Fresh after delivering his update Tuesday on the state of Canada’s economy and public finances, Finance Minister Bill Morneau (pictured above) has already began musing about next year’s federal budget. According to media reports, Morneau confirmed that his government plans to eliminate additional tax credits as part of its ongoing review.

But Morneau should use this opportunity to reform taxes—concurrently reducing tax rates broadly—not to generate more revenues for Ottawa and raise the tax burden on Canadians.

Eliminating tax credits, which are essentially special carve outs in the tax code for particular individuals doing particular activities, can help simplify a system that has grown in complexity over the years. Tax complexity imposes real costs on Canadian families who spend a significant amount of time (collecting and organizing receipts, understanding the rules) and money (paying accountants, buying software) complying. The cost of complying with the personal income tax system alone is estimated at up to $7 billion—or roughly $501 per household—each year.

Tax credits add to the cost of compliance because claiming a tax credit or deduction requires keeping records, ensuring eligibility, and perhaps hiring an accountant to ensure you’re not missing out on any tax benefits.

While tax credits can help reduce one’s tax bill, the related compliance costs partially offset the benefit. These compliance costs likely explain why lower-income Canadians are less likely to claim some tax credits or be aware of them in the first place.

And a more complicated tax system is more costly for governments to administer (i.e. manage and enforce). These administrative costs, along with the costs of compliance, consume resources unavailable for more productive priorities that actually help grow our economy.

The solution is straightforward: a simpler tax system. That means scaling back ineffective tax credits and reducing tax rates more broadly. In other words, the extra revenue from eliminating tax credits should be used to launch a major tax reform plan, not to pad federal revenues.

Remember that with more tax credits, the government has to keep income tax rates higher to raise the same amount of revenue. By eliminating a large number of ineffective tax credits, the government could, in exchange, broaden the tax base and use the resulting resources to dramatically reduce personal income tax rates for all Canadians. Such a reform would result in a much simpler tax system that improves the incentive for Canadians to work, save, invest and be entrepreneurial—all things that help propel the economy forward.

The last fundamental reform to Canada’s personal income tax system took place in 1987 so the country is overdue for another round of reform. With the government’s current review of tax credits, Morneau has an opportunity to lead this charge.

But simply eliminating tax credits without concurrently reducing tax rates will produce another round of tax hikes on Canadians, further contradicting the Liberals stated objective to keep more money in the pockets of Canada’s middle class.