The richest Canadians should help fund Canada’s recovery from the pandemic
If there’s one issue that gets university students fired up during a federal election, it’s taxes.
When walking around campus, one is bound to overhear two twenty-somethings, each armed with a copy of Canada’s Federal Tax Act, passionately debating the government’s most effective fiscal instrument.
Such conversations often last well into the evening, with each student exhibiting a fervor that only a discussion about the Canadian tax code can provoke.
… Ok, maybe it’s not like that.
Even if UVic students are not zealous about taxes, they should recognize that Canada’s current tax system exacerbates wealth inequality. This federal election, we should support candidates who will tax Canada’s richest individuals and corporations.
The pandemic revealed that Canada’s tax system allows the rich to incur more wealth while servers and grocery store clerks, enjoying almost none of the same tax benefits, live on minimum wage.
According to Forbes, Canadian billionaires collectively increased their wealth by $78 billion dollars between January and April 2021. The greatest profits were gained by billionaires like Jim Pattison, owner of Save-on-Foods, who canceled a two dollar per hour pandemic pay-increase for grocery store workers while his profits skyrocketed.
And while the billionaires like Pattison enjoyed increased earnings, Canadians in low-income households lost their jobs. A report published in January 2021 by CIBC Economics found that “all the jobs lost in 2020 were among workers who earned below average wages.”
In addition to exacerbating wealth inequality, the pandemic showed this type of inequality can have dangerous consequences for the poor. In 2020, a report from Canada’s chief statistician Anil Arora found Canadians living in a low-income household were at higher risk of “severe COVID-19 outcomes,” such as extended hospitalization and death. Further, The Globe & Mail found that Canadians living in densely-populated low-income urban neighbourhoods, like Toronto’s Downsview-Roding area and Montréal-Nord, were the most likely to contract the virus.
This is the economic landscape ahead of the federal election. The richest Canadians have made huge gains while the poorest Canadians have lost their jobs and gotten sick. If we continue to elect representatives who do not address this wealth gap, working-class Canadians will suffer the consequences.
Here’s the good news: Canada can implement specific taxes, targeting only the richest Canadians, not low or middle-income earners, to address wealth inequality.
For example, Canada is the only G7 country without an inheritance tax. This allows extreme wealth to concentrate within the same families for decades. The Canadian Centre for Policy Alternatives found that the wealthiest 87 Canadian families own as much wealth as the lowest earning 12 million Canadians.
An inheritance tax would help reduce this inequality. Canadians for Tax Fairness, a left-wing advocacy group based in Ottawa, have shown that a 45 per cent tax on inheritances over $5 million dollars would generate over $2 billion dollars annually. An inheritance tax with these parameters would exclude the vast majority of Canadians, affecting only those who have much more than they need.
Canada can also tax extreme wealth. In 2020, the Parliamentary Budget Office estimated that taxing citizens who control more than $20 million could provide Canada with $5.6 billion in the first year and $70 billion over the first decade.
In addition to implementing new taxes, politicians can close tax loopholes that benefit only the wealthiest Canadians. For example, Canada could eliminate the lower tax rate for capital gains and cancel business entertainment expense deductions, two methods the wealthy use to reduce their taxes, which would generate hundreds of millions of dollars in tax revenue.
It’s clear not only that Canada can address wealth inequality through taxation but also that a majority of Canadians want tax reform. A poll by Abacus Data, an Ottawa polling and marketing firm, found that 89 per cent of Canadians, including 82 per cent of self-identified Conservatives, want Canada’s rich to pay for the recovery.
With popular bi-partisan support for higher taxes on the rich, Canada’s three main Federal parties have released their tax plans. The Conservatives plan to implement a 3 per cent digital services tax to gain revenue from huge media corporations like Google and Amazon. They vow to implement tax credits and increase funding for the Canada Revenue Agency (CRA) to fight tax avoidance. However, tax credits will not help raise revenue to address wealth inequality and, after the CRA was defunded under Stephen Harper’s government, this funding merely returns the CRA’s budget to normal.
The Liberals have a more robust tax platform aimed at taxing the rich. They promise to increase taxes on luxury items, fund the CRA, and work with other countries to establish an international tax rate in hopes of reducing tax evasion. But, the Liberals’ plan does not go far enough to address the massive wealth inequality in Canada. They do not have a tax on wealth, nor on corporations who made huge profits during the pandemic, nor a plan to close tax loopholes. Their plan simply isn’t aggressive enough in taxing the rich.
That’s why I’m voting for the New Democratic Party. Jagmeet Singh and the NDP have promised to implement a 1 per cent tax on assets over $10 million, tax corporate pandemic profits, close tax loopholes, as well as fund the CRA and work to establish a global minimum tax rate. We need this type of bold tax reform to recreate Canada’s tax system so that it benefits the majority, not the rich.