A new study written by CUPE economist Toby Sanger for the Canadian Centre for Policy Alternatives says Canada should join other countries in introducing fairer taxes on the financial sector that could generate over $10 billion a year.
Canada’s financial sector has been the greatest beneficiary of recent corporate income tax cuts and preferred tax rates applied to capital gains taxes and stock options. In total, the value of these tax preferences and recent tax cuts add up to $11 billion a year for Canada’s financial sector and is projected to reach over $14 billion a year in 2013.
The report points out that in the wake of the financial and economic crisis, many industrialized countries have taken steps to have their banks and financial sectors make a “fair and substantial contribution” to pay for some of the costs of the crisis.
In contrast, the Harper Conservative government lobbied to prevent world leaders from agreeing on introducing new taxes on banks at the Toronto G20 Summit last June.
The study recommends establishing a fairer tax system and broadening the base by:
- Introducing a Financial Activities Tax (FAT) on financial sector profits and remuneration to compensate for the under-taxation of the financial sector.
- Eliminating tax preferences for stock options and capital gains.
- Reversing recent corporate tax cuts.
- Working with other countries to establish global financial transactions taxes.
Read Fair Shares: How Banks, Brokers, and the Financial Industry Can Pay Fairer Taxes on the Canadian Centre for Policy Alternatives (CCPA) website.