Flaherty’s axe or fairer tax? Time to discuss the full range of options

Canadians for Tax Fairness - June 13, 2011 press release


It is time for a full review and public discussion of all options related to funding important public services and programs, says Canadians for Tax Fairness (CTF), a newly formed organization promoting a fairer and more progressive tax system “to support the Canada we love and the Canada we need to build”. CTF’s founding board includes long-time NGO leaders who have been active in poverty elimination, the environment, fair trade, social justice and democratic reform, as well as leading tax expert Neil Brooks and author Linda McQuaig.

“In recent decades, the management of public finance has been largely driven by an agenda focused on cutting taxes and shrinking government,” said Chandra Pasma, spokesperson for Canadians for Tax Fairness. “Most of our political leaders, either in agreement or because of electoral fear, have played along. Taxes were cut, more loopholes added and – surprise – we’re told that the public treasury doesn’t have adequate funds for the existing range of programs, let alone others that are needed.”

Canadians for Tax Fairness executive committee member Murray Dobbin said: “The dirty little secret that most government leaders will not admit is that a fairer and more balanced tax system could generate tens of billions of dollars in new public revenue. The numbers are truly breathtaking.”

A series of tax reforms that gain a fairer and balanced tax contribution from the wealthiest individuals and corporations could produce more than $84 billion in new public revenue over a three-year period, or about $28 billion per year, according to figures presented in the 2011 Alternative Federal Budget, prepared by the Canadian Centre for Policy Alternatives. That new revenue could fund new programs, current programs and/or help address the deficit.

A detailed list of potential tax revenue sources and applications appears below.

“The adoption of specific tax reforms and expenditures are decisions that should emerge from an informed public discussion and political debate,” said Ms. Pasma. “Our objective today is to emphasize that we do have a choice. We have been told that many important programs and services are simply unaffordable. In reality, a fairer and more balanced tax system could produce significant new revenue. It’s a political choice.”

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Examples of Potential Tax Revenue Sources and Applications.

The following data was taken from the 2011 Alternative Federal Budget prepared by the Canadian Centre for Policy Alternatives. The Alternative Budget provides three-year projections (2011-2014), so the following figures refer to potential revenue and expenses for that three-year period.

New Sources of Tax Revenue - $84 billion (2011-2014)

  • Rolling back the expensive and unnecessary corporate tax cuts to the 2007 tax rate could produce $30.0 billion.
  • Capital gains from investments are taxed at only half the rate of salaries and wages. While promoted as an investment incentive, it mostly rewards stock market speculation. Fully taxing personal and corporate capital gains, and eliminating the stock options deduction, could produce another $19.3 billion.
  • Introducing a financial activities tax of 5% on profits and remuneration in the financial sector, as advocated by the International Monetary Fund, could generate another $14.4 billion.
  • Canada’s highest income tax tier is only $128,800. If we added two higher tiers at $250,000 and $750,000, with modestly higher rates, that could bring in another $12.0 billion.
  • Plus the Alternative Federal Budget identified a number of other tax adjustments producing another $8.7 billion in revenue.

Possible Applications of New Revenue - $81 billion (2011-2014)

  • Initiate a national PharmaCare program ($11.2 billion)
  • Significantly boost continuing care services, e.g. nursing home and residential care ($8.7 billion)
  • Launch an affordable national childcare program ($4.9 billion)
  • Provide safe drinking water for First Nations ($3.0 billion)
  • Reduce post-secondary tuition to 1992 levels ($4.8 billion)
  • Create new income tested education grants ($4.2 billion)
  • Launch an environmentally sustainable municipal infrastructure building program ($13.5 billion)
  • Significantly boost the Canada Child Tax Benefit to $5,400 ($14.3 billion)
  • Double the refundable GST credit ($11.2 billion)
  • Increase poverty reduction transfers to provinces ($5.4 billion)

 

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