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Liberals Expose Conservative Capital Gains Tax Cut |
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Written by Liberal Party of Canada
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Monday, 16 January 2006 |
Conservative Leader Stephen Harper’s proposed capital gains tax cut creates a massive tax loophole that will deliver in the order of $6 billion over 5 years in federal tax cuts to the richest one per cent of Canadians, Finance Minister Ralph Goodale and Revenue Minister John McCallum said today.
“This $6-billion dollar windfall will benefit the wealthiest Canadians. In fact, the bulk of the total benefit of the Harper tax cut will go to the 140,000 Canadians who earn more than $100,000 a year and report capital gains,” said Minister Goodale. “That is only 0.6 of one percent of the 23 million people who file taxes in this country.”
Minister Goodale said Harper’s tax cut for the rich is even more outrageous since he would implement it at the same time as he would roll back the Liberal government’s tax cuts for low and middle-income Canadians.
“This is staggering. Understand that more than 95 per cent of Canadians will never see any benefit from this plan, but they will pay for it in spades – through higher personal income taxes and the loss of valued government programs,” said Minister Goodale.
Minister McCallum, a former Chief Economist of the Royal Bank of Canada, spelled out the scale and regressivity of the loophole.
He said that the tax benefit for those 34,000 Canadians who earn more than $250,000 a year and report capital gains would average about $115,000 over five years – roughly twice the average annual household income.
“That’s a huge benefit to a select and wealthy few,” McCallum said. "I cannot think of a tax cut that is more skewed to the rich than this one."
McCallum added the Conservatives’ costing of this measure is a massive under-estimate of the actual costs.
“Any competent financial planner can find half a dozen ways to ensure you never pay. This promise comes close to a de facto elimination of the capital gains tax for individuals,” he said.
He said the Conservatives have completely miscalculated the cost of this commitment. They said it would cost the federal government $150 million a year, which is only 7 per cent of the federal government’s revenue from the capital gains tax on individuals. The true cost would likely be about $1.7 billion a year to the federal treasury.
“Is this incompetence, or are they trying to hide this massive windfall for the rich?” asked McCallum.
He also noted that the Conservatives did not put any limitations on the range of capital assets that would qualify, which means the impact of the proposal could be even greater, as this loophole could significantly alter investor behaviour.
“We have to ask how Mr. Harper intends to pay for this. Will this tax cut for the very wealthy be funded by cancelling the national child care program, backing away from our Kyoto commitments or cancelling the Kelowna accord?” said Minister Goodale. |
