News
Why some of Canada’s richest millennials want to pay more taxes
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Many people wish for lower tax bills and more money in their bank accounts. But a group of young, rich Canadians want the federal government to tax them more.
About 200 wealthy people aged 18 to 40 belong to Resource Movement, an activist group that is expanding across Canada. Their mission is to reduce inequality between Canada’s wealthiest people and the rest of the population.
Its members are advocating for the creation of two new taxes that would have a direct impact on their own bank accounts and those of their parents: a “wealth tax” on the richest 10 per cent of Canadians, and an inheritance tax on the top 10 per cent of estates.
“A wealth tax will have no impact on my life. So, why not?” Montrealer Claire Trottier said in an interview with Radio-Canada. “No one’s going to cry for me if I have to give part of my inheritance.”
The group says it has redistributed more than $450,000 to social justice groups and, more recently, grassroots COVID-19 aid measures through its fundraising efforts since it was founded in 2015.
‘Tax my inheritance. Tax my fortune’
Trottier, a 40-year-old microbiology and immunology professor at McGill University in Montreal, grew up rich.
Her father, Lorne Trottier, co-founded Matrox, a high-tech company, and was ranked 38th wealthiest Canadian in the late ’90s when she was attending a private high school.
“I knew I was very, very lucky,” she said.
“I never had to worry. If I had trouble making rent, for example. I always had a safety cushion to rely on. It helped me make life choices that are difficult for other people.”
In 2000, her family created the Trottier Family Foundation, a charitable foundation that gives out grants every year. In 2018 alone, it donated close to $10 million to environment, health and education projects.
But Trottier said philanthropy is not enough.
“Our family made a conscious choice to give part of its wealth to society. There are many families like ours who do not make this choice,” Trottier said.
“A wealth tax is a way to make sure everyone does their fair share.”
Leading up to what would have been the March federal budget earlier this year — which was cancelled because of the pandemic — Resource Movement prepared a campaign taking aim at Canada’s tax system.
In a video produced for the group’s website and social media channels, members ask the government to “tax my fortune” and “tax my inheritance.”
A federal report found the top 10 per cent of Canada’s richest families have about 56.7 per cent of Canada’s wealth — more than $6.6 trillion, according to the report, which was published in June by the office of Canada’s parliamentary budget officer.
In contrast, the bottom 40 per cent are estimated to have 1.1 per cent of the wealth, about $132 billion.
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Resource Movement’s members say a wealth tax alone would bring in $9 billion annually and could help finance affordable housing, a national drug benefit program and access to dental care.
“As people who come from wealth, we know there’s a ton of wealth in this country that is just not being accessed by the state right now, but we need it and we can use it more productively,” said member Daniel Hoyer, a 38-year-old college instructor based in Toronto. His father was a chef and restaurant owner; his mother was an accountant.
He believes a wealth tax is the way to recover the money that currently eludes public coffers by taxing all assets.
How to balance the scales
But one expert said rebalancing the scales is easier said than done. Patrick Leblond, a professor with the University of Ottawa’s Graduate School of Public and International Affairs, is doubtful.
“‘We’ll tax the rich’ sounds good, but is it the most effective way of getting more money in government’s coffers?” he said.
“Government would have to hire people to try to measure all this, to run all over the world because, of course, the richer people are, the more they’re able to hide their assets.”
He suggested other measures could be more easily put in place, such as treating all personal revenue the same way — starting with capital gains.
Right now, if a person sells shares or properties, for instance, only half the profit, called a capital gain, is taxable. People’s wages, on the other hand, are almost all taxable.
Leblond said taxing capital gains less than salaries is “a fiscal advantage for the rich.”
While some experts don’t agree on the measures needed, others in power recognize there is a problem.
The new federal finance minister appears to be one of them.
In 2012, right before going into politics, Chrystia Freeland published Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, a book on the inequalities between the very rich and the rest of the population.
But she would not comment on the proposed taxes on the wealth and the inheritance of the richest Canadians.
Finance minister previously denounced inequality
In an email, her office noted the Trudeau government had introduced higher personal income taxes for the wealthiest Canadians, lowered those of the middle class and put the Canada Child Benefit in place. But her office recognized that “there is still more to do to ensure every Canadian has a fair chance at success.”
Trottier said the next speech from the throne, scheduled for Sept. 23, is the opportunity for the Trudeau government to do more.
The pandemic has laid bare who’s most deserving in Canada — the front-line workers whose salaries are often on the low end of the scale, she said.
“I think the inequalities in our society became obvious to a lot more people during the pandemic,” she said. “And we realized who are the people doing the essential work. We have lists now. It’s very clear who is doing the essential work.”
Source: – CBC.ca
Tuesday’s federal budget will include a tax increase on the richest Canadians, sources tell Radio-Canada.
It’s not clear exactly what form the tax measure will take but senior Liberal sources have told Radio-Canada that it will affect less than 1 per cent of Canadians.
Prime Minister Justin Trudeau and his ministers have been on a countrywide tour in recent weeks to make a series of pre-budget announcements.
Those announcements add up to more than $38 billion in commitments over a number of years. Because $17 billion of those commitments involve loan-based programs, about $21 billion could hit the government’s bottom line directly.
Since much of the spending side of the budget is already public, the focus on tomorrow’s budget likely will turn to how the government intends to pay for the new programs.
Finance Minister Chrystia Freeland has ruled out tax increases on the middle class.
“We remain absolutely committed to being there for hardworking middle-class Canadians, and then we won’t raise taxes on them,” she said last week.
On the eve of Tuesday’s federal budget, sources have told Radio-Canada that it will include a tax increase for wealthy Canadians. It’s not clear what it will exactly be, but senior Liberal sources say it will affect less than one per cent of Canadians.
The Trudeau government has made tax changes that target wealthier Canadians in the past.
In last year’s federal budget, the Liberals introduced significant changes to the alternative minimum tax rate. Those changes affected Canadians who earn more than $300,000 per year.
The House of Commons finance committee has recommended the federal government implement a windfall tax on companies in all sectors that generate “oversized” profits during crises, as well as grocery giants, to fund another doubling of the GST rebate.
The Liberal government faces a slowing economy and an uphill battle in the polls as it prepares to table its 2024 federal budget on Tuesday.
Global News spoke to Canada’s former parliamentary budget officer ahead of April 16, who said he’s expecting a tight spending plan with little room for surprises or hotly demanded relief on cost-of-living issues for Canadians.
Heading into the third budget under the government’s current mandate, Justin Trudeau’s Liberals have been on a cross-country tour plugging a series of measures that will be included in the coming year’s spending plans.
Since late March, the Liberals have announced just over $37 billion in new spending and loans planned for the federal budget, according to a Global News analysis. Some of the Liberal announcements have spending spread out over multiple years, while other items come with little to no price tag attached.
A significant amount of spending is tied to the Canadian housing market, in the form of either incentives to build more supply or policy changes to support renters and help prospective buyers get their first rung on the property ladder. Those include promises to help renters build their credit scores, changes to savings plans and amortization rules aimed at promoting affordability and billions in incentives to get more shovels in the ground on new builds.
Outside the housing market, Ottawa is planning to introduce a national lunch program and promised billions for expanded child-care access, boosts to the country’s defence spending and artificial intelligence industry, and a new youth mental health fund.
All the while, Finance Minister Chrystia Freeland has pledged that the Liberals will not increase the federal deficit past its current $40.1-billion levels.
Liberals have little fiscal room to ‘manoeuvre’: former PBO
Kevin Page, Canada’s first PBO and the president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, tells Global News the Liberals are facing significant headwinds in trying to keep the deficit stable while also meeting the needs of Canadians.
Canada’s economy may have avoided tipping into a recession in 2023, but growth remains weak under the weight of higher interest rates from the Bank of Canada. That means the federal government is seeing lower revenues flowing into its coffers at the same time its debt is becoming more expensive.
“Their challenge is, they just don’t have a lot of fiscal room to manoeuvre,” Page explains.
An RBC economics report released last week also warns of consequences for Canadians if governments are tempted to stray from their fiscal anchors, whether that be maintaining the overall size of the deficit or keeping a steady debt-to-GDP ratio.
Governments, federal or provincial, keeping to their fiscal anchors instils “confidence in voters and financial markets,” author Rachel Battaglia, an economist with RBC, wrote.
Canada’s sovereign triple-A credit rating heading into the 2024 federal budget is “strong,” Battaglia said, but the country risks a downgrade if Ottawa were to stray from its fiscal anchors.
A hit to this key credit rating would trickle down to large banks, and by extension, the rates paid by their customers on products like mortgages, according to Battaglia.
“Even though deeper deficits and higher associated sovereign borrowing costs may feel like a distant problem for many Canadians, the impact has the potential to trickle down to most households and businesses,” Battaglia wrote.
“Therefore, all Canadians have a stake in seeing the federal government meet its fiscal targets.”
Another tactic to increase revenues when economic growth is stalling is by hiking or introducing new taxes. While Freeland has pledged that no new taxes will be levied against the middle class in the 2024 budget, she has been mum on whether taxes on wealthier individuals or corporations could be in the cards.
