Brian Topp’s proposals to increase the personal income taxes of the wealthiest Canadians are just “dreamy ideas” that are ultimately nonsense, Finance Minister Jim Flaherty says.
Mr. Topp, the actors-union director and former party president who is the perceived frontrunner in the NDP leadership race, told The Canadian Press he wants his party to make higher income taxes for high-income earners a key plank in its next election campaign platform.
“I will be talking about income taxes and I think it's time for our party to step up to that plate and to be pretty clear about that because then we'll have a mandate to act if we're elected,” Mr. Topp said in a wide-ranging interview.
But Mr. Flaherty said Mr. Topp should go back and study the Canadian tax system before tossing around such ideas.
“Most of the personal income tax in Canada is not paid by wealthy people. It’s actually paid by middle class people because they’re the bulk of the population,” Mr. Flaherty said when asked about the NDP candidate’s plan at an Ottawa news conference Friday.
“If anyone thinks – in the United States, Canada, Europe – you can tax the 1 per cent or 0.5 per cent and raise a lot of money, it’s nonsense,” the Finance Minister said. “It doesn’t produce the volume of revenue that you need in order to run a country. So it’s just one of those dreamy ideas that people think about that don’t make any sense.”
The New Democrats, and even the Liberals, have supported hikes to the corporate tax rate.
But the Reform movement of the 1990s, which formed the backbone of the current Conservative Party, has rendered any discussion of raising personal taxes a politically risky move. The Conservatives have made a sport of trying to label their opponents on the other side of the house as tax increasers and even those most left-leaning politicians have shoed away from the suggestion that personal taxes should be raised.
But the Occupy movement that started in the United States and has spread around the world has drawn attention to the disparity between the wealth of corporate and financial executives and the average wage earners.
And other Western countries are starting to float the notion of increasing taxes on the wealthy. U.S. President Barack Obama last month proposed $1.5-trillion in new taxes aimed primarily at the wealthy, including setting a minimum tax on those making $1-million or more in annual income.
In his interview with The Canadian Press, Mr. Topp also called for a hike in corporate taxes and did not rule out a sales tax increase “at some point,” once the fragile economy is on surer footing.
Mr. Flaherty said Canada’s tax policy has been the key to its successful performance in the recent recession, relative to other G20 countries.
“I’m a lucky guy, being the Finance Minister in Canada, because we’ve got the fundamentals right,” he told reporters, “and the last thing I’m going to do is screw up those fundamentals and one of the fundamentals is lowering our corporate tax rate.”