New Democrats stand for a fair and just redistribution of wealth. That means implementing a tax system where those earning above $200,000 pay their fair share. The NDP should actively campaign for bold, progressive tax change, not only to plug tax loopholes, but to return to 1988-era corporate income tax (CIT) rates. NDP MP Erin Weir says that the next NDP leader should advance a bold tax policy that stops the downward spiral of corporate income tax that began with the Mulroney government cutting the CIT from 36% to 29%, which led to further cuts by subsequent Liberal and Conservative governments down to 15%.
Weir states that we have to go beyond a 2% CIT rate increase from 15% to 17%, and raise the CIT to 19.5%. We recommend the gradual tax hikes proposed by the Canadian Centre for Policy Alternatives in its Alternative Federal Budget of March 2016. That would see the CIT rate increasing to 21%, the level of the tax when Steven Harper came to power. Implementation of this CCPA recommendation, along with a crackdown on tax havens and tax avoidance, would raise $20 billion. That would help to fund ambitious social programs like a national child care programme, public pharma care, and tuition-free post secondary education.
We’ve been told for several decades, by Tories and Liberals alike, that cutting corporate taxes will result in more “jobs, jobs, jobs.” That was, and still is a bogus claim. Instead of leading to greater investment, more jobs, and more money for social funding, corporations have hoarded $700 billion, with about $200 billion stashed in offshore tax havens. It is estimated that Ottawa loses at least $7.8 billion in revenues every year because of tax haven-facilitated tax dodging.
Canada should be working with global partners to end tax haven secrecy and to reform international corporate tax laws. The imposition of either a Financial Transaction Tax (FTT) or a Financial Activities Tax (FAT) can raise an additional $5 billion in revenues, according to the CCPA’s 2016 Alternative Federal Budget. Action to further improve the progressivity of the tax regime should include:
1. Tax Capital Income at the same rate as employment income bringing in $8 billion dollars
2. Increasing the Corporate Tax rate from 15% to 21% bringing in $9 billion dollars
3. Eliminating corporate stock options as a benefit would net savings of $600 million
4. Cutting Justin Trudeau’s “middle class tax cut” and enhancing the Guaranteed Income Supplement and Child Benefits
5. Increasing income tax for earners with income over $200,000 to 33%.
The NDP should follow the lead of Jeremy Corbyn, and his shadow cabinet chancellor of the exchequer John McDonnell, who advocate the establishment of a National Investment Bank and a policy of Peoples’ Quantitative Easing to build half a million social housing units, replace crumbling infrastructure, and assist cooperatives and small businesses in the creation of productive, fulfilling and innovative employment.