Little room for surprises in the budget
One tailwind benefiting the federal government this budget season is that the first quarter of real GDP growth in Canada is so far coming in stronger than forecast in Ottawa’s fall economic statement last November.
That’s giving the Liberals a bit more spending room than they would’ve otherwise had amid pressures to maintain the deficit, Page says. But he expects this bandwidth will have been mostly eaten up with the already announced measures, and he does not expect any new big-ticket items will be unveiled on April 16.
Ipsos polling conducted exclusively for Global News last month shows the top demand from voters heading into the federal budget is for financial relief from the rising cost of living.
The most commonly cited priorities from Canadians surveyed by Ipsos about the upcoming 2024 federal budget.
Global News / Ipsos
Some 44 per cent of those surveyed in March said they wanted help with rising daily expenses, followed by 38 per cent who prioritized health-care investments and 33 per cent asking for a reduction in personal taxes.
“Pocketbook issues dominate the list of the things that Canadians want to see addressed in the budget,” Sean Simpson, senior vice-president at Ipsos Global Affairs, told Global News earlier this month.
But Page sees little room for those kinds of relief efforts in the 2024 budget if the Liberals want to maintain the deficit.
The best the Liberals can do is make it look to Canadians like they’re “trying their best” when it comes to acting in a fiscally responsible way while providing support to the most vulnerable, he says.
“I don’t think we’re going to see much new that can make a big difference for families in 2024 with respect to affordability,” Page says.
“It’s possible we see some small measures, but they will be small and targeted.”
The already announced efforts to get more homes built are “incremental steps” to solving the housing crisis, but Page says the country is “millions of units short” of what’s needed to restore affordability. Even efforts to put more housing supply in the pipeline will take years before homes are move-in ready, he says.
“It’s not something that we’re going to solve in the 2024 budget,” Page adds.
Liberals could have better prospects in 2025
Ipsos’s latest political polling from March 28 has the Conservatives up 18 points over the incumbent Liberals, who are themselves only three points ahead of the NDP. Simpson said the Liberals will need to “stop the bleeding” to avoid falling into third place behind the NDP.
A federal election is currently slated for no later than October 2025, but could be called earlier if the Liberals fail a confidence vote or bring down the government themselves.
Page expects a “pretty thin budget” this year, with some major items reserved for a hopeful pre-election budget next year.
But if the Liberals do get to put up another budget before the next federal election is called, Page thinks the incumbent party might find better fortunes in 2025.
By that point, many economists, as well as the Bank of Canada, forecast that the economy will be starting to recover amid anticipated cuts to the central bank’s benchmark interest rate.
This time next year, the Liberals might find rising revenues will boost their electoral prospects and give them more ammunition to deliver a 2025 budget that would have a better chance at restoring voter confidence in the government, Page says.
“The government knows it’s going to be a hard year economically for Canadians and probably a hard year politically,” he says. “But I think they’re hoping that this will rebalance when we get to 2025.”
– with files from Global News’ Sophall Duch
More on Money
Tuesday’s federal budget will include a tax increase on the richest Canadians, sources tell Radio-Canada.
It’s not clear exactly what form the tax measure will take but senior Liberal sources have told Radio-Canada that it will affect less than 1 per cent of Canadians.
Prime Minister Justin Trudeau and his ministers have been on a countrywide tour in recent weeks to make a series of pre-budget announcements.
Those announcements add up to more than $38 billion in commitments over a number of years. Because $17 billion of those commitments involve loan-based programs, about $21 billion could hit the government’s bottom line directly.
Since much of the spending side of the budget is already public, the focus on tomorrow’s budget likely will turn to how the government intends to pay for the new programs.
Finance Minister Chrystia Freeland has ruled out tax increases on the middle class.
“We remain absolutely committed to being there for hardworking middle-class Canadians, and then we won’t raise taxes on them,” she said last week.
On the eve of Tuesday’s federal budget, sources have told Radio-Canada that it will include a tax increase for wealthy Canadians. It’s not clear what it will exactly be, but senior Liberal sources say it will affect less than one per cent of Canadians.
The Trudeau government has made tax changes that target wealthier Canadians in the past.
In last year’s federal budget, the Liberals introduced significant changes to the alternative minimum tax rate. Those changes affected Canadians who earn more than $300,000 per year.
The House of Commons finance committee has recommended the federal government implement a windfall tax on companies in all sectors that generate “oversized” profits during crises, as well as grocery giants, to fund another doubling of the GST rebate.
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