OTTAWA (CCN) — Social justice think-tank Citizens for Public Justice (CPJ) has issued a report that puts a positive spin on taxes as a way to reduce poverty and clean up the environment.
“In addition to generating revenue, taxation can be used to achieve positive policy objectives, such as poverty reduction and environmental goals,” the report said.
In Taxes for the Common Good: A Public Justice Primer on Taxation released May 27, CPJ called for a carbon tax as the most effective way of taxing pollution. It contrasted a direct carbon tax with cap and trade regimes, where governments set a yearly cap on greenhouse gas emissions, and issue permits to businesses who must buy additional permits if they emit more than their allotted share. It described a carbon tax, where government sets a price per tonne of emissions, as more efficient to administer.
CPJ said the money raised through a carbon tax could be used toward “credits for low income people, for programs to help families and businesses adapt their practices and their homes and building, to encourage the development of new, green practices and technologies, and as investments into clean energy infrastructure in order to facilitate the transition off fossil fuels.” It said a harmonized $30 per tonne of greenhouse gas emissions carbon tax would generate about $15 billion in government revenues a year.
The 19-page report explains how taxes fund public programs and services that “are about building the kind of Canada we want.” Citizens have a responsibility to participate in promotion of the common good and one of the primary means is “through the contribution of our income and wealth through taxes,” the report said, noting taxes “help create a democratic, just, and equitable society.”
The think-tank pointed out since 2006, tax cuts have reduced government revenues by $45 billion. “Cuts to government expenditures have been implemented while millions of people continue to live in poverty, climate change and growing greenhouse gas emissions take a toll on our environment, and refugees are being turned away and denied essential healthcare.”
At the same time, CPJ called for transparency and accountability in how taxes are raised and used.
The primer explains the differences between types of taxes, such as progressive taxes such as income taxes that have higher income people pay a larger share or their income; regressive taxes like sales taxes where the share of taxes paid declines for those with higher incomes; and proportional taxes such as flat tax rates where everyone is required to pay the same percentage of taxes. The latter two forms of taxation, CPJ argued pose a heavier burden on low income households.
The CPJ also urged government to reverse the recent trend of reducing corporate taxes. “There is a much greater cost to citizens due to lost programs and opportunities than the marginal benefits reaped through corporate tax cuts.”
The Conservative government touts lower taxes as a way for families to keep more of their hard-earned dollars and use them to spend as they see fit, rather than have government bureaucrats determine where to spend them. It also has defended lowering corporate taxes to benefit the economy. CPJ estimated the cost of lowered corporate taxes at all levels of government has amounted to $13 billion per year in foregone revenue.
CPJ argued the lowered corporate tax rates have not benefited the economy because corporations are not investing their savings, but holding them in bank accounts. A one percentage point increase in corporate taxes would “generate $1.85 billion in federal government revenue — more than enough to expand the number of high quality child care spaces and the stock of affordable housing units across the country.”