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OTTAWA – Preferential tax treatments such as tax exemptions, credits, and loopholes have become a cash cow for Canada’s richest 10 per cent, says a new report by the Canadian Centre for Policy Alternatives (CCPA).
The report analyzes Canada’s 10 costliest preferential tax treatments, starting with the richest 10 per cent, which is responsible for 42 per cent of the federal money spent on these types of tax expenditures (up from 36 per cent in 1992).
“As Canadians await their tax refunds, they need to know that the richest Canadians have managed to heavily skew that system in their favour, robbing governments of much needed revenue in the process,” says the report’s author, CCPA Senior Economist David Macdonald. “The richest 10 per cent of Canadians enjoy an average of $20,500 a year in tax exemptions, credits, and other loopholes.
“That’s $6,000 more than in 1992 and it costs the federal government $57.9 billion — double what it paid in tax expenditures in 1992.”
Among the key findings in the report:
- The cost to the federal government for all preferential personal income tax treatments, not just for the rich, has ballooned from $90.3 billion in 1992 to a projected $152.3 billion in 2018. That’s a 69 per cent cost increase since 1992.
- Preferential treatment of personal capital gains cost federal coffers $6.1 billion in 2017. That’s 1,415 per cent higher than in 1992.
- The cost to Ottawa for preferential corporate tax treatments also ballooned, rising from $13.5 billion in 1992 to a projected $23.1 billion by 2018. That’s a 71 per cent cost increase since 1992.
- Thanks to preferential tax treatments ranging from personal income taxes and corporate taxes to RRSP enticements and GST exemptions, the federal government will lose $202.5 billion in foregone revenue in 2018. That tax expenditure cost is up from $120.9 billion in 1992.
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