A Liberal MP proposed a double whammy to Canadian taxpayers, advocating for both an equity tax on millionaires and the revival of a federal inheritance tax to "help pay for the pandemic response," reports Blacklock's.
"I think we have to tackle wealth inequality," said Liberal MP Nathaniel Erskine-Smith in the House of Commons. "Of course I would like to see a social safety net akin to a basic income that leaves nobody behind."
However, he admits "the math does not work" and could not address the issue of minimum income, let alone the other "noble objectives."
Erskine-Smith recently requested the Budget Office's figures to "address rising extreme wealth inequality and generational fairness concerns by implementing a one-time tax on extreme wealth to help pay for the pandemic response."
In Motion 68, he proposed a three percent tax on assets over $10 million, a five percent tax on assets over $20 million, and an inheritance tax on estates worth more than $5 million.
All three measures combined would raise $60.7 billion over five years, cited the Budget Office, which are the equivalent of 8.8 percent of ongoing deficits over the period. Analysts noted "uncertainty with respect to revenues raised by the tax" due to "behavioural responses" by millionaires. Parliament abolished the federal inheritance tax in 1972.
The Canadian Taxpayers Federation (CTF) called out the federal government Thursday on its proposed wealth tax, stating it would not cover the budget gap worsened by excess pandemic spending.
Franco Terrazzano, federal director for the Canadian Taxpayers Federation, said: "The PBO data shows that the Trudeau government’s deficit spending would burn through the extra cash in about a month, so if the feds don’t start saving money, it will be everyday Canadians that get clobbered by the debt tab." He denounced the "eat-the-rich mentality" as "silly political posturing."
The Commons last November 16 by a 292 - 27 vote rejected a similar New Democrat motion to impose a one percent equity tax on assets over $20 million, and an excess profits tax on corporations. Cabinet opposed the measure.
"It is easy and wonderful to say to people we are going to tax the wealthiest and we are going to do this, do that, and take all that money and give it to the poor," said Liberal MP Kevin Lamoureux, parliamentary secretary to the Government House Leader.
Conservative MPs opposed the motion in Commons debate and warned of higher costs of cabinet borrowing. "In the future, in three, four or five years when interest rates get back to normal, the biggest spending increases will go toward paying the interest on the debt the government is racking up," said MP Pierre Poilievre.
"The biggest threat to our health is this government’s out-of-control spending and debt," said Poilievre, who predicted taxpayers "will wind up paying more for the interest on our debt than we spend on health transfers."
"When it comes to how we pay for the recovery, how we pay for the pandemic, New Democrats believe we need to ask the ultra-rich to pay their fair share," said NDP leader Jagmeet Singh on Thursday.
In 2020, the NDP also proposed a 30 percent tax on excess profits for large companies worth $7.9 billion, though it was never adopted. Singh called it a "pandemic profiteering tax" similar to a wartime Excess Profits Tax Act passed by Parliament in 1940. It imposed a minimum 35 percent levy on corporations with net earnings above their previous three-year average.
Lamoureux urged greater need to focus on Canada's middle class, a pledge that economists at the Fraser Institute publicly challenged in an op-ed submission to the Globe and Mail. Jason Clemens, Milagros Palacios and Niels Veldhuis noted that while the federal government lowered the middle-income tax rate from 22 per cent to 20.5 per cent, it also eliminated tax credits for children's fitness, public transit, and income-splitting for couples with young children. They said this increased personal income taxes for all Canadians who previously claimed the aforementioned tax credits.
A 2017 analysis of these tax changes found that 81 percent of middle-income families typically paid $840 more in income taxes, while a subsequent study found they increased personal income taxes for 61 percent of low-income families.
In addition, the expansion of the Canada Pension Plan (CPP) in 2016 is expected to increase taxes for 98.8 percent of middle-income families in 2025, when CPP reforms are fully implemented. The economists claim the Trudeau government has increased taxes on most Canadians.