Federal budget must take action on inequality and boost economy: CCPA

Think tank unveils plan to cut poverty, create jobs, and close tax loopholes.

Ottawa (15 March 2017) — Every year, the Canadian Centre for Policy Alternatives (CCPA) develops its alternative to the federal governmen'ts budget. This year, the CCPA is urging the federal government to make good on its promises to reduce income inequality and drive inclusive growth. 

Following the Alternative Federal Budget creates meaningful economic change

With the release of its annual Alternative Federal Budget (AFB), the CCPA proposes a federal budget that takes decisive action on what matters to Canadians: creating jobs, reducing income inequality, lowering poverty levels, closing unfair and expensive tax loopholes, and getting the economy moving. The measures in this year’s AFB would lift a million Canadians out of poverty, double economic growth to 5.4 per cent, and, at its peak, result in 460,000 new jobs, bringing Canada’s unemployment rate down to 6.4 per cent.

“Income inequality and economic uncertainty throughout the developed world have provoked distrust and desperation. This would be a very bad time to retreat into the rhetoric of fairness without implementing the policies that would deliver meaningful change,” says CCPA senior economist David Macdonald.

Focus on policies to reduce inequality and create more fairness

Under the AFB plan, the 90 per cent of families who earn less than $170,000 a year would be better off. The top 5 per cent of families (those who make more than $218,000 a year) would pay more in taxes than they receive in new services due primarily to the closing of tax loopholes.

The AFB focuses on policies that would reduce income inequality and provides a transparent distributional analysis of who benefits and who pays for its proposals. It has extended this analysis in 2017 to provide a gender breakdown of major tax and transfer changes, providing a template for the federal government’s own analysis.

"More and more Canadians are feeling the impact of inequality in their daily lives. Women want to be paid equally, young people want job opportunities, the middle class wants a fair tax system," says senior researcher Kate McInturff. "The Alternative Federal Budget provides a clear path to a more equal and sustainable future."

AFB doesn't increase federal spending

As income inequality continues to rise, we have been challenging governments — at every level  — to examine the decisions they make during budget time to see what kind of harm they may be inflicting.  A Fairness Test would assess the impact of key tax and spending policies in government budgets to determine whether they will increase or decrease income inequality. This test would embed the principle of fairness into public policy choices and ensure that the poorest citizens and women are not hit the hardest by these choices. Such a test could be developed and applied by the Department of Finance and published in the budget as part of the fiscal planning framework.

The Alternative Federal Budget brings together 85 economists and sectoral experts to produce a detailed, fully costed progressive economic plan. Despite extensive changes to Canadian social programs, the AFB leaves federal spending and revenue levels near historic lows, while the federal debt-to-GDP ratio remains constant. 

The AFB plan

  • introduces a new “GST top up” providing up to $1,800 per person to reduce poverty rates;
  • tackles the crisis on First Nations reserves with a full-court press on infrastructure for housing, clean water, education and health care;
  • drives a massive improvement in public infrastructure through $13 billion a year in new transfers for city spending on transit, water, wastewater and other local needs;
  • dramatically expands affordable child care, with much greater federal involvement in funding provincial efforts;
  • increases the federal share of health spending and expands Medicare to include pharmacare, home care, long-term care, mental health, dental care, and rehabilitation services; and
  • closes the most costly and regressive tax loopholes in order to raise revenues without hurting middle-class households.

“If Brexit and the U.S. election taught us anything, it’s that people are not happy with the status quo. The stakes are high and the choices are clear,” says Macdonald. “Not taking immediate action to fix Canada’s inequalities will result in deeper divisions within society, indefensible poverty, and further erosion of the public trust.” 

More information: 

CCPA Alternative Federal Budget

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 370,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE