April 17, 2018
Ottawa - Canadians for Tax Fairness calls for tax expenditures that mostly benefit the wealthy to be closed.
The newly released Federal Report on Tax Expenditures confirms that the federal government is losing over $20 billion in revenue this year from just five regressive tax loopholes that overwhelmingly benefit those with higher incomes. Finance Canada's annual tax expenditure and evaluations estimate that the federal government will lose:
- $15 billion annually from income and corporate income tax revenues from taxing capital gains at a lower rate than ordinary income;
- $700 million this year and next from the stock option deduction, which allows CEOs and executives to pay tax at half the rate on their stock options;
- Over $1 billion annually through Tax Free Savings Accounts;
- $5 billion from the Dividend Gross Up and Tax Credit; and
- $750 annually from the meals and entertainment expense deduction.
The over $20 billion foregone through these tax expenditures is larger than the federal government's projected deficit this year of $18 billion. Those funds could go a long way to providing much needed public services, such as a national affordable childcare program, affordable housing and an affordable medicine/pharmacare program.
“The Trudeau government promised to review and eliminate regressive and ineffective tax loopholes,” says Executive Director, Dennis Howlett, “but has done little on this promise after it faced criticism on its attempts to address the private corporations tax preferences last year.”
“The Liberals have greatly improved the tax expenditures reporting,” adds Howlett, “however, there is a very long list of tax breaks in that report showing how complex the tax system has become and at least a third are lacking cost estimates.”
Some important line items in that report that do not have any costs include: accelerated capital cost allowances for liquefied natural gas facilities, for mining and oil sands assets and accelerated deductibility of some Canadian exploration expenses. There is also no tracking of the effectiveness of the tax breaks in the report. For example, the small business tax credit is intended to create jobs but half of the businesses it goes to have no employees.
Media contact: Diana Gibson, Canadians for Tax Fairness: 780-910-0665
Read more about this issue on the Tax Fairness website.