A tax on the richest Canadians’ wealth would net $5.6 billion in annual revenue, a report from the Parliamentary Budget Officer (PBO) says.
NDP finance critic Peter Julian asked the PBO to estimate the revenues from a 1% tax on family net wealth above $20 million. The tax was part of the NDP platform in last fall’s federal election. It would apply to all assets, including real estate, though lottery winnings would be exempt.
The PBO’s report on Wednesday estimated that 13,800 families would pay the wealth tax, generating $5.6 billion in the 2020–21 fiscal year. That’s the same figure the budget watchdog estimated for the policy in its campaign platform costing last year.
The policy would cost $113 million to administer.
The PBO used its high-net-worth family database for the estimates. Uncertainties in the projection include families’ tax strategies and depressed asset values induced by the economic shock from Covid-19, the report said.
“A large behavioural response could be expected, due to avoidance and valuation optimization by high-net-worth families; however, the magnitude of this response is highly uncertain and dependent on the level of enforcement and the asset valuation techniques prescribed by the legislation,” it said.
A PBO report last month highlighted income inequality in Canada, showing that the wealthiest 1% of families hold more than one-quarter of the wealth.
The NDP and the Green Party responded to that report with renewed calls for a wealth tax as the Liberal government grapples with the fallout from the global pandemic.
Finance Minister Bill Morneau is releasing his fiscal update Wednesday afternoon.