High prices are caused by corporate greed, not taxes

Oct. 4, 2023

Conservative politicians and right-wing organizations have crafted a traditional scapegoat for Canada’s affordability crisis — taxes.

After the prime minister recently announced that grocery chains making record profits could face new tax measures if they don’t get prices under control, Conservative Leader Pierre Poilievre came out swinging against the idea.

“Axe Trudeau’s tax on food. Cap spending to bring down inflation and bring home lower prices,” Poilievre tweeted, warning the tax would hurt “the working class.”

Other Conservative politicians and anti-tax organizations such as the Canadian Taxpayers Federation quickly dolled out near identical lines, referring to a “grocery tax” that would “hammer” Canadians.

There was little mention of the tax’s actual target: the country’s biggest, most profitable grocery corporations. As a Competition Bureau study found, Canada’s grocery chains significantly increased their gross profit margins during the pandemic. These higher margins allowed the three largest grocery stores in Canada to reap an extra $17 billion from Canadian consumers in 2020-22.

Leveraging the threat of a windfall tax may force large grocery chains to stabilize high food prices. If push came to shove, the tax could discourage further profit-driven price hikes while redistributing revenue to Canadians in need.

These fairly reasonable considerations seem to have no foothold on Poilievre’s soap box. For over a year now, he has campaigned on the message that taxes are to blame for higher prices. The carbon tax, new fuel regulations for industry, and now a potential windfall tax are being lumped together on a laundry list of measures that Conservatives claim are costing average workers.

Corporate accountability is completely missing from the anti-tax narrative. Higher prices are always the fault of government spending — never the corporations that enjoyed soaring profits thanks to their pricing power. The omission has continued in the face of more and more economists noting the role corporate profits have played in driving inflation.

While Poilievre claims to be standing up for the working class, his anti-tax policies are likely to do them more harm.

The truth is that progressive taxes have a direct redistributive benefit for average workers and their families.

Revenue from industry windfall taxes in the EU is being redirected to households struggling with higher costs. The carbon tax — an important piece of climate action — provides lower-income households more in rebates compared to higher earners who emit more.

Poilievre and his anti-tax campaigners have brought their anti-tax and anti-climate action under one roof.

While the carbon tax has been a favourite target, they have had little to say about the tens of billions in tax subsidies paid out each year to the oil and gas sector, where five of the biggest Canadian oilsands companies brought in a combined $35 billion last year.

Poilievre’s solution of “scrap taxes and cut government spending” is no solution at all. Canadians have already seen how this plays out.

Decades of tax cuts have not trickled down to the working class that Poilievre claims to defend.

However, the collective gains of government spending are clear. Programs such as the Canada Child Benefit and the pandemic supports for households had real impacts on reducing poverty.

Anti-government forces want Canadians to believe that taxes were designed to punish — rather than help.

Misdirecting public anger over affordability at the very policy solutions that can get us out of this mess is not only wrong, it’s dangerous.

Politicians and all Canadians who value our country’s social programs and public services must call them out on it.

Katrina Miller is the executive director of Canadians for Tax Fairness, a non-profit, non-partisan organization that advocates for fair and progressive tax policies aimed at building a strong and sustainable economy, reducing inequalities and funding quality public services.

[Top photo: While Conservative Party Leader Pierre Poilievre claims to be standing up for the working class, his anti-tax policies are likely to do them more harm. Photo by Taymaz Valley/Flickr (CC BY 2.0 DEED)​]