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TORONTO – More than a decade’s worth of tax cuts have disproportionately lined the pockets of Canada’s most affluent families, says a new tax study by the Canadian Centre for Policy Alternatives (CCPA).
The study finds the top 1 percent of families in 2005 paid a lower total tax rate than the bottom 10 percent of families.
“Canada’s tax system now fails a basic test of fairness,” says Marc Lee, senior economist with the CCPA’s B.C. office and author of the study. “Tax cuts have contributed to a slow and steady shift to a less progressive tax system in Canada.”
The study, which is the first comprehensive review of tax changes at all levels of government in Canada within the past 15 years, finds the system is delivering larger tax savings for high income families. This reinforces the growing gap in market incomes between high income families and the rest of Canadians.
“Most Canadians will be surprised by these findings because they believe we have a progressive tax system – but looking at all taxes combined, that’s no longer the case.”
The study, Eroding Tax Fairness: Tax Incidence in Canada, 1990 to 2005, is available at www.policyalternatives.ca. Its key findings include:
- Provincial tax cuts are the key culprit for the increasingly regressive nature of Canada’s tax system but the problem has been exacerbated at the federal level with billions of dollars worth of post-2000 tax cuts.
- The richest one percent of taxpayers saw their tax rate drop by four percentage points between 1990 and 2005.
- Most Canadians saw their tax rate fall by two percentage points of income, but not so for the poorest 20 percent of taxpayers, who pay three to five percentage points more in taxes.
- Middle-income families pay about six percentage points more in total taxes than a family in the top 1 percent.
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