Time for a fairer tax sys­tem

Advertiser (Grand Falls) - - Editorial - Mar­i­lyn Porter So­cial Jus­tice Co­op­er­a­tive NL

Noth­ing gets the rich more en­raged than a pro­posal that Canada needs to close the tax loop­holes that ben­e­fit the few and make our tax sys­tem un­fair. A case in point is the Lib­eral in­tent to re­view taxes as they re­late to pri­vate cor­po­ra­tions.

Re­cent com­ments from busi­ness lead­ers have made it sound that such a re­view is an at­tack on small busi­ness and the mid­dle class. What non­sense!

Univer­sity of Ot­tawa re­searcher Michael Wolf­son has cal­cu­lated that the tax ad­van­tages as­so­ci­ated with pri­vate cor­po­ra­tions favours the top one per cent of in­come earn­ers. Their use of Cana­dian-con­trolled pri­vate cor­po­ra­tions serves to shel­ter their in­come from per­sonal tax.

The Depart­ment of Fi­nance ex­plains the prob­lem: “The grow­ing gap be­tween cor­po­rate and per­sonal in­come tax rates since 2000 has in­creased re­wards as­so­ci­ated with tax plan­ning in a pri­vate cor­po­ra­tion.”

No won­der the num­ber of pri­vate cor­po­ra­tions has sky­rock­eted in re­cent years. Why not be­come in­cor­po­rated and pay less tax?

It should come as no sur­prise that it is the wealthy who are able to ben­e­fit most from tax ex­emp­tions and loop­holes. A re­cent study by the Cana­dian Cen­tre for Pol­icy Al­ter­na­tives (CCPA) found, “The rich­est 10 per cent of Cana­di­ans en­joy an av­er­age of $20,500 a year in tax ex­emp­tions, cred­its, and other loop­holes.”

All modern economies sup­port pro­gres­sive tax­a­tion rates. The higher your in­come, the more taxes you can ex­pect to pay. Our taxes help pay for the es­sen­tial ser­vices we all ex­pect and use: qual­ity health care, ed­u­ca­tion, po­lice ser­vices and more. And we know that there is room for im­prove­ment. For in­stance, Canada is the only de­vel­oped coun­try with a uni­ver­sal health care sys­tem that does not pro­vide ac­cess to uni­ver­sal cov­er­age of pre­scrip­tion drugs.

Ac­cord­ing to the CCPA, the to­tal cost of all tax ex­pen­di­tures is es­ti­mated to cost the pub­lic trea­sury $202.5 bil­lion in 2018. The chief ben­e­fi­cia­ries are the rich. When half of Cana­dian work­ers are liv­ing pay­cheque to pay­cheque, the fed­eral gov­ern­ment has a re­spon­si­bil­ity to en­sure that the Cana­dian tax sys­tem is fair to ev­ery­one. A fairer tax sys­tem will al­low for lower in­come taxes for those who truly need a break.

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