The Green Party of Canada is the first, and so far only, political party to request that the Parliamentary Budget Officer (PBO) calculate the budgetary impact of nine of its proposed measures.
The PBO released nine estimates, based on a hypothetical start date of July 1, 2025.
However, budgetary reports had not yet been released for some of the Green Party’s more expensive proposals, such as increasing the federal basic personal amount to $40,000, making college and university tuition free, expanding universal public healthcare and creating a 120,000-strong National Civil Defence Corps. It is unclear whether the party requested budgetary impact analyses for these items.
Annual wealth tax
If the government applied a 1% annual tax on household net worth over $10 million and up to $50 million; 2% on household net worth over $50 million and up to $100 million; and 3% on household net worth over $100 million, it would boost government revenues by $121 million between 2025 and 2030.
The PBO expects a behavioural response as high-wealth households may find ways to reduce their tax exposure. To account for this behaviour, the office assumed that 35% of each household’s net worth would be hidden and reduced from the overall tax base, plus administrative costs of 2% of gross revenues.
Financial transaction tax
Introducing a financial transaction tax on all financial transactions in Canada equal to 0.2% of transaction value would increase government revenue by $238 million over five years.
The calculation was made using transaction volumes for equity trading, bond trading, exchange-traded derivatives, over-the-counter (OTC) derivatives, foreign exchange (FX) spot market, FX swaps, FX outright forwards, FX OTC and the money market. The PBO assumed relocation and fiscal evasion of between 10% to 90% depending on the financial product.
Eliminating resource deductions for the oil and gas sector
Cutting the deduction for Canadian development expenses and oil and gas property expenses from taxable income will yield a net income of $15 million over five years.
The PBO’s estimate did not account for potential alternative accounting or tax treatment of resource expenditures. Revenue estimates were adjusted down to account for corporations changing their behaviour in response to the additional tax. There is also uncertainty over the cumulative effect of the proposed policy on the oil and gas sector tax base.
Eliminating the deduction for advertising on foreign-owned websites
Eliminating the deductibility of internet advertising expenses paid by Canadian businesses to foreign-owned digital media would push up tax revenue by $12 million from 2025-2030, or about $2.4 million in each fiscal year.
To estimate the additional revenue earned, the PBO imposed the effective corporate income tax rate on the projected deductible expenses. A behavioural response was incorporated to reflect an expected shift of some Canadian advertising spending to Canadian-owned platforms, where it remains deductible.
Exit tax on high net worth households
Introducing an exit tax of 35% on all household net worth over $10 million upon renouncing Canadian tax residency would bring $7.8 million into government coffers over the next five years.
The PBO assumed high-net-worth households would engage in tax avoidance behaviour that would decrease their taxable wealth by 35% before being subject to the proposed exit tax. The numbers did not include administration costs and how the policy may interact with capital gains taxes due to the deemed disposition of assets upon renouncing tax residency.
Eliminating the corporate meals and entertainment expenses deduction
Eliminating corporate meals and entertainment expenses deduction for corporations will preclude corporations from claiming GST paid on meals and entertainment expenses as an input tax credit.
A 5% GST rate was applied on the total value of deductions to estimate the value of lower input tax credit claims, but the PBO didn’t account for a behavioural response.
Increasing funding for labour market training
Increasing funding for Labour Market Agreements by $625 million per year would save the government $112 million over five years. The proposed policy would result in a net expenditure until 2026-27 before it sees net savings from the 2027-28 fiscal year onwards.
As this proposed measure would increase expenditures under the EI program, it would be financed through higher premiums paid by employees and employers, the PBO said. The EI premium rate will be increased over time to ensure the EI Operating Account is balanced over a seven-year period as per the EI Act. A behavioural response is not expected.
Federal minimum wage of $21 an hour
Raising the federal minimum wage for all federally regulated employees to $21 per hour from $17.75 and indexing it annually to inflation thereafter would cost the government $56 million from 2025 to 2030.
The cost was calculated from the number of students working in the public service with the assumption that the average student worked the equivalent of one-third of a full-time employee each year. The PBO sourced data from 2021-24, but doesn’t know how the proposed policy will impact the number of students in the public service and the hours they work in the future.
Issuing retail bonds
Issuing retail bonds to individuals with a total par value of $3.734 billion, an estimated value of $4.2 billion, a simple coupon rate of 5% annually, and a maturity of 10 years would cost the federal government $685 million over five years.
It was assumed that the issue of the bonds would be fully subscribed and wouldn’t incur additional transaction costs.
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