An economy that works for everyone is an economy where everyone plays by the same set of rules. Since 2015, the federal government has worked to ensure that the wealthiest people and businesses pay their fair share; that sophisticated tax planning does not allow anyone to avoid paying the taxes they owe; and that tax measures disproportionately benefiting the wealthiest at the expense of everyone else are eliminated.
At the same time, Canadians expect their tax dollars to be put to good use by an efficient and responsible federal government.
Budget 2022 proposes additional measures that will make the tax system more fair, and new steps to ensure that the federal government is delivering the effective programs and services that Canadians deserve.
Significant steps that the federal government has announced since 2015 to promote fairness and integrity in the tax system include:
- Raising taxes on the wealthiest one per cent of Canadians, and cutting taxes for 20 million low- and middle-income Canadians;
- New taxes on luxury goods, like yachts and private jets;
- A tax on vacant or underused housing owned by non-resident, non-Canadians;
- Reforming the tax treatment of employee stock options to ensure it does not disproportionately benefit the very wealthy;
- Limiting excessive interest deductions to ensure that large companies pay their fair share;
- Restricting the ability of large financial institutions to use complicated financial transactions to create artificial tax deductions;
- Implementing all minimum standards from the OECD’s Base Erosion and Profit Shifting project to tackle international tax avoidance; and
- Ensuring that the GST/HST applies in a fair and effective manner to the growing digital economy.
The federal government has also taken steps to reinforce the Canada Revenue Agency (CRA) as it works to unravel tax avoidance schemes. Investments announced in the 2020 Fall Economic Statement and Budget 2021 have included:
- Strengthening the CRA’s ability to fight tax crimes such as money laundering and terrorist financing by upgrading its tools and increasing international cooperation;
- Increasing the CRA’s offshore audit capacity to focus on people who avoid taxes by hiding income and assets abroad;
- Modernizing GST/HST risk assessment systems to review high-risk refund and rebate claims prior to payment;
- Improving the CRA’s ability to collect outstanding taxes; and
- Providing legal resources to support audits and to defend against appeals to the courts by wealthy taxpayers motivated to spend large amounts on litigation.
These efforts, which began in 2021-22, are expected to support the recovery of $2.3 billion in revenues, and the collection of $5 billion in taxes assessed but remaining outstanding over five years.