NDP leadership candidate Brian Topp is gambling that Canadians are ready for a tax-raising politician.
In unveiling a plan that proposes a new 35-per-cent tax rate for Canadians making more than $250,000 a year, Mr. Topp acknowledges he’s challenging a “tax phobia” that dominates the nation’s politics.
“The only time we ever hear our current political leaders utter the word ‘tax,’ it’s immediately followed with ‘cut.’ That has to change,” states Mr. Topp’s platform document.
Mr. Topp’s plan to raise $18-billion a year in additional government revenue is built around a tax-the-rich message that would also eliminate tax breaks on capital gains and stock options, while raising the corporate tax rate from 15 per cent to 22.12 per cent.
Billed as an attempt to tackle income inequality in Canada, Mr. Topp’s tax platform borrows heavily from the current rhetoric of Barrack Obama. The U.S. President has squared off against Republicans over taxes through repeated references to the so-called “Buffett rule.”
The President’s push is based on a column by U.S. billionaire investor Warren Buffett, who noted that thanks to various investment tax breaks, he pays a lower tax rate than his secretary.
Pollster Nik Nanos predicts Mr. Topp will have a hard time selling his plan, because it forces him to explain details and paints him as generally supportive of higher taxes.
“It’s a symbol of how you view taxes,” he said. “I think for a lot of Canadians, when the economy is unsteady, any talk about increasing taxes – whether theoretical or not – would probably make Canadians nervous.”
Mr. Topp’s proposal would reverse tax breaks on capital gains brought in under the Liberals in 2000.
“Let’s be very clear: The Liberal government’s capital-gains tax cut was the most regressive single tax change in Canadian history,” Mr. Topp states in his policy paper, arguing that it has largely benefitted Canada’s highest-income earners.
Economic think tanks like the C.D. Howe Institute and the Macdonald Laurier Institute criticized Mr. Topp’s proposed changes for capital gains, arguing they would hurt small business owners.
Scott Clark, who approved the capital gains tax change as deputy minister of finance from 1998-2001, said Mr. Topp is right to start a discussion about revenue and taxes, but the NDP leadership candidate is looking at the wrong ones.
The retired public servant argues that raising the goods and services tax is the least damaging way to address Mr. Topp’s concern about income inequality.
“He’s avoiding a discussion on what is the most efficient and fairest way to raise and distribute the tax burden,” Mr. Clark said. “At the end of the day, the GST was created as the best tax system in terms of raising revenue while reducing the impact on economic growth and job creation.”