With the federal budget only a few days away, think tank Canadian Centre for Policy Alternatives (CCPA) is calling on the Liberal government to tax financial transactions, inheritances and capital gains at higher rates.
“Closing unfair and ineffective tax loopholes (or tax expenditures), while making the tax system simpler and fairer, could raise $18 billion in additional revenue—all without raising taxes for the vast majority (90%) of Canadians,” the CCPA says in its 2018 Alternative Federal Budget, released Thursday.
The Liberal government will table its budget in Parliament on Feb. 27.
The CCPA budget calls for a financial transactions tax (FTT) “as a means of curbing excessive speculation and raising revenues,” or a 5% financial activities tax (FAT) on profits and remuneration in the financial industry.
It also calls for a wealth tax of 1% on the net wealth of the top 10% of households, as well as a minimum inheritance tax of 45% on estates valued over $5 million (similar to the U.S. estate tax).
The budget also calls for a gradual increase in corporate tax rates from 15% to 21%, while raising the small business rate to 15%.
The think tank proposes eliminating or restricting the following:
Stock option deduction: CCPA says it would save $700 million per year by no longer allowing people to pay lower taxes on stock option compensation. The NDP made a similar proposal earlier this month in a parliamentary motion.
Capital gains: The budget would maintain capital gains exemptions for farms, fisheries and small business but tax personal and corporate income from capital gains at the same rate as employment income after adjusting for inflation. It would also introduce a $500,000 lifetime capital gains exemption for gains from selling a primary residence, as a way to remove some incentive for real estate speculation and help reduce wealth inequality. The measure would save $12.5 billion, CCPA says.
TFSAs: Impose a lifetime TFSA contribution limit of $50,000.
RRSPs: Reduce the annual contribution limit to $22,000 (the 2018 maximum is $26,230) while improving the CPP.
Boutique tax credits: Remove more of the activity-specific tax breaks, including for first-time homebuyers, volunteer firefighters and teacher supplies.
Corporate meals and entertainment deduction: The budget maintains the meal expense for long-distance truckers but removes the deduction that allows businesses to claim half their meal and entertainment expenses.
Fossil fuel subsidies: Remove all federal subsidies.
Read the full alternative budget here.