Canada Needs Dual Tax System

November 27, 2014 Taxation in Canada

income taxes in CanadaOTTAWA – Canada needs to implement new marginal tax rates and to institute a new system for taxing investment incomes in order to prevent the widening of income inequality in the country.

On November 26th the Canadian based research institute C.D. Howe Institute issued a new report on the effect of the tax system in Canada, claiming that a significant tax reform could help reduce inequality in the country, and would help reduce tax avoidance by wealthy individuals.

The experts of C.D. Howe Institute noted that a significant reason for the widening levels of inequality in Canada can be attributed to the increasing ability of the country’s wealthiest taxpayers to circumvent their tax obligations through a selection of corporate structures and with the help of specialized tax professionals.

As a means to reduce the wealth inequality, in its report the C.D. Howe Institute called for Canada to implement a dual tax system, whereby incomes from salaries and wages would continue to be taxed under the current progressive system, while incomes from investments would be taxed under a new flat tax system.

It was also suggested that the top marginal tax rates on personal incomes should be hiked, with the implementation of a new rate of 32 percent at CAD 250 000 per year, and potentially even a 35 percent rate at CAD 400 000.

Photo By: Alex Indigo