THE RICH MAKE APRIL THE CRUELEST MONTH. It is the month we have to pay our taxes. That often leads us to dark thoughts about the whole system; dark thoughts about who pays what and about whether what we pay gives us everything we deserve to get.
Being reasonable men and women we know paying taxes is necessary and not an inherent evil. We remind ourselves how our taxes pay for a myriad of public services: everything from roads and bridges to hospitals and schools, from the Canada Pension plan to old age pensions, from social assistance for the poor and disabled to veterans pensions, from weather forecasting to employment insurance and the security of Medicare.
In short: we know our taxes pay for all the things we count on to make our day-to-day lives possible.
But we can’t shake the thought that the whole tax system is basically unfair, an intricate and elaborate shell game set up to favour the rich over the rest of us. And, so it is.
Pay as little as possible
Wealthy corporations have been enjoying diminishing tax rates for decades, while personal income taxes have skyrocketed as a proportion of total government revenue. For every dollar paid by corporations in taxes, $3.50 is now paid in personal income tax.
Worse, as a detailed investigative report in the Toronto Star has revealed, the fine art of tax avoidance has been honed by the corporations to a keen edge. Canada’s Big Five banks racked up $44.1 billion in profits over the period 2000-2016, but managed to avoid $5.5 billion in tax.
Don’t pay tax at all
The Liberals made tax reform a main plank in their platform in 2015, when they were elected. But we haven’t much to show for it—besides a lot of political rhetoric. Nearly three years after their election, Canada Revenue Agency experts were polled: nine out of ten of them agreed that it was easier for wealthy Canadians and corporations to “evade and/or avoid [their] tax responsibilities” than for the average Canadian.
Five months ago, Auditor General Michael Ferguson reported that CRA was giving big business and wealthy individuals with offshore bank accounts more favourable treatment than ordinary Canadian taxpayers. They got a longer time to answer queries and produce documents, and CRA was more likely to waive interest and penalties—sometimes without even being asked.
Cheating by hiding
Last year the CRA itself estimated that rich Canadians have cached up to $240.5 billion in offshore accounts, cheating the federal government of up to $3 billion a year in tax revenue.
Even setting illegal tax withholding aside, however, there are perfectly legal loopholes available to the wealthy to avoid paying their fair share of taxes. A particularly gaping one is the current taxation of capital gains, which exempts half of this money from taxation altogether. 87% of this benefit goes to the wealthiest 1%. But the Liberals haven’t made a move to close it.
There are other loopholes as well, and the top five of them are costing the public $13 billion every year. Besides unduly benefiting the already-wealthy, they are also gendered: they benefit men far more than women.
Finance Minister Bill Morneau is now—after considerable wavering—promising to tax some stock options benefits that are presently enjoyed tax-free by CEOs. But at the same time, he has provided business a new windfall: $14 billion in tax cuts over the next six years.
A budget only corporations could love
The Liberals’ 2019 budget—how our taxes are to be spent—reflects corporate, not social, values. A national lunch program for the nation’s schoolchildren, for example, is mentioned in the budget, but not a dollar has been allocated towards it.
An NDP motion to start funding urgently needed social housing across the country was waved away by the Liberals. Pharmacare should be a national priority given the high cost of drugs, and is overwhelmingly supported by Canadians. But it did not appear in the budget—there was only a tentative move to set up a drug assessment agency sometime in the future.
The budget was, in fact, the usual election-year scattering of largesse hither and yon, much of it to be delivered after the Fall election, without making any real difference.
A plan to help millennials buy houses is a case in point: it will allow first-time homebuyers to access RRSPs that many of them don’t even have, and offers too little to permit them to obtain home mortgages in major metropolitan areas. The program won’t “gain much traction at all,” according to one mortgage broker. The budget, he observes, is “designed to make more friends than enemies.”
So there it is. Our taxes are due by the end of the month. They won’t be used to meet glaring social needs in any meaningful way. And you’ll likely pay them at a much higher rate than the wealthy folks at the very top end of the income scale. That’s the cruel truth.
A deeper truth is that while our unfair tax system is something we all complain about, we accept it. Unless and until we change that, tax time will keep April as the cruelest month.
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