What real tax fairness looks like

March 23 2023

Over the last decade a pattern has developed with federal budgets and tax fairness. When the federal budget is presented, the Minister of Finance claims that the measures in it will make the tax system fairer. Then, after those measures are implemented, it becomes clear that what is actually being done comes nowhere close to matching the rhetoric.

This has happened under several different finance ministers from both the Liberals and Conservatives.

While the rhetoric finance ministers used was intended to appeal to Canadians concerned about tax fairness, the measures in the budget were designed to minimize the impact on the wealthy and large corporations.

Grocery store profits are latest example that tax fairness is needed

Profit taking by large grocery store chains and the impact on inflation are the latest examples of why more than rhetoric is needed. As Canadians for Tax Fairness (C4TF) pointed out earlier this month, Loblaws increased its gross markup to 46.7% in 2022, costing Canadians almost $900 million.

Profit taking by Loblaw Companies Ltd. and other large corporations is a major factor in the price increases we’ve seen recently. And it is not just grocery store chains that are the problem. As a Canadian Centre for Policy Alternatives report from January showed, 47% of every dollar spent due to higher prices went to increased corporate profits.

A windfall tax would discourage that kind of profit taking.

Tax fairness measures that would make a difference

C4TF’s Submission: Recommendations for tax fairness in Budget 2023 to the Pre-Budget Consultations for the 2023/24 Federal Budget shows what real tax fairness would look like. These measures would address problems like excess profit taking that hurts low- and middle-income Canadians. These measures would help ensure that the money is there to do things like fix our health care system.

Among the measures are the following:

  • Increase the federal corporate income tax rate to 20% (still below the federal rate of 21% in the US).
  • Introduce a minimum tax of 15% on corporate book profits to deal with the problem of tax avoidance.
  • Improve corporate transparency to make tax dodging more difficult.
  • Review federal tax loopholes that disproportionately benefit the wealthy and large corporations.

Tax fairness is about everyone doing their share

During the pandemic, front-line workers were called upon to risk their lives so that the rest of us could access essential services like health care or get necessities like groceries. Now it’s time for the large corporations and wealthy individuals to do their part.

Unlike front-line workers, the wealthy and corporate CEOs aren’t being asked to risk their lives. But we should expect that the federal government will ensure that they pay their fair share in taxes.

Comparing what’s in next week’s budget to the measures put forward by C4TF will tell us if the federal government really believes that.