Thank you, Mr. Chairman, for the invitation to speak to this very important House of Commons finance committee.
It's important to give my bias as a former senior economist in the provincial treasury for a number of years, from which I've now retired.
We have an anemic economy because of the relatively slow growth of labour income in the economy for the last several decades—some would say stagnant growth. This has reduced the current aggregate consumption in the economy, and one result is that business is not investing as much as it otherwise would. These circumstances are likely to prevail, in my view, for at least the next four or five years. Other advanced economies are in a similar situation.
In this context, I think the government should double its planned annual expenditures on infrastructure over the next few years. The increase should be financed by increased taxes that will make the tax system fairer.
The brief of Canadians for Tax Fairness to this committee in August outlined three important areas for raising taxes, with an estimated total annual additional income of $20 billion. These include, for example—and these are just examples—limiting the capital gains tax deduction on the sale of investments or on other assets, so that income from capital investments is taxed at the same rate as employment income. That estimates at $10 billion a year. Secondly, stop corporate offshore tax dodging, for example, by applying a 1% withholding tax on Canadian assets held in tax havens. The estimate for that is $2 billion a year. Finally, eliminate stock option deductions that allow corporate executives to pay tax on stock option income at half the statutory rate of employment income.
I think the timing of these tax changes would obviously be different than the timing of infrastructure spending, which I think should be immediate. However, over the intermediate term, the two should balance out.
Thank you.