Canada’s tax system is in dire need of reform, says a new study by the Canadian Centre for Policy Alternatives (CCPA), an Ottawa-based independent research organization.

According to the study, by CCPA economists Marc Lee and Iglika Ivanova, ad-hoc tax changes over the last two decades have seriously weakened the redistributive role of Canada’s tax system at a time when market inequalities call for more, not less, redistribution.

“At a time of rising income inequality and unprecedented concentration of wealth in the hands of a few, restoring fairness should be the primary objective of the Canadian tax system,” says Ivanova.

The study presents a framework for a progressive tax reform strategy that includes:

  • broadening the income tax base to ensure that all forms of income are subject to the same progressive tax rates;
  • raising marginal income tax rates on top incomes;
  • eliminating tax credits and deductions that disproportionately benefit the richest Canadians;
  • introducing a single, streamlined, income-tested transfer for low- and modest-income families; and
  • implementing inheritance and/or wealth taxes to prevent the concentration of wealth across generations and to improve social mobility.

The study recommends the establishment of a Fair Tax Commission to examine how federal taxes and transfers work together as a system and make recommendations for changes.

“The last comprehensive tax policy review, the Carter Commission, was convened more than half a century ago, in 1962,” says Lee. “It’s time for a meaningful and broad-based public dialogue on how to make our tax system fair for all Canadians.”