Wealth tax could raise $70B in 10 years

OTTAWA • The NDP’S proposed wealth tax, a centrepiece of the party’s election platform, could raise nearly $70 billion over the next 10 years, Canada’s budget watchdog has found.

The “super-wealth tax,” as the NDP is calling it, is similar to an idea promoted by U.S. Democratic presidential candidate Elizabeth Warren, and is part of the NDP’S campaign focus on tax fairness and inequality.

The party wants to apply a one per cent tax to fortunes worth more than $20 million. Unlike a tax on income, a wealth tax would apply to all assets, including real estate, with the aim of reducing economic inequality. The NDP says the tax would apply only to the wealthiest one-tenth of one per cent of Canadian households.

On Tuesday, the parliamentary budget officer (PBO) released a cost estimate of the proposal, part of its mandate to cost out election platforms. According to the analysis, the measure could raise $5.6 billion in the 2020-21 fiscal year, rising to nearly $9.5 billion in 2028-29.

“Unlike the Liberals and Conservatives who work for their rich and powerful friends, we will help people who are struggling to get by,” NDP Leader Jagmeet Singh said in a news release. “Our plan is simple — we can afford to help people when we have the courage to ask the super-rich to pay a little bit more to fund the services we all rely on.”

However, the PBO also noted that the cost estimate is highly uncertain, in part because wealthy households are likely to take steps to avoid the tax. “A large behavioural response is expected, due to avoidance and valuation optimization by wealthy families,” the analysis reads.

The NDP, which released its election platform in June, has proposed a number of other tax reform measures, including a plan to increase the corporate tax rate from 15 to 18 per cent. The party also wants to increase the top income tax rate, which applies to those making more than $210,000, by two points, to 35 per cent.

The platform further reiterated previous commitments to close tax loopholes, including the CEO stock option deduction, and to tax 75 per cent of profits on investments, up from the current rate of 50 per cent.

The NDP would likely need the extra tax revenue to pay for major spending promises, including a pledge to enact universal pharmacare in 2020 and to publicly fund dental care, vision care, mental health care and hearing care within 10 years. The party has not provided estimates of how much those promises would cost.

“Canadians deserve … expanded health care services to cover people head-to-toe — and we can do this when the very richest pay their fair share,” Singh said in the news release.