Canada’s tax system is working against the federal government’s efforts to meet climate commitments and combat inequality, according to a new report from Canadians for Tax Fairness (C4TF), member of the Global Alliance for Tax Justice (GATJ).
“Following a catastrophic summer of wildfires and an affordability crisis, our report shows that the tax system perversely rewards those who contribute the most emissions and benefit the most from our carbon-intensive economy,” said Katrina Miller, executive director of C4TF and co-author of the report. “The government’s climate plan absolutely depends on major shifts in how and who we tax.”
The report shows that the bottom 90% of Canadians have reduced their emissions by 4 tonnes per person since 1990, but the top 1% increased their emissions by 34 tonnes per person.
Fossil fuel corporations have grown in terms of market-share over the last 20 years, paying an estimated $149 billion to shareholders and investors . At the same time, tax incentives have slashed oil and gas extraction companies’ taxes by 40% since 2010. The extraction sector’s emissions intensity alone—emissions per dollar of production—was 27% higher in the second half of the 2010s than in the first half.
Broad progressive tax measures such as introducing a wealth tax, and fully taxing capital gains can fund the direct public investment needed to meet Canada’s climate goals while ensuring the biggest contributors to climate change pay for its costs. The report also cautions that the federal government’s new package of green investment tax credits could achieve little in terms of climate action if not properly designed.
“The federal government is spending tens of billions on corporate tax credits in an attempt to drive economic green transition even though decades of costly tax breaks have not meaningfully reduced emissions. Much stronger conditions around these credits are needed to ensure public funding results in a public good instead of just profits that pool at the top,” said DT Cochrane, report co-author.
Aggressively ending fossil fuel subsidies and supports through the tax system would bring Canada closer to its climate and equality goals.
“Canada can absolutely afford to spend what it takes to transition to a green economy, but we can’t afford to make the same mistakes that have exacerbated inequality. The climate and inequality crises are two sides of the same coin and the tax system has a significant role to play in correcting the course,” Miller said.
— Canadians for Tax Fairness (@FairTaxCanada) October 16, 2023