OTTAWA – Proposed Conservative tax cuts could give corporate CEOs and others virtual tax-fee status by eliminating the capital gains tax, said CUPE National President Paul Moist in condemning the cuts.
“Harper’s promise to eliminate the capital gains tax is probably the most regressive and unfair tax measure ever proposed in Canada,” said the leader of Canada’s largest union. “It would create stark and growing inequalities and increase the social deficit in Canada.”
Billions would be lost every year in government revenue and enormous benefits would go to the privileged few, Moist said. “In particular, corporate executives, who receive most of their compensation in the form of stock options, could pay only a small fraction of the tax they should pay.”
Moist cited the example of Robert Gratton, Canada’s highest paid CEO formerly with Power Corp. He received $173.2 million in compensation in 2004, but $169.4 million of this was in profits from stock options.
Under the Conservative proposal, someone like this could avoid paying federal tax on these stock options indefinitely. They could save up to $24.5 million in federal income taxes in just one year. The federal income tax that they pay could be less than 1 per cent of their total compensation.
“No wonder Canada’s CEOs are now so supportive of the Conservatives,” Moist said. “Martin’s promised tax cuts for high income earners are little better. He cut the capital gains inclusion rate to 50 per cent in 2000, allowed income trusts to go tax free and cut the tax rate on corporate dividends.”
In fact, the Martin cuts for higher-income earners would cost $2.7 billion a year by 2010 and would provide enormous benefits to those with high incomes with virtually no benefit to middle and lower income earners.
“Harper wants to increase the lowest income tax rate paid by everyday Canadians – the hard-working people who pay their taxes and play by the rules – while giving the privileged few a multi-billion dollar tax break.”
“Instead of giving billions away to those who need it least,” Moist said, “these funds should go to improving public services for the benefit of all Canadians.”