Unless Federal Minister of Finance Bill Morneau introduces comprehensive tax reform he will face a massive loss of faith in a tax system that continues to allow the top 1 per cent to avoid paying anything like their fair share.

Tax avoidance and evasion by the rich ultimately undermines democracy: it starves social programs and public services, increases after tax income and wealth inequality, and further concentrates economic resources in the hands of a few. The overall message to a majority of Canadians is that the rules of the economic game are rigged against them.

Hot on the heels of talk of the very rich hiding their income in secret family trusts, we learned this week that tens of thousands of high income Canadians and corporations have stashed away part of their wealth in offshore accounts. We also learned that government officials have actively worked to block reforms agreed at the international level to make offshore banking much more transparent.

Additionally, we have data that shows the Canada Revenue Agency is not chasing down offshore cheats. It places most of its compliance energies elsewhere. Unlike other countries, they do not even attempt to estimate how much revenue we are losing from our overseas tax evasion. The Conference Board of Canada has estimated this figure at $47 billion.

The Liberals promised change. In their 2015 election platform, they promised to “conduct a review of all tax expenditures to target loopholes that particularly benefit the top 1 per cent.”

But there has been no broad public review in which citizens could participate. And action to date has been limited to stopping abuse of some private corporation rules. Minister Morneau has said he will impose higher taxes on the small number of private corporations that shelter investment assets of more than about $1 million, which is an action that should be supported.

But the Liberals