Federal deficit will require progressive taxes to help pay for COVID-19 costs | Unions Yeah!

Federal deficit will require progressive taxes to help pay for COVID-19 costs

An excess profits tax, which we had during both world wars, would raise revenues and prevent pandemic profiteering.

Ottawa (18 July 2020) — Canadians for Tax Fairness are calling for new progressive taxes to help pay for the costs of responding to COVID-19. These taxes will enable Canada to manage the $343.2-billion deficit projected in last week’s fiscal snapshot.

Tax cuts mean the wealthiest 1% are paying a lower over rate than the rest of us

“Decades of regressive tax cuts and loopholes have allowed the top 1% to pay a lower overall effective rate of tax than all other income groups, including the poorest. Canada’s recovery plan should ensure those who can afford to pay are contributing to it,” said Toby Sanger, economist and director of Canadians of Tax Fairness.

Proposals for fair taxes

The federal government should introduce a number of fair tax measures to support public services and reduce the disparities that have been exacerbated by COVID-19.  These include:

Taxes on wealth and excess profits: The wealthiest Canadians now own more than a quarter of the country’s net wealth. A 1 or 2% tax on fortunes over $20 million would generate over $10 billion a year. Just as the wealthiest families have done very well during the crisis, some large corporations have also seen their profits increase, while Main Street businesses are suffering. An excess profits tax, which we had during both world wars, would raise revenues and prevent pandemic profiteering.

Corporations, pay your fair share: As more economic activity moves online, the federal government should follow through on its 2019 election promise and finally tax Google, Facebook and other e-commerce firms on their profits and revenues here. Canada has a poor track record of convicting large corporations for taxes owed. It’s time to toughen laws around tax havens and corporate tax dodging.

Transparency still needed

Canadians for Tax Fairness and other organizations have also called for stronger transparency around COVID-19 spending, including government aid and contracts as other countries have done. The recent WE charity controversy is an example of the need for greater disclosure to ensure funds are spent wisely and that corporations, organizations, and government are held accountable.

“Public spending should focus on initiatives with significant economic returns that will reduce inequality, and help establish a sustainable economy. We can afford these critical investments by making the tax system fairer. What we can’t afford are cuts to public services and programs that would only throw us back in time and into a deeper crisis,” Sanger said.