One of the most highlighted issues during the elections has been the desire to see Canada’s wealthiest pay their fair share of taxes. The New Democratic Party (NDP) and conservatives have put forward proposals that would see an overhaul to the current tax system.
NDP is seeking to introduce a new annual 1% wealth tax on families with a worth exceeding $10 million. This plan would see an additional $60 billion in tax revenue generated over the next 5 years. The party is also proposing to increase the top marginal tax rate by 2% to 35%. This would apply to those with an annual income of over $216,000. They are also suggesting that 75% of capital gains be taxed, versus the current 50%. The funds raised would be used on social spending.
Conservatives have taken a different line and avoided mention of any tax increases on those with higher incomes or net worth. They are rather proposing to target large corporations with hopes of boosting tax revenues by as much as $750 million annually.
Trudeau’s Liberal party has noted that they have increased taxes on the country’s top 1% earners already. Their platform seeks to ensure more is done to guarantee these top earners actually pay their taxes by closing loopholes.
Research has indicated that a robust wealth tax in Canada could raise more than $363 billion over the next 10 years. Such a move would be expected to stem rising rates of inequality that have worsened during the pandemic as the wealth of the super-rich continues to climb. A 2018 report indicated that the 87 richest families possessed wealth that was 4,448 times that of the average Canadian family and that the top 1% controlled 26% of the country’s wealth. Polls indicate that there is overwhelming public support for a wealth tax. This has however not motivated any of the parties to propose measures steep enough to reach this target.
Polls indicate the Liberals are facing a tight race against the Conservatives with the country likely to elect another minority government. Neither party is expected to secure the minimum 170 House seats required to take the majority. The National Bank of Canada expects such an outcome to lead to continued difficulty balancing taxes and spending. The NDP is likely to hold the balance of power, however, an alignment with Bloc Quebecois may be enough to ensure control on legislative matters. The federal election will be held on 20 September to elect members of the House.
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