Taxes for the benefit of all Canadians

Citizens for Public Justice (CPJ) believes that the way Canada taxes its citizens and distribute its budgets is one reflection of our priorities as a country. In our pre-budget submission to the House of Commons Finance Committee, we proposed changes to Canada’s tax code that work toward achieving the common good.

Recommendation #3: Reverse tax cuts that don’t benefit all Canadians, such as boutique tax credits, corporate tax cuts, and GST cuts.

The continuing trend of tax cuts for individuals and corporations has disproportionately benefited a select few at a high cost to our nation’s economic and social well-being. Canada needs a fair tax system that ensures sufficient federal revenue and creates a vibrant economy that benefits all people.

Today, there are 190 tax exemptions at the federal level that cost the government over $100 billion in foregone revenue annually.[1] Between 2006 and 2011, the Canadian government provided $60 billion in tax savings to Canadian corporations.[2] This amounts to billions of dollars less each year for investments in jobs, education, and social and environmental programs. While the corporate tax rate has been consistently and dramatically cut over the last decade, Canadian companies have piled up more than $500 billion in cash reserves.[3]

Boutique tax credits like the Children’s Fitness Tax Credit and the Public Transit Credit mainly benefit wealthy individuals and families. Combined, these boutique tax credits represent more than $164 million in federal tax expenditures.[4] They have little to no effect in the lives of low-income families who already struggle to pay for basic needs. The same is true of the proposed Income Splitting program. Such tax credits should be halted in favour of increasing tax credits like the Working Income Tax Benefit and the Canada Child Tax Benefit which more effectively address income inequality and the needs of low-income families.

CPJ further recommends that recent cuts to the GST and to corporate tax rates be repealed. The resulting increases in federal revenue should be used to invest in people (i.e. through job creation, education, and removing barriers to workplace entry) and in environmental protection (i.e. investing in green energy and combatting climate change). These are initiatives that would lead to economic recovery and growth, and enhance the common good.

[1] Reinventing the Canadian Tax System: The Case for Comprehensive Tax Reform (2012, March). In Conference Board of Canada.

[2] The Stimulus Phase of Canada’s Economic Action Plan: A Final Report to Canadians.

[3] Alternative Federal Budget 2014. In Canadian Centre for Policy Alternatives.

[4] Harper’s Tax Boutique (2011, March). In Frontier Centre for Public Policy.

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