Raising revenue by taxing extreme wealth

As a possible recession looms, New Democrats won’t leave working people to face it alone. We’ll deliver real support when Canadians need it most—and we’ll pay for it by making the ultra-wealthy and big corporations finally pay their fair share.

We will maintain the capital gains inclusion rate changes which the Liberal government flip flopped on, and was opposed all along by the Conservatives. As the Minister of Finance said at the time, “only 0.13 per cent of Canadians—with an average annual income of $1.4 million—will be affected by this change in any given year. But millions more, especially younger Canadians, will benefit from it.”

Income from flipping stocks should not be taxed at a lower rate than the wages earned by a nurse, a carpenter, a pipefitter, or a teacher. We will rebalance the tax system to ensure it values work as much as wealth.

For those at the very top, super-rich multi-millionaires with over $10 million in wealth holdings, we will put in place a graduated wealth tax of 1% for wealth between $10 million and $50 million, 2% from $50 million to $100 million, and 3% for households with net worth over $100 million.

We will put in place a 2% surtax on the most profitable corporations – those earning over $500 million in profits.

We will take additional measures to tackle corporate tax avoidance, including instituting a 15% minimum tax on corporate book profits, ending tax agreements with known tax havens, requiring corporations to prove a genuine business reason for offshore accounts, and providing additional resources to the Canada Revenue Agency to step up enforcement.

Navigating uncertainty and rejecting cuts

Canada’s economic and fiscal picture is uncertain and facing unprecedented volatility as a consequence of Donald Trump’s trade war. We enter this period with an already high and rising unemployment rate and with our economy not yet fully recovered from the COVID-19 crisis and the resulting supply chain shock.

Nobody knows exactly what the next four years will bring. The Parliamentary Budget Office’s 2025 Election Proposal Costing Baseline provides for heightened economic uncertainty in the coming years, but it doesn’t account for a full-blown trade war. Forecasts from the Bank of Canada (BoC) and various private sector forecasters are even more gloomy in anticipating a slowdown.

New Democrats are rejecting calls for cuts to the public sector and to social programs – cuts which would be made to reach a budgetary balance in the short-term, despite the costs and the consequences for people. Instead, we are proposing increased investments in both infrastructure and in people.

In the context of significant uncertainty, and in an abundance of caution, our fiscal plan will set aside an additional amount each year as a contingency fund. This will help hedge against risks, including further external shocks or events that could reduce government revenue and increase expenditures more than anticipated.

Additionally, our costing includes two scenarios for the country’s economic trajectory based on the latest analysis from the BoC. As such, it also includes an upper and lower estimate for the deficit and debt. The initial baseline for the deficit used in this analysis comes from the PBO’s updated projection from March 24 while the initial economic baseline comes from the PBO’s March Economic & Fiscal Outlook. These baselines are then adjusted for the two scenarios analyzed in the BoC’s Monetary Policy Report that accompanied its April 17 decision to hold the policy rate at 2.75%.

The Bank’s two scenarios both result in lower economic output over the mid-term than in the PBO baseline. All else being unchanged, lower output produces a larger deficit. To calculate the effect on the deficit, the PBO’s fiscal sensitivity values were used.

The NDP’s fiscal target over a four-year mandate is a falling debt-GDP ratio by the fourth year at the latest. After accounting for the impact of revenue and expense measures on the economy via the fiscal multiplier, this is achieved even under the more dire scenario considered by the BoC.

Even using conservative estimates for the fiscal multiplier, the NDP’s fiscal plans have a significant, positive effect on economic output. Revenue measures are focused on the wealthiest households and most profitable corporations while spending measures are aimed at housing, low-and-middle income households, and infrastructure.

Investing in people

Increased program spending will protect the financial well-being of Canadians, and help stabilize the economy. Improvements to Employment Insurance will help more workers stay afloat during tough times and avoid being pushed into lower-paying, lower-productivity jobs. Revenue generated by tariffs will be directed to the EI Fund to avoid adding undue strain to employers and workers with higher premiums. And permanent personal income tax cuts will be targeted to low and middle-earners, who are most likely to direct those savings into local and Canadian-owned businesses.

Strengthening Canada’s social programs is not only the right thing to do—it’s a smart economic strategy. By supporting families through challenging times and ensuring continued participation in the workforce, we reduce long-term fiscal and social costs. Universal pharmacare, for example, would lower health care spending by reducing the need for costly interventions, enable bulk purchasing of medications at internationally

competitive prices, and improve productivity by reducing missed work and ensuring people can access the treatment they need.

With Trump’s trade war threatening jobs and driving up costs, these investments are even more critical—helping protect Canadians from economic shocks while building a healthier, more resilient economy that puts people first.