Tax reform and social safety
TAX REFORM

Several problems

Over the past decade, the right has imposed the theme of reduced taxes. Yet we too often ignore that the real issue is not the level of taxes, but the real level of income (gross income - taxes + transfers).

Our tax system is not as progressive as it could be. The middle class pays almost the entire total tax bill. On the one hand, the upper middle class does not pay its fair share. On the other hand, many citizens do not have enough income to pay taxes. This situation creates a climate of confrontation and ill will between « taxpayers » and those who do not pay taxes.

Some solutions

During a first mandate, we will make important changes to the tax tables in order to:

• Establish a more progressive tax system;
• Take account of the guaranteed annual income in the net income.

We will increase the number of tax brackets from the current four to five. A first bracket (of 8%) will be added so that everyone pays taxes on the first dollar of taxable income. The personal tax credit will be eliminated and the sums thereby liberated will be converted into a universal direct transfer. As well, the fifth bracket will be established for people earning more than $80 000 per year. In any reform, we will proceed in order to ensure that the first quintile of the population (the poorest 20%) suffer no losses in their available income.

Social Democrats have long criticized the Goods and Services Tax (GST) for being a regressive tax. We nevertheless cannot ignore that the GST generates significant revenues for the Canadian government. During a first mandate, we will conserve the GST while considering how it can be reformed. The GST is a regressive tax, but it can play a part in a generally progressive system (notably with a guaranteed annual income and a very progressive income tax). It is also possible to consider making the GST vary depending on the type of good or service being taxed, or depending on the economic cycle. The sums currently spent on the GST tax credit will also be converted into the guaranteed annual income.

During a first mandate, we will undertake studies to evaluate the possibilities of making significant reforms to corporate taxes. We will consider the possibility of replacing taxes on profits by taxes on capital (assets). This has the effect of ensuring that the biggest firms pay their fair share, without raising disincentives to the productivity and dynamism of these firms.