Years of federal and provincial tax cuts have placed the heaviest tax burden on poor Canadians while the richest in the country enjoy the lowest rates, according to a new report released Thursday.
The Canadian Centre for Policy Alternatives looked at the progressive tax system from 1990 to 2005 and found that the top 1 per cent of the income bracket -- Canadians with annual earnings of more than $265,000 -- is paying a lower percentage on its income.
According to the report, "," those earning the most saw their taxes fall by four percentage points over the 15-year period to 30.5 per cent.
By contrast, Canadians with an income of $13,523 -- the lowest 10 per cent of family earnings -- were paying 30.7 per cent in federal and provincial taxes, representing an increase of five percentage points.
The report includes all sources of income, including salaries, inheritances, employer-provided benefits and capital gains, as well as all taxes including property, corporate taxes and user fees charged by governments.
"New research from Statistics Canada shows that tax cuts over the past ten years have overwhelmingly benefited only a very small proportion of the population at the top of the income scale," Marc Lee, senior economist with CCPA, said in a statement.
The policy centre contends that taxes have dropped, on average, by two per cent from 1990 to 2005. However, the added relief was not spread out over income levels meaning the highest earners received the most benefits while those at the bottom of the scale saw their levies rise.
CCPA says the trend is eroding the concepts that underpin the tax system, mainly that those earning the most have a greater ability to pay and should contribute the most.
The report shows that the highest taxed Canadians are upper-middle class families earning between $120,000 and $151,000. This income bracket pays 36.9 per cent of their income to taxes.
They are closely followed by those earning $57,460 to $72,299, whose tax bill represents 36.5 per cent of their total income.
Keith Gaudet, Ontario director for the (CTF), told CTV.ca that all Canadians are suffering from over-taxation.
"I agree with the sentiment that tax rates are too high, but I don't think that tax rates should go up for any group," Gaudet said on Thursday from Toronto.
"I think it's convenient to blame the so-called rich."
The CCPA says the regressive-style of taxing the public, where the share of income paid in tax drops as income rises, is accelerating and will continue to do so under the federal government's $14-billion cut in corporate taxes announced in the Oct. 30 mini-budget.
The mini budget includes $60 billion in tax cuts over the next five years -- including a reduction in the GST to five per cent.
"Blowing today's surplus on tax cuts and debt repayment could easily turn future surpluses into deficits when the long-anticipated economic downturn arrives, setting the stage for further cuts to public services," Lee said in a statement shortly after the mini-budget was unveiled.
Gaudent argues that Canada has some of the highest corporate tax rates in the Western world, which effectively makes it harder for companies to maintain or create jobs.
"When corporations can't be competitive, especially with an increasingly high dollar, those companies can't afford to keep employees," he said.
"I would have thought any organization would be in favour of creating business climates that increase the possibility of well-paying jobs. Without them, you don't have any income to pay taxes on."
The report concludes that provincial taxes were the main impetus behind the system's regression. Provincial taxes are less progressive than federal because they depend heavily on sales taxes and charges such as driver's licensing fees.
"Provincial income tax cuts are the major culprit behind Canada's eroding tax fairness, an important consideration given allegations by the provinces of a fiscal imbalance in Canadian federalism,'' the report states.
While the CTF contends a flatter tax system is preferable for Canadians, Gaudet agrees that local and provincial taxes are continuing to put a strain on Canadians from every income level.
"They point out things like consumption taxes, provincial taxes, property taxes; those are taxes that have been increasing quietly and are things that our organization has been increasingly fighting against," he said.
With files from The Canadian Press
