Out of the Shadows

Shining a light on Canada’s unequal distribution of federal tax expenditures
December 5, 2016
1.75 MB58 pages

This study finds that Canada’s personal income tax expenditures disproportionately benefit the rich and cost the federal treasury nearly as much as it collects in personal income tax. The study examines the income distribution of benefit for the 64 personal income tax expenditures for which there is available data. Out of the 64 tax expenditures, 59 of them provide more benefit to the top 50% of income earners than the bottom half, with the largest share going to the richest 10%. The cost of those 59 expenditures totalled $100.5 billion in 2011 alone. 

The report also makes several recommendations to reform the system and promote greater equality, including: the closure, capping, or phasing out of the most regressive tax expenditures; having Finance Canada publish the distribution of tax expenditures in its annual review; and the inclusion of tax expenditures as costs in federal financial reporting.