Consecutive Conservative and Liberal governments have cut taxes for corporations and the rich, which has resulted in funding cuts to public services. The federal government needs to restore fairness to the tax system, raise taxes on the rich, and crack down on tax avoidance (using legal loopholes to avoid paying taxes) and evasion (using illegal methods to reduce taxes).
Why it matters
- The federal government has cut corporate taxes, promising that will spur jobs and wage growth—but research shows that corporate tax cuts don’t actually do either of those things, instead they go directly into executives’ pockets.
- The federal government needs to help provinces invest in public services, like healthcare and childcare, to create good jobs, improve well-being, and foster a prosperous economy.
- Canadians need to feel that the tax system is fair to feel good about paying more taxes for the services that we all rely on.
How current policy is falling short
- The Trudeau Liberals promised to eliminate loopholes that benefit the wealthy and to crack down on tax evasion, avoidance and tax havens, but have failed to do so.
What should be done
- Increase the corporate tax rate.
- Close the ‘Filthy Five” tax loopholes:
- Partial inclusion of capital gains: while 100% of wages is included in taxable income, only half of investment profits (income from capital gains) are taxed. The NDP proposes to increase the percentage of capital gains income that is subject to taxes from 50% to 75%.
- Employee stock option loophole: the Trudeau Liberals have made a last-minute attempt to partially close this loophole.
- Business entertainment expense: businesses can write off golf tournaments and tickets to hockey games as legitimate business expenses, this is unfair and shouldn’t be allowed.
- Dividend gross-up and tax credit: most of this tax credit goes to the rich, and it easily allows income to be transferred to family members in a lower tax bracket.
- Offshore tax havens: more resources must be allocated to cracking down on tax evasion.