The NDP’s proposed wealth tax would generate more than $60 billion over five years, the Parliamentary Budget Office has estimated.
If elected on Sept. 20, the NDP have pledged to impose an annual tax of 1% on Canadian families with a net worth of more than $10 million.
The PBO said the cost of the proposed measure would be $10.85 billion in 2021–22, followed by between $11.36 billion to $13.12 billion in each of the subsequent four years to 2025–26.
The NDP’s wealth tax was part of the party’s 2019 campaign platform, then applying to Canadians with more than $20 million in wealth.
On Tuesday the Green Party of Canada released its platform consisting of, among other things, a 1% tax on net family wealth above $20 million — also part of the Greens’ 2019 election proposal.
According to the PBO, the estimate for the NDP’s proposal was developed using the PBO’s high-net-worth family database, and the estimate accounts for the recurring annual taxation of the wealth stock.
“A behavioural response is expected, reducing total exposure to wealth taxation,” the PBO said in its estimate. “To account for this behaviour, each economic family’s net wealth was reduced by 35%.”
Net wealth surpassing the $10-million threshold was multiplied by the 1% tax rate to determine gross revenues, the PBO noted, and administrative costs were assumed to be 2% of gross revenues.