Why is this motion so important? Decade after decade vital public services are left underfunded, ignored, or even cancelled. Far too often, the justification for the inaction or cuts in programming is that we cannot afford it. Oddly enough, the affordability question is only asked when we are talking about investments in support of social programs. It never seems to get asked when it comes to providing lucrative tax credits for the wealthy or the continual slashing of corporate taxes or maintaining costly and inefficient tax expenditures that only apply to the highest earners in the country.
Successive governments, Liberals and Conservatives alternating, have chosen to allow these oh so splendid tax loopholes that benefit Canada's wealthiest to continue. For the Liberals and Conservatives, these tax giveaways for the elite are never questioned. For them it is a standard practice. Why? It is in their DNA. Election cycle after election cycle, it is the same old story. Even when they pretend that it is an issue they are concerned about and they campaign on clamping down on these ludicrous tax loopholes, for example, as even written in the Liberals' platform, after the election, boom, it is as though someone waved a magic wand and that promise disappeared. It is gone.
In the most recent election, the Liberals thought that the employee stock option deduction was disproportionately benefiting the very wealthiest Canadians at the expense of everyone else, and of course they were right about that. The Liberals specifically noted in both their 2011 and 2015 election platforms that 8,000 Canadians with very high incomes were deducting an average of $400,000 from their taxable income through these stock options. This represents 75% of the fiscal impact of this deduction, which in total cost $750 million in 2014. The Liberals proposed changes to this tax loophole to raise an additional $560 million for the government's coffers that could have been put into use for public services. Then, in March 2016, just months after the election, when the Liberal government was asked what it was going to do and whether it would follow through on the promised changes to crack down on this lavish tax loophole for the ultra-wealthy, the Minister of Finance stated, “It's not in our plans.”
What happened, we might ask. Documents obtained under access to information show a direct correspondence between CEOs and the Minister of Finance pressuring him in advance of the 2016 budget to backtrack on that promise, and guess what. The corporate elites got exactly what they wanted, a $560-million gift courtesy of the Liberal government.
According to a CCPA report, roughly 99% of this money is given to the highest 10% of income earners in Canada. In fact, the study found, “In essence, there is no benefit from this tax expenditure to anyone making less than $215,000 a year.” While this loophole might have originally been designed to help raise money for start-ups and expansions, it is now primarily used by Canada's ultra-rich to avoid paying their fair share of taxes. In case members are wondering, Canada's top CEOs now make 193 times the average Canadian's salary. In fact, Canada's richest CEOs made the average Canadian's annual salary before lunchtime on the first day of work this year.
The heads of Canada's five big banks own $6 million in stock options. Is there a real reason for these individuals to need preferential tax treatment? Are Canada's big banks at risk of being unable to start up or expand if these loopholes are closed? Are they not making record profits already?
To be sure, these are the corporate elites, and in the end, no matter what the Liberals say, they always have the interests of these elites at heart. Canadians get conned every time. They want to believe in the Liberals and what they campaigned on, but in the end, frankly, the campaigning Liberals are not the same as the governing Liberals. What they say is not what they do. They just cannot resist the pressure being put on them by the most powerful in this country to leave in place a system which benefits them at the expense of everyone else.
If people think these tax giveaways stop with stock option loopholes, they should think again. Over the years, between the Conservatives and the Liberals, Canada's corporate income tax rate has dropped dramatically, from 37% to 15%. Members heard me correctly. That is a 22-point drop. The office of the parliamentary budget officer found that the former Conservative government's corporate tax giveaways cost taxpayers an additional $12 billion every year. That is $12 billion, not $12, not $1,200, but $12 billion.
If that is not enough already, recent international headlines, such as the Panama papers and the Canadian-born KPMG tax haven scandal, among others, showed the wealthiest and corporations are increasingly turning to aggressive tax avoidance measures through the use of shell corporations and offshore accounts in tax havens to avoid paying their fair share of taxes. It is estimated that in 2015, Canadian corporations alone stashed almost $40 billion in the top 10 tax haven destinations.
From 1988 to 2001, Canadian direct investments in Barbados, a top tax haven destination, increased from $628 million to $23.3 billion, a 3,600% increase. The increased use of these tax havens means Canadian taxpayers are losing $7 billion in taxes each year. That is $7 billion that Canadians will never see invested in much-needed infrastructure programs for hard-working Canadians.
It does not stop there. Another big tax giveaway is the dividend gross-up and tax credit. This measure cost taxpayers $4.1 billion per year. By the way, 91% of this money goes to the top 10% of income earners and roughly 50% of that actually goes to the top 1%. Do not forget that the foreign tax credit comes with a price tag of $740 million per year. According to the CCPA's recent study, if we add up all the measures that benefit mostly the wealthy, in 2011 alone, there was more than $100 billon in forgone revenue. That is money that could be invested in critical programs for Canadians.
What are some of those critical programs? How about restoring the national affordable housing program that the Liberals axed in 1993? Homelessness exists because we allow it to exist. A 2014 study found that putting Canada on a path to ending homelessness would cost roughly $3.7 billion per year.
There was a gathering of concerned citizens bound by one common thread, the desire to end homelessness, on February 25, the third annual Coldest Night of the Year walk for the homeless. In Vancouver, close to 200 people came out to walk on that cold winter night in my riding. Together we raised $50,000 in support of those who are homeless, hungry, and hurting. United across the country, some 118 communities also joined in this annual walk. This event was a clear statement that many Canadians want to see an end to homelessness. Ending homelessness is entirely possible. It is not rocket science. All we need is to close these tax loopholes.
What about big corporations? If we closed the tax loopholes for big corporations, we could invest in a much-needed pharmacare program. I have met seniors who are cutting their pills in half so they can stretch out their medications. I have met seniors who are eating pet food to survive each day. We are providing these huge tax giveaways. Why? The government says we cannot afford these other programs. I say yes we can. We should close the loopholes, tax corporations, reinvest the money into communities for the people, so all Canadians can have the benefit of succeeding in our country.