While the Liberals had previously announced housing and profit taxation policies for large financial institutions, they did not release their full platform for the September 20 election until Wednesday, weeks after the Conservatives and the NDP.
The Liberal minimum tax rule would ensure that top earners (those earning more than $ 216,511 in 2021) pay at least 15% tax each year, the same rate as those earning less than $ 49,000.
Canada already has an alternative minimum tax, which limits the tax deduction available for certain incentives.
The tax rate on income over $ 216,511 is 33%. The Liberals’ minimum tax would remove “the ability of top earners to artificially pay no taxes through excessive use of deductions and credits,” the platform said. The tax would bring in $ 1.7 billion over five years, according to the party’s projections.
The proposal was part of a section of the platform dedicated to “a fair tax system”. Other measures included the higher corporate tax rate for banks and insurers on profits above $ 1 billion announced last week, and the luxury tax on expensive vehicles proposed in the 2019 but never campaign. Implementation.
The Liberals would also increase the resources of the Canada Revenue Agency to $ 1 billion a year to fight “aggressive tax planning and tax avoidance” and close the tax gap. (The NDP also pledged to increase funding for the CRA, but did not provide a number.)
The tax on bank and insurance profits was not the only liberal measure targeting financial institutions.
The Liberals pledged to establish “a single, independent ombudsman to deal with consumer complaints involving banks, with the power to impose binding arbitration.”
The Ombudsman for Banking Services and Investments (OBSI) has lost its relevance as the big banks have established their own dispute resolution services. While OBSI still deals with investment-related disputes, it lacks the authority to enforce its compensation recommendations, which has frustrated investor advocates for years.
The Liberals also said they would strengthen the power of the Financial Consumer Agency of Canada to review fees charged by banks “and impose changes if they are excessive”, and go moving forward with a plan to launch an open banking system in 2023.
The conservative platform also included measures targeting financial institutions. The Conservatives are committed to more transparency on investment management fees and have asked the Competition Bureau to investigate bank fees.
The Liberal platform includes about $ 78 billion in new spending over the next five years and about $ 25.5 billion in new revenue. Using the Parliamentary Budget Officer’s August projections, the Liberals predicted that the deficit of $ 156.9 billion in 2021-22 would drop to just over $ 32 billion in 2025-2026, the ratio of debt to GDP dropping from 48.5% to 46.5% over the same period. .
The platform also has a $ 15 billion risk adjustment fund for Covid.
Other measures of the liberal platform include:
- A “career extension tax credit” for active seniors. Canadians over 65 who earn at least $ 5,000 from their job will be able to eliminate the tax payable on a portion of their income and benefit from a tax credit of up to $ 1,650. (Quebec has a credit like this for people over 60.)
- An “EI career insurance benefit” for people who have worked continuously for the same employer for five years or more and who are laid off when the business closes. Benefits will come into effect at the end of regular EI, providing 20% more of insurable earnings in the first year after layoff and 10% more in the second year (or nearly $ 16,900 over two years). ).
- An extension of the housing expense deduction for those who work from home, with the deductible amount increased to $ 500 without receipts.
- A Canadian Disability Benefit, a direct monthly payment for low-income Canadians with disabilities aged 18 to 64 that works like the Guaranteed Income Supplement and the Canada Child Benefit.
- A new national financial crime investigation body that brings together the RCMP, the Financial Transactions and Reports Analysis Center and the CRA.
- A modernized general regime of anti-avoidance rules to prevent banks and insurance companies from using “tiered structures as a form of corporate tax planning that channels profits derived from Canada through” entities located in low tax jurisdictions to reduce taxes in Canada ”.
- The elimination of flow-through shares for oil, gas and coal projects to promote the transition to a net zero economy.
- A one-time tax deduction for health professionals during the first three years of practice of up to $ 15,000.
- An expanded Canada caregiver credit that would become a refundable, non-taxable benefit.
- A labor mobility tax credit allowing workers in the building and construction trades to deduct up to $ 4,000 in eligible travel and temporary relocation expenses.
- A 15% tax credit up to $ 500 in repair costs for household appliances.