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OTTAWA—Canada’s tax system is in dire need of reform, says a new study by the Canadian Centre for Policy Alternatives (CCPA).
According to the study, by CCPA economists Marc Lee and Iglika Ivanova, ad-hoc tax changes over the last two decades have seriously weakened the redistributive role of Canada’s tax system at a time when market inequalities call for more, not less, redistribution.
“At a time of rising income inequality and unprecedented concentration of wealth in the hands of a few, restoring fairness should be the primary objective of the Canadian tax system,” says Ivanova. “Instead, the past twenty years of tax cuts have disproportionately lined the pockets of Canada’s wealthy.”
The study presents a framework for a progressive tax reform strategy that includes:
- broadening the income tax base to ensure that all forms of income are subject to the same progressive tax rates,
- raising marginal income tax rates on top incomes,
- eliminating tax credits and deductions that disproportionately benefit the richest Canadians,
- introducing a single, streamlined, income-tested transfer for low- and modest-income families, and
- implementing inheritance and/or wealth taxes to prevent the concentration of wealth across generations and to improve social mobility.
The study recommends the establishment of a Fair Tax Commission to examine how federal taxes and transfers work together as a system and make recommendations for changes.
“The last comprehensive tax policy review, the Carter Commission, was convened more than half a century ago, in 1962,” says Lee. “It’s time for a meaningful and broad-based public dialogue on how to make our tax system fair for all Canadians.”
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