In mid-March, we began this seven-part series on the upcoming federal Budget with a self-evident statement, “COVID-19 has shown us that people’s health and wellbeing must be prioritized.” Events of the last weeks have underlined this truth with devastating clarity. Even as a disastrous third wave destroys lives and families, overwhelmingly in working class and racialized communities, access to vaccinations has been grossly uneven, favouring the affluent.

On the brink of Monday’s Budget, the need for strong social infrastructure, and a resilient, sustainable economy that supports a livable future in the midst of ongoing and coming crises, has never been greater.

In this last instalment of our series, we address the steeply rising inequality which has been accelerated by the pandemic. Inequality is widely recognized as a societal danger in its own right, on top of the obvious impacts of poverty. Well-designed taxation can significantly reduce inequality while raising money for recovery and sustainability. But this only works if taxes have a net redistributive effect. That is, the wealthy need to pay more in taxes than they make on their investments, and the rest of us need to benefit more from public spending than we pay in taxes.

In addition, the existing extractive economic model must be questioned or we risk maintaining the root causes of the multi-headed crisis we face. Public funds must no longer be used to prop up industry that feeds climate chaos and harms Indigenous and racialized communities. Instead, we need bold and just measures to accelerate the shift to a low-carbon future, measures like shifting away from public-private funding models to federally funding community infrastructure directly and creating a network of public banks. In tandem, federal mandates must be transparently reworked so that protection of the environment, decolonization and the elimination of carbon-intensive and fossil fuel related investments are central. Simply put, what is currently seen as a “Healthy Economy” can no longer take precedence over a “Healthy Environment” and goals that truly protect people and the planet. It is time for a green and just recovery! [1] [2]

Some Recommendations below! See more in our full budget submission.

Progressive Taxation

• Introduce an excess profits tax of up to 80% for profits above 7.5%, similar to those in Canada and other nations during the world wars.
• Create an annual net wealth tax of 1% on fortunes of over $20 million and 2% on fortunes of over $50 million.
• Establish a 5% federal income surtax on income of over $500,000 and 10% on income over $1 million. Maximum combined federal and provincial rates are now just over 50%, far below top rates that existed in previous decades.
• Introduce a 10% luxury tax on private cars, boats, and planes with a value of over $100,000. The PBO estimated this would generate over $600 million annually.

Reform the Infrastructure Bank

• Enter into new funding agreements with provinces, territories, municipalities and Indigenous communities to expand and support publicly owned infrastructure projects based on national priorities (i.e. national public transit strategy, national decarbonization strategy, care economy investments). These should include poverty reduction, equity and other goals that help communities (i.e. economic diversification, community benefit agreements).

TAKE ACTION!

•       Join Canadian for Tax Fairness (https://www.taxfairness.ca/), sign their letters to government, share on social media.
•       Read and share CUPE’s resources on the Canada Infrastructure Bank https://cupe.ca/stop-liberals-bank-privatization

Sources Referenced and used for Recommendations 

[1] Guy Dauncey’s “26 weeks of Federal Climate Action”, The Practical Utopian (January 5, 2020)

[2] “Alternative Federal Budget Recovery Plan,” Canadian Centre for Policy Alternatives, (July 21, 2020)