Topp dives into tax-the-rich issue

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New Democrat leadership hopeful Brian Topp wants the richest Canadians to pay more taxes – a policy that most other politicians have avoided for more than a decade and one that leaves him vulnerable to Conservative attack.

Mr. Topp, the former NDP party president who is the presumed front-runner in the leadership contest, said Friday that he will provide full details of his fiscal policy later in the campaign. But "I know basically where I am going," he said, "and what I think is it's time to take another look at inappropriate tax expenditures implemented by the Conservative government."

The Conservatives are spending money on tax benefits for the highest-income Canadians, Mr. Topp said. That is something Canadians and many people in other countries around the world are coming to identify as a misplaced priority, he said.

"One of the issues, and certainly a key one, is income tax rates," he said when asked if would hike the taxes of top earners.

The New Democrats, and even the Liberals, have campaigned on the promise to increase the corporate tax rate. Mr. Topp agrees with that and says he would not rule out increasing the federal portion of the GST when the economy is in better shape.

But since the mid-1990s, any suggestion that personal income taxes should be raised has been a political non-starter.

Jack Layton, the former NDP leader whose death this summer left his party's top job unfilled, tried in the 2004 election campaign to get Canadians to buy the idea of an inheritance tax. It did not go over well. And Mr. Layton abandoned any policy of raising personal taxes in subsequent policy platforms.

But the Occupy movement that started in the United States and spread around the world has drawn attention to the disparity between the salaries of corporate and financial executives and those of average wage earners.

Other Western countries are starting to float the notion of increasing taxes on the wealthy. U.S. President Barack Obama, for instance, has proposed $1.5-trillion in new taxes that would hit the wealthiest Americans. He also wants to impose a minimum tax on those making $1-million or more in annual income.

The Conservatives in Canada, meanwhile, have made a sport of labelling their opponents "tax hikers."

"I think their priorities are misplaced," Mr. Topp said. "I think their fiscal policies are feckless. And it is time to say so."

Conservative Finance Minister Jim Flaherty dismissed Mr. Topp's proposals to increase the personal income taxes of the wealthiest Canadians as "dreamy ideas" that are ultimately nonsense. Mr. Topp, he said, should go back and study the Canadian tax system.

"Most of the personal income tax in Canada is not paid by wealthy people. It's actually paid by middle-class people because they're the bulk of the population," Mr. Flaherty said when asked about the NDP candidate's plan at an Ottawa news conference Friday.

"If anyone thinks – in the United States, Canada, Europe – you can tax the 1 per cent or 0.5 per cent and raise a lot of money, it's nonsense," the Finance Minister said. "It doesn't produce the volume of revenue that you need in order to run a country. So it's just one of those dreamy ideas that people think about that don't make any sense."

But Mr. Topp said he is hardly dreaming when he points to dollars misspent due to Conservative fiscal policy.

And the strong financial system that Mr. Flaherty points to "is strong because of a strong regulatory system which his party opposes," he said, "and which Mr. Flaherty inherited and which is in fact the best evidence that his own approach to economic and fiscal issues is wrong."