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Gap between rich and poor greater than most Canadians think

Sara Mojtehedzadeh / The Toronto Star

Canadians drastically underestimate the country’s wealth gap but still show broad support for policies such as higher income taxes to address the problem, according to new research by an Ottawa-based think tank.

The study, published Tuesday by the Broadbent Institute, drew its results from an online poll of 3,000 people. The findings said that Canadians believe the richest fifth of the country own about 55 per cent of wealth, and thought the poorest fifth held about 6 per cent.

In reality, the gap is much starker. The richest segment of Canada’s population controls close to 70 per cent of the country’s wealth. Its very poorest segment has no share at all.

“This is the first time this question has been looked at in Canada, namely people’s perception of the wealth gap versus the reality,” the Broadbent Institute’s executive director, Rich Smith, told the Star.

“There’s a huge discrepancy between the kind of Canada that people want and the kind of Canada that actually exists.”

The research showed a strong appetite for government intervention to alleviate income inequality, with over 85 per cent of the country agreeing that the wealth gap was a problem.

“In public policy terms, that’s nearing unanimity,” said Smith.

“I was actually struck with how commonly held a lot of opinions are across demographics, including with Conservative voters,” he said. Three in four Tory supporters reported that they see inequality as a growing issue.

Canadians agreed on specific measures to address inequality, too. Eighty per cent of those polled by the Institute supported higher federal income tax rates for the richest Canadians. Almost the same proportion were in favour of introducing higher corporate taxes. Canada’s general corporate tax rate has dropped from around 22 per cent to 15 per cent under the Stephen Harper government.

An earlier report from the Broadbent Institute issued in September used Statistics Canada data to show that the top 10 per cent of Canadians saw their median net worth grow by 42 per cent between 2005 and 2012. Meanwhile, the bottom 10 per cent of the country saw their median net worth shrink by 150 per cent.

Ontario’s concentration of wealth was found to be more equal than Western Canada, but compared poorly to Quebec and the Maritimes. A 2012 report by labour coalition The Ontario Common Front said that the province saw a larger change in income inequality between 1981 to 2010 than anywhere else in the country.

Rich said that latest Broadbent research showed that “public concern about income inequality is now such that it cannot be ignored by politicians of any political persuasion.

“A new test of public policy in people’s minds has emerged, and that is — does this new policy make income inequality better or worse?”

On Canadians’ misperception of inequality, Rich said he believed that “the situation is so bad, the gap is so wide, that people have difficulty wrapping their heads around it.”

“When the major sources of capital are invisible, it’s hard for society at large to understand what’s actually happening,” said Garrett Morgan, executive director of the Toronto-based fair wage advocates Wagemark. “I think we generally think of the rich as celebrities. We don’t think of the hedge fund manager on Bay Street. The 0.1 per cent is still invisible.”