Progressive tax measures can help fund initial cost of response
The federal government should make significant investments now to help Canadians weather an unprecedented health and economic crisis, according to this year’s Alternative Federal Budget.
The CCPA’s annual AFB outlines fiscal proposals for government to reduce inequality and improve public health, safety, well-being and inclusion.
While the 2020 AFB was compiled before the COVID-19 outbreak, the authors included last-minute measures to address worker and community protections in the wake of an unfolding global health pandemic and collapsing financial markets.
Progressive fiscal policies, including several tax fairness measures, should be introduced after the crisis to help fund the government’s response.
The AFB identifies several areas where Canada can take direct action, starting with fixing inadequacies in the Employment Insurance system by reducing working hour requirements, increasing the benefit replacement rate and doubling the sickness benefit.
To protect workers in an increasingly gig economy, the government should also create a separate emergency fund for workers who need to quarantine but don’t qualify for EI.
Doubling the Canada Child Benefit for a month would also assist lower-income families struggling under school and childcare closures.
More medium-term measures to alleviate the economic damage from COVID-19 involve implementing a “Dignity Dividend” to stabilize lower-income families in a recession. Increasing transfers to seniors who need financial assistance and expanding the Canada Housing Benefit would help households who lose income as a result of having to isolate.
Longer-term, the government can use lessons learned about shortcoming in our infrastructure to improve Canada’s ability to react to future emergencies.
It can do this by bolstering investments in health and poverty reduction efforts, a national Seniors Care Strategy, affordable childcare, and a Just Transition to a green economy, as Canadians for Tax Fairness and other NGOs called for last week.
Together, these short and medium-term responses would cost over $15 billion, but after overcoming the crisis, the government can fund some of that initial cost by introducing progressive changes to Canada’s tax system.
The AFB includes a chapter with contributions from Canadians for Tax Fairness on how fair taxation can support a more equitable and prosperous Canada.
Some of our recommendations include:
- Increase top income tax rates and introduce a wealth tax for the top 1%
- Crack down on international tax evasion and avoidance by reforming international tax rules and ending double-non-taxation agreements with tax havens
- Eliminate regressive tax loopholes that almost exclusively benefit the top 10% and 1%
Together, these and other AFB recommendations could raise the billions needed to manage the immediate health and economic threats from COVID-19. Then, the government can begin to repair weaknesses in our front lines of defense – the essential public services and social programs that will enable us to face future adversities.