Missing piece in Canada’s climate action plan? Taxing the rich

June 28th 2023

Smoke from a record start to Canada’s wildfire season has made the climate crisis more visible than ever. From B.C. and Alberta to Nova Scotia and Quebec, Canadians are literally struggling to breathe through the result of decades of inadequate climate action.

While the federal government is making significant green investments in areas such as clean electricity and infrastructure, it continues to overlook a critical piece of building a more sustainable future: tackling inequality by making the biggest polluters pay.

The rich are the greatest individual contributors to climate change.

Research by the Stockholm Environment Institute estimates the wealthiest one per cent — with their mansions, yachts and private jets — are responsible for more than double the emissions of the poorest half of humanity, a total of 3.1 billion people combined.

While the rich fuel climate change, the poorest bear the brunt. Through each flood, drought, heat wave and wildfire, lower-income communities are continually the hardest hit.

To effectively tackle the climate crisis, the government must tackle the inequality crisis that has worsened alongside it.

Recent data from Statistics Canada shows that one year after pandemic supports lifted a million Canadians out of poverty, nearly 500,000 fell back into poverty in 2021 as government supports were withdrawn and the cost of living increased.

Canada’s elite, on the other hand, have increased their share of total wealth. A handful of the richest Canadians now have $249 billion in assets, more than all assets held by the bottom 40 per cent combined, a study this year by Oxfam found.

Without action, this gap between the rich and poor will likely worsen. The Bank of Canada’s ongoing interest rate hikes are making life harder for households while ignoring a main driver of inflation: the rise of corporate profits.

Canadian corporations made record profits in 2021 while raising prices and contributing to inflation. In the same year, the biggest companies in Canada avoided tens of billions in taxes, according to research by Canadians for Tax Fairness.

Many of these corporations also took government subsidies during the pandemic that were intended to help retain workers. Companies instead reduced their workforce, bolstered profits and spent $173.5 billion on dividends, share buybacks and acquisitions.

Public money helped big corporations grow their bottom lines while making wealthy owners and shareholders richer.

Without significant new taxes to redistribute excess wealth and profits, Canada’s current climate action plan risks a similar outcome. The tax burden will shift to regular Canadians while failing to hold the biggest polluters accountable.

There is no shortage of tax measures for the federal government to remedy these crises.

A progressive wealth tax on the richest households — those with more than $10 million in net wealth — would raise more than $400 billion over 10 years, according to a recent study by the Canadian Centre for Policy Alternatives.

Canada can also learn from other countries that have recognized corporations and their wealthy owners must contribute a fairer share to the cost of transitioning to a green economy.

This year, the U.S. introduced a new minimum tax on large corporations’ reported profits to raise revenue for its green investments. Canada, which lost $30 billion to corporate tax avoidance in 2021, should do the same.

But governments need to look beyond taxing corporations and the wealthy as a revenue driver and recognize that it is simply the right thing to do. It is only fair that those who have extracted resources and hoarded wealth from our planet should pay to save it.

Like climate change, inequality has devastating effects on our health, economy and society. Fair taxation is our means out of our multiple crises.

Katrina Miller is the executive director of Canadians for Tax Fairness, a non-profit organization that advocates for fair and progressive taxes to reduce inequality and strengthen the economy.

[Top photo: Without significant new taxes to redistribute excess wealth and profits, Canada’s current climate action plan will have a risky outcome. Photo by John Schnobrich/Unsplash]