For the upcoming federal budget, the Institute has put together a blog series exploring key areas the federal government must take immediate action on to continue to effectively respond, and recover from the COVID-19 pandemic. Our three-part blog series includes submissions in the areas of: Investing in the Caring Economy; Taxing the Rich; and, Vaccination.
Even before the pandemic, economists and organizations like the International Monetary Fund were sounding the alarm over excess wealth concentration and the need for more progressive taxation. The federal Liberals are hearing that message, but we need continued pressure from the public and opposition parties to ensure they follow through.
The upcoming federal budget is the perfect opportunity to tell the Liberal government to make good on their commitment to address extreme inequality — with significant tax reforms.
While the pandemic has drawn attention to disparities between rich and poor, inequality is not a recent problem in Canada. Over the past 10 years, the top 1% have increased their share of total wealth in the country while the share of all other groups has declined or stayed the same. In the past 20 years, the number of Canadian billionaires has more than quadrupled and their combined wealth has increased five times over.
Decades of regressive tax measures have helped the rich get richer while draining government revenues for programs to help middle and lower-income individuals, such as investments in pharmacare, accessible childcare and affordable housing.
New taxes are needed to reverse this trend. Canada remains the only G7 country without a tax on wealth, inheritance, or estates. Separate reports by Canadians for Tax Fairness and the CCPA have shown that a progressive wealth tax on the richest households could raise $20 billion annually, which could fund public services that benefit all Canadians.
The government also needs to start taxing income from investments at the same rate that it taxes income from labour and close other tax loopholes like the stock option deduction that overwhelmingly benefit top earners.
Equality has been eroding in lockstep with Canada’s declining effective corporate tax rate, which is about half of what it was 20 years ago. Costly tax cuts have failed to trickle down and instead padded profits of wealthy executives and shareholders.
Weak corporate transparency rules and outdated tax laws have enabled rich individuals and multinationals to avoid taxes through tax havens, with corporate tax dodging accounting for 40% of the government’s overall tax gap. It’s also time to restore corporate tax rates and tighten rules to prevent tax haven abuse.
There’s still time to tell the Finance Minister and your MP that you want action on fair taxes in this and future budgets.
Erika Beauchesne is the communications coordinator with Canadians for Tax Fairness, a non-profit organization that advocates for progressive taxes to reduce inequality and strengthen the economy.