Internal government documents show Prime Minister Justin Trudeau requested a personal briefing on the merits of a tax on extreme wealth last summer, just weeks before he triggered the 2021 election campaign.
Mr. Trudeau’s interest in the policy is documented in a series of briefing notes, as well as e-mail exchanges among senior officials in the Prime Minister’s Office (PMO), the Privy Council Office (PCO) and Finance Canada. Although he asked for the briefing during the pivotal period before the election, his Liberal party ultimately did not include such a measure in its platform.
Unlike income taxes, which are collected based on a percentage of an individual’s taxable annual income, wealth taxes take into account total assets and liabilities, such as property values, personal debt and investments.
This type of measure is very uncommon globally, but the concept is attracting increasing attention as political leaders ponder potential responses to wealth inequality and concerns that the world’s ultrarich should be paying more tax.
Mr. Trudeau’s request for information can be traced to a Thursday morning in mid-July, when Parliamentary Budget Officer Yves Giroux released a report analyzing M-68, a motion put forward by Liberal MP Nathaniel Erskine-Smith in the House of Commons. The motion expressed support for a wealth tax.
The PBO report said a one-time tax of 3 per cent on net wealth over $10-million, and 5 per cent on net wealth over $20-million, would bring in net revenue of $44-billion over five years. Using different assumptions, the PBO estimated the five-year revenue could be as high as $60.7-billion.
That afternoon, an official in the PMO indicated that Mr. Trudeau had taken an interest.
“During his briefing, the PM requested a note synthesizing the PBO analysis,” says an e-mail from a person with a PMO account. The message says Mr. Trudeau had also requested PCO comments on the merits of the policy. The name of the sender is redacted.
A report on a one-time wealth tax was provided to the Prime Minister on July 22, by Janice Charette, the PCO interim clerk. The report is marked “secret” and includes a cautionary message.
The message says that, while the report contains an analysis of the policy’s merits, “this is a complex issue and the views expressed in this memo are preliminary. Any further consideration/analysis of such a policy would require the involvement of the Department of Finance and Canada Revenue Agency.” It also notes that the PBO had said there was “considerable uncertainty” regarding its revenue projections, owing to a number of factors.
A section titled “PCO Comment” is entirely redacted.
A few weeks after the report was delivered, Mr. Trudeau triggered last year’s federal election. The campaign ran from Aug. 15 to Sept. 20 and returned the Liberals with a second consecutive minority government.
The documents were released in response to an Access to Information request by the Canadian Taxpayers’ Federation, which posted the 49 pages online on Friday.
Although the Liberal platform, released on Sept. 1, did not promise a wealth tax, the NDP platform did promise one – and the party has said it will continue to push for higher taxes on the wealthy as part of the New Democrats’ ongoing agreement to support the Liberal government on confidence matters in exchange for policy concessions.
Canadian Taxpayers Federation federal director Franco Terrazzano said Friday that the co-operation agreement, combined with the documents showing the Prime Minister was interested in hearing more about a wealth tax, suggests higher taxes could be on the horizon.
“We believe that the Trudeau government should be studying ways to save money and attract investment, not studying new ways to raise taxes,” he said.
NDP MP Niki Ashton said Mr. Trudeau has not shown any initiative to adopt a wealth tax since receiving the briefing. She said Canadians want the government to address affordability concerns by making the rich pay their fair share.
Other sections of the documents show senior officials had been reviewing the concept of a wealth tax prior to the PBO’s report.
In February 2021, University of British Columbia economics professor Kevin Milligan, who was acting at the time as a temporary special adviser on economic recovery in the PCO, provided senior Finance officials with a note titled “Tax Tools for Wealth Inequality.”
The contents of the note are redacted.
“Please find attached a note on tax measures to address wealth inequality. I hope you will find it complementary to your own analysis and recommendations,” Mr. Milligan wrote in a Feb. 4, 2021 e-mail.
The list of recipients included Finance Canada deputy minister Michael Sabia and other department officials, as well as two of the Liberal government’s top political advisers on financial policy: Leslie Church, who is Finance Minister Chrystia Freeland’s chief of staff, and Tyler Meredith, who is Ms. Freeland’s director of economic strategy. Both Ms. Church and Mr. Meredith would later have key roles in developing the Liberal party’s election platform.
The documents include a highly redacted and undated paper titled “Background on and consideration for potential revenue raising policy.”
Only part of the opening paragraph is unredacted. It begins: “As the health and economic situation shifts from emergency to recovery, the Government may shift focus towards longer-term objectives, including further progress on an ambitious social agenda, addressing inequality and pursuing fiscal repair.”
A section called “overview of options” is entirely redacted.
Mr. Erskine-Smith said he was glad to see his motion caught the Prime Minister’s attention.
“These are all ideas that should be on the table as we look to more serious tax reform going forward,” he said.
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