In its latest attack on the Liberal government’s planned changes to the tax code, the Canadian Taxpayers Federation (CTF) is coming to the defence of an unlikely group of people: the rich.
A study commissioned by the group and released Monday shows that while Canadians who make over $100,000 a year (before tax) represent just 8.4 per cent of tax filers across the country, they were responsible for 52 per cent of all income tax revenue collected by the federal government in 2014 and 54.5 per cent of all provincial income tax collected.
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People with incomes of $250,000 or higher represented 1 per cent of all tax filers that same year, the CTF study found, but paid 21 per cent of all federal income tax.
Canada’s tax system is admittedly based on the concept that your tax burden should be based on your ability to pay, but CTF federal director Aaron Wudrick said that it’s a “lie” that higher-income Canadians aren’t shouldering enough of the overall burden in Canada.
“Prime Minister Justin Trudeau recently claimed that ‘the middle class pay too much in taxes and the wealthiest don’t pay enough,'” said the CTF study’s author, policy analyst and economist Mark Milke.
“The middle class could always use a tax break. But it is false to say higher income Canadians do not pay their fair share.”
The taxpayers federation is also arguing that the overall rate of taxation in Canada remains too high; higher even than when Trudeau’s father was prime minister.
“The most recent statistics from 2015 show that general revenues to all Canadian governments amounted to 38.6 per cent of (gross domestic product),” the federation noted in its release on Monday. “In the 1970s … general revenues to government as a percentage of the economy ranged from 35.2 per cent to 38.1 per cent.”
Since taking office on late 2015, the Liberals have taken direct aim at high-earners in Canada.
As promised during the federal election campaign, they started by creating a new income tax bracket for Canadians earning more than $200,000 per year, charging them 33 per cent income tax — up from the previous rate of 29 per cent. The argument was that the increase would allow them to lower the tax burden on people in the middle-income range.
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Then, last July, the government announced proposed changes to tax law that would close “loopholes” in the system that Finance Minister Bill Morneau alleged were largely being exploited by the richest Canadians.
But those proposals have proven highly controversial, with incorporated small business owners in lower tax brackets arguing that they stand to lose thousands of dollars a year.
In response to the CTF’s study, Morneau’s office said the numbers are simply a clear demonstration of Canada’s “progressive tax system” at work.
That system, according to Morneau’s spokesperson Chloé Luciani-Girouard, is “one in which the wealthiest among us pay more for the goods and services that we all benefit from. It’s why our first action as a government was to lower taxes for the middle class, by asking the wealthiest to pay a little more. It’s why the Canada Child Benefit now gives nine out of 10 families more money, tax-free every month, rather than sending cheques to millionaires.”
Luciani-Girouard added that government is looking forward to hearing more from Canadians on its recent tax proposals.