The New Democratic Party of Canada’s (NDP) and the Liberal Party of Canada’s election campaign proposal to apply full taxation to stock options, rather than the preferential tax treatment they currently receive, will not generate the hundreds of millions of dollars in revenue annually for the government that both parties suggest it will, said economist Jack Mintz at a news conference on Wednesday in Toronto.

“There’s no revenue in it,” said Mintz, president’s fellow at the School of Public Policy at the University of Calgary. Instead, he said, the change might actually generate a modest annual loss for the federal government, according to calculations in his report Taxing Stock Options: Efficiency, Fairness and Revenue Implications, co-authored with V. Balaji Venkatachalam.

Subject to certain limitations, the benefits from the exercising of stock options are taxed at half the full rate today, which is similar to how capital gains are taxed. Mintz argued that any move to apply full taxation to the sale of stock options would require the government to introduce a corresponding corporate tax deduction for corporations issuing the options, something they can’t currently do.

“If you don’t [introduce a corporate tax deduction], you’re going to have double taxation of stock option benefits,” Mintz said. “Any smart board would say, ‘Forget it, we’ll never issue another stock option’.”

The NDP has said in its fiscal plan that it would eliminate the preferential tax treatment of stock options, arguing that “90% of the benefit of this loophole goes to Canadians earning $250,000 or more.” The Liberals, who said they would consider making the change as part of a broader review of tax expenditures, have suggested that they would apply full taxation above a cap of $100,000 a year.

Both parties have suggested that they would provide exemptions for start-up technology companies that often offer employees stock options in lieu of other forms of compensation.

The Liberals and NDP have also said that they expect their proposed changes to raise $500 million or more in annual revenue.

In contrast, the report estimates that the net effect of the proposed changes would be a loss of $12 million. That figure was reached by estimating the revenue from eliminating the current preferential tax treatment of stock options to the government, deducting the revenue lost by allowing corporate tax deductions, and factoring in the increase in personal tax on the higher dividend amounts — on the corporate tax savings — investors would received after the change.

Mintz noted that he actually agreed with the idea, in principle, of fully taxing stock options as well as all other forms of compensation — so long as there exists a corresponding corporate tax deduction.

“It’s good from an economic point of view to reduce distortions between different forms of compensation,” he said.

This is the eighth article in the Canada Votes 2015 series.