Toronto-Dominion Bank calls for tax reform to unlock Canada’s C$1.5 trillion investment boom

Canada’s largest bank by assets thinks the country is sitting on a massive investment opportunity, but only if Ottawa stops tinkering around the edges and commits to real structural change. Toronto-Dominion Bank’s economics team is pushing for sweeping tax and regulatory reforms, arguing they’re the missing ingredient for what could become a sustained investment supercycle north of the border.

The C$1 trillion benchmark and why TD says it’s not enough

Prime Minister Mark Carney’s federal budget laid out an ambitious target: approximately C$1 trillion in combined public and private investment over five years. The plan leans heavily on tax incentives directed at housing, infrastructure, and improving business competitiveness across critical sectors.

Beata Caranci, TD’s chief economist, offered a notably lukewarm assessment. She characterized the budget’s approach as largely “unwinding previous bad policy,” suggesting the measures represent a correction rather than a genuine leap forward.

TD Economics contends that the budget’s incentives amount to a partial improvement at best, falling short of the kind of deep, structural tax reform needed to truly unleash private-sector capital deployment at scale. The bank’s economists have been consistent on this point throughout 2026, reiterating in multiple reports and executive discussions that Canada needs a fundamentally more stable and competitive regulatory environment.

Why the US trade backdrop makes this urgent

Canada’s economic planning is happening against a backdrop of persistent uncertainty around US trade relations. Canada has experienced periods of slower capital formation in recent years, a trend that predates the current trade friction but has been amplified by it. The federal budget’s investment targets are explicitly designed to reverse this pattern, but TD’s position is that incentives aimed at specific sectors won’t compensate for a broader tax and regulatory framework that doesn’t stack up competitively.

Sectoral opportunities and what investors should watch

The budget’s focus areas, housing and infrastructure in particular, reflect where Canada sees its most pressing needs and its best growth potential. For investors, the C$1 trillion target over five years serves as a useful benchmark for gauging whether actual capital deployment keeps pace with government ambitions.

But TD’s argument implies a bigger prize. If Ottawa delivers the deeper reforms Caranci is advocating for, the beneficiaries wouldn’t be limited to budget-targeted sectors. Broader private-sector capital deployment could lift business investment across manufacturing, technology, energy, and other industries that aren’t explicitly named in the budget’s priority list.

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