Close tax loopholes, including donations

Re Canada’s ‘Filthy Five’ tax loopholes, Opinion,

Feb. 20 This column by Rick Smith, executive director of the Broadbent Institute, highlights an important aspect of our taxation system. He has listed five loopholes that are costing the federal government $12 billion per year in tax revenue.

But he missed the elephant in the room: the deductibility of donations to registered charities. The motivation for giving should be compassion and social good, not tax benefits.

Corporations and rich individuals are lowering their tax burden by exploiting these loopholes, including donations. The tax system is tilted in favour of the rich, forcing lower income groups to share a higher share of the tax burden. Anis Zuberi, Mississauga Overall, a good column by Rick Smith, but he errs in his recommendation that capital gains should be taxed at 100 per cent. His reasoning is that it is a tax break for the rich. But if you are the average retired person who has sold a principal residence, and you do not have a company pension, you will likely need to invest the proceeds and spend some each year to supplement CPP, OAS and your RRSP/RRIF, if you have one.

In the year you cash out, you have to pay tax on 50 per cent of capital gains. Increasing that to 100 per cent would significantly affect many average Canadians who are not using tax loopholes. Mike Faye, Toronto