Time for a fairer tax system
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.