Amid Davos, calls are growing to tax the ‘ultra rich.’ Where does Canada stand?

As global leaders gather at the World Economic Forum in Davos, Switzerland, there are growing calls to tax what some call the “ultra rich” — but how feasible is that in Canada?

A new report released by Oxfam International Monday suggested that the world’s wealthiest one per cent accumulated nearly twice as much new wealth — a whopping US$26 trillion — compared to the remaining 99 per cent of the global population over the past two years.

That report said that during the COVID-19 pandemic, billionaire fortunes rose by US$2.7 billion a day, while at least 1.7 billion workers live in countries where inflation is outpacing their wages and over 820 million people are going hungry.

“Wealth inequality is out of control and is at levels that we haven’t seen before, and we’re starting to see poverty increase for the first time in 25 years,” said Ian Thomson, policy manager at Oxfam Canada in Ottawa.

The Oxfam report comes as the World Economic Forum, an annual gathering of political and business leaders, is underway in Davos.

2:12 Growing push to tax the ultra-wealthy in the U.S. as billionaires expand fortunes

To narrow the ever-widening gap between the wealthy and poor, Oxfam is urging governments to introduce a range of tax policies targeting the rich.

These include one-time “solidarity” wealth and windfall taxes, as well as permanently raising taxes on the richest one per cent.

And now, some millionaires, including wealthy Canadians, are joining the calls for higher taxes.

In an open letter released Wednesday to political leaders in Davos, a group of more than 200 millionaires from 13 countries said: “Tax the ultra rich and do it now. It’s simple, common-sense economics. It is an investment in our common good and a better future that we all deserve, and as millionaires we want to make that investment.”

Claire Trottier, a philanthropist and tax justice advocate from Montreal, is among five Canadians who have signed the letter.

She said taxing the rich will not only address the widening inequality but also generate much-needed revenue to tackle major problems that the world is facing right now.

“There’s no one solution, but certainly wealth taxes to me are an absolutely essential and necessary part of the solution,” Trottier told Global News.

In an Ipsos poll conducted last year, an overwhelming majority of Canadians (80 per cent) said that governments should tax the rich more.

The federal government has been looking at ways to do that and ensure tax fairness, but critics in favour of more taxes on the highest earners say more needs to be done, including an imposition of a wealth tax, inheritance tax, windfall profit tax on corporations, as well as closing any tax loopholes in the country as part of some of the solutions.

The Liberal government’s 2022 budget included a proposed surtax of 1.5 per cent on bank profits over $100 million, as well as a one-time 15 per cent charge on income above $1 billion for the 2021 tax year.

A luxury goods tax, which came into effect last September, covers cars and SUVs, as well as private planes and helicopters, worth more than $100,000. The federal tax will also cover yachts and boats, including motorboats, worth more than $250,000.

1:45 Will Trudeau’s promised bank tax hike mean higher fees?

These are all “baby steps,” Thomson said.

“The Liberal government has said for many years that they want to address excessive wealth inequality, but we haven’t seen them putting those words into action,” he said.

The New Democratic Party has been putting pressure on the Liberals to do more to tax the super-rich. With the party now in a governance deal until 2025 with the federal Liberals, who hold a minority government, whether the NDP will use that influence to push further on those goals is not clear.

“It’s disappointing to see the federal government refuse to take progressive action to make sure that the richest are paying their fair share in taxes,” said Niki Ashton, NDP critic for tax fairness.

“We need to close tax loopholes that are allowing the richest in our country from evading and avoiding paying their taxes,” she added.

According to Oxfam’s analysis, 95 food and energy corporations more than doubled their profits last year, making US$306 billion in windfall profits.

In Canada, the highest-paid CEOs and other top executives shattered a record for compensation in 2021, earning an average of $14.3 million, according to a report by the Canadian Centre for Policy Alternatives released earlier this month.

2:15 Rich get richer: Canada’s highest-paid CEOs’ incomes rise as inflation soars

Thomson, of Oxfam Canada, said the response to the COVID-19 pandemic and its consequent economic crisis, has contributed to the wealthiest increasing their fortunes.

He said pumping public money to keep economies afloat and to meet the basic needs of people really drove up corporate profits over the past two years.

“The response to the pandemic was necessary, but what it led to is this wealth concentration at the top,” he told Global News.

This is why Oxfam and others are calling for a windfall tax on corporations that have seen excess profits. Oxfam also wants the idea to go further to include big food corporations, as a way to narrow the widening gap between the rich and poor.

Some governments have turned to taxing fossil fuel companies’ windfall profits as Russia’s war in Ukraine sent oil and natural gas prices soaring last year.

Canada is not on board yet, with the federal government saying it has no plans to impose a windfall tax on the massive profits being posted by Canadian energy companies.

Tax avoidance and evasion are also exacerbating the inequality problem, as the rich are able to move their money around and take advantage of the legal system to pay less in taxes, experts say.

A 2017 joint investigative report by the Toronto Star and the CBC entitled “Snow Washing” revealed how wealthy individuals around the world were creating shell companies in Canada to hide their money.

Marc Tasse, a forensic accountant and professor at the University of Ottawa, said Canada is “an attractive” option for corrupt individuals because it is easy to create a company without providing much information in the country.

“You can incorporate a company in Canada in about 15 minutes, so basically easier to incorporate a company in Canada than it is to get a library card,” he told Global News.

To tackle the problem, there should be a “political will,” but the problem can’t be fixed overnight, Tasse said.

“I think that we need to review our laws, to give more power to regulatory agencies and also to law enforcement agents,” he said.

“We need to work hand-in-hand with our international partners.”

— with files from The Associated Press and The Canadian Press