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Canada's personal income tax expenditures disproportionately benefit the top 50 percent of income earners, according to a new report by the Canadian Centre for Policy Alternatives (CCPA).
Using data from 2011, it found that 59 of the 64 available tax expenditures provide more benefit to the top 50 percent of income earners than the bottom half. It added that in 2011, 39 percent of the benefit of tax expenditures went to the top 10 percent of income earners; the bottom half of income earners saw 16 percent of the benefit.
The report alleged that only five – the working income tax benefit, non-taxation of the guaranteed income supplement, non-taxation of social assistance, the refundable medical expense deduction, and the disability tax credit – can be described as "relatively progressive," with a maximum benefit of CAD1,110 (USD840).
Together, the 64 tax expenditures studied cost CAD103bn in 2011. Income taxes generated revenue of CAD121bn that year.
The Canadian Government is currently undertaking a comprehensive review of federal tax expenditures. The aim is to ensure that tax expenditures are fair, efficient, and fiscally responsible.
The Centre recommended that the annual tax expenditures report from Finance Canada should include the distribution of tax expenditures across the income spectrum, and that tax expenditures be included as costs in federal government financial reporting. It argued that the federal Government should target annual savings in tax expenditures of five percent (worth CAD5.1bn a year) through the closure, capping, or phasing-out of the most regressive expenditures.
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