Canada's five worst tax loopholes provide 99% of their benefit to the richest half of Canadians and cost the federal government $10.4 billion in 2011. That's the conclusion of an in-depth study of tax expenditures published by the Canadian Centre for Policy Alternatives.
CCPA Senior Economist David Macdonald examined who benefitted from a list of 64 personal income tax expenditures. They ranged widely from the Guaranteed Income Supplement to the Stock Option deduction. He found that 59 of them provide more benefit to the top 50% of income earners than the bottom half, with the largest share going to the richest 10%. Using data from 2011 he found that the cost of those 59 expenditures totalled $100.5 billion.
“The richest 10% pocket an average annual benefit of $15,000 per person from tax loopholes. By comparison, the poorest 10% receive on average $130 in tax loopholes and $1,200 in federal income transfers,” says Macdonald. “In essence, there are two federal transfer systems in Canada: one for the poor and middle class and another shadow system for the rich.”
If the tax system were modernized, the federal government could target eliminate university tuition, create an affordable national child care program and address poverty.
"It is all about choices. Currently we are spending a lot of our tax money shifting wealth to those who are already well-off," says Dennis Howlett, Executive Director of Canadians for Tax Fairness.
The full report can be found here.