Does Canada Need a "Robin Hood Tax"?
Mar 11, 2010
As confirmed in the recent federal budget, Canada seems headed for structural deficits in the medium term and perhaps even larger ones in the longer term. Revenue lost from years of tax cuts, the regressive nature of our income tax system, and the recession have combined to make it likely that things will continue to be difficult for the average Canadian for the forseeable future.
To make things worse, there has been a growing income gap between the richest and the rest of Canadians over the last 25 years. Canadian social programs erode, municipal infrastructure suffers, deficits increase. Yet the wealthiest of Canadians never bear the burden or any responsibility for this situation. In Canada today, the top one percent of income earners take home almost 14 percent of national income – nearly twice the share they had as little as 30 years ago.
In terms of accumulated wealth, the picture is even more disheartening. The median net worth of the wealthiest 10 percent of Canadian families increased 35 percent between 1984 and 1999. They gained an additional 65 percent from 1999 to 2005 at the same time as the wealth of the bottom 50 percent of Canadians saw no gains at all since 1984.
A regressive income tax system has further contributed to this growing gap in income and wealth. In 1949 there were 17 tax brackets, and tax rates ranged from 15 to 84 percent. By 2009, there were four federal tax brackets, the highest being only 29 percent.
But strangely enough, some prominent Canadians are calling for tax increases. Ed Clark, CEO of TD Bank, has publicly stated that the best way to get rid of a large deficit is through tax increases – on people like him. He wasn’t the only one saying this – he was reporting the position of the Canadian Council of Chief Executives (CCCE), which is the voice of the 150 largest corporations in Canada.
Most recently, a campaign for a global “Robin Hood Tax” on the banks has taken off in Britain and is fast spreading to other parts of the globe. The campaign calls on G20 leaders to place a 0.05 percent tax on financial transactions that do not involve members of the public (such as derivatives, currencies and other financial activities). With the massive profits the banks continue to make each year, it goes without saying that such a tax would have little impact on their bottom line.
It is expected that such an initiative would generate approximately $400 million Canadian per year. As the website explains, the monies would be used to finance front line services in the UK that have suffered from the recession, such as the National Health Service (NHS), the educational system, and the environment.
Somewhat surprisingly, several leading politicians have spoken out in favour of the tax, including British Prime Minister Gordon Brown, German Chancellor Angela Merkel, and French President Nicolas Sarkozy. Big business names are supportive as well, people from philanthropist George Sorel to businessman Warren Buffet. Organizations supporting it include the Trades Union Congress, Oxfam and Greenpeace.
It’s well past the time when something innovative needs to be done in order to restore the stability in our social structure and to reduce the income gap and its effects. Might it be possible that a “Robin Hood Tax” could work for Canada?
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It's time to impose this type of tax in Canada. The big six Canadian banks released their quarterly results this week. Collectively they earned about $5.3-billion in the three months, up from $3-billion a year ago and $4.7-billion in the prior quarter.
Jeff - -0001-11-30 00:00