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High-income earners paid less taxes in 2016

High-income earners paid less taxes in 2016


Source: The Globe and Mail

The Liberal government’s tax on Canada’s top 1 per cent failed to produce the promised billions in new revenue in its first year, as high-income earners actually paid $4.6-billion less in federal taxes.

The Liberal Party’s campaign platform said a new top tax bracket would raise nearly $3-billion a year, but an analysis of recently released data from the Canada Revenue Agency (CRA) shows the expected benefit didn’t materialize.

The latest available tax records show that revenue from Canadians earning about $140,000 or more – which had previously been the fourth and highest tax bracket – dropped by $4.6-billion in 2016, the first full year that the Liberal tax changes were in effect. Further, 30,340 fewer Canadians reported incomes in that range for 2016 compared with the year before.

Finance Minister Bill Morneau’s office told The Globe and Mail that the drop in revenue from high-income earners appears to have been a one-time event. Because the changes were announced in late 2015, before the year was done, taxpayers had the opportunity to shift income into the 2015 tax year, sheltering those funds from the higher 2016 taxes. As a result, the government says tax revenue was higher in 2015 and lower in 2016. A spokesperson for Mr. Morneau said early indications are that 2017 will show “a substantial rebound” in revenue from high-income earners.

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