoring the need for domestic buffers.
Reactions: Mixed From Business and Policy Circles
- Industry Echoes: CPA Ontario backs White’s simplicity push, while peers like RBC’s Dave McKay have similarly urged barrier reductions. U.S. bank results (strong Wall Street, weak consumer) reinforce White’s caution: “Having your feet in the freezer and your head in the oven; on average, you feel fine, but it’s pretty goddamn uncomfortable.”
- Government Silence: No immediate response from Finance Minister François-Philippe Champagne’s office, though the capital-gains reversal suggests openness to business pleas.
- Critics: Fiscal hawks, including the PBO, decry deficit denial, with Marion warning of “unsustainable” paths without offsets like spending restraint.
White’s stance marks a rare hawkish turn for the BMO chief, betting on bold fiscal moves to secure Canada’s edge in a tariff-tense world. As CUSMA talks heat up, his words could galvanize corporate lobbying. For the full Bloomberg piece (paywalled) or deficit trackers, let me know!