PBO report shines light on haves vs have-nots

The federal Liberals campaigned on a promise to make the wealthiest Canadians “pay a little bit more” — and it turns out those Canadians were wealthier than many realized.

On Wednesday, a report from the Parliamentary Budget Officer revealed that Canada’s top 1% hold more than 25% of the country’s wealth — much higher than the 13.7% calculated under the PBO’s previous methodology.

Before the federal budget was derailed by Covid-19, Finance Minister Bill Morneau’s mandate letter repeated the Liberals’ election pledge to introduce a 10% tax on the sale of luxury boats, cars and personal aircraft that cost more than $100,000.

The Department of Finance said it was currently “focused on providing immediate assistance” for those affected by Covid-19 when asked if it would consider increasing taxes for wealthy Canadians in light of the PBO report.

Elliot Hughes, senior advisor with Ottawa-based Summa Strategies Canada Inc., said the PBO report is “another piece of analysis that will be useful” when the government considers how to address income inequality.

“The question is going to be what is the best policy response from the government to address this inequality, and within the context of Covid-19, how does that play out?” Hughes said.

One policy that has been pitched by both the NDP and the Green Party is a wealth tax on Canadians whose fortunes exceed $20 million.

Wednesday’s PBO report “kicks off a huge debate that we need to have in this country,” NDP finance critic Peter Julian said in an interview.

“Everyone should pay their fair share,” Julian said. “In a progressive tax system, if you earn more, you should pay a little bit more.”

Last year, the PBO estimated that the NDP’s proposal to tax the wealthy would bring in more than $5.5 billion in revenue this year — but that amount would likely be “more than double” using the PBO’s revised estimate on income inequality, Julian said.

On June 11, the Green Party released a plan to rebuild the economy in the wake of Covid-19, doubling down on its demand that the government implement a wealth tax.

“We are continuing to call for a wealth tax,” Green MP Elizabeth May said in an interview.

May said the pandemic — which has cast a spotlight on essential workers — has underscored the need for a fairer tax system.

“That 1% that holds 25% of the wealth has been entirely useless in the pandemic,” May said. “The useful people are the truck drivers, the grocery store employees and the front-line health care workers, all of whom, as a group, have been quite underpaid and underappreciated.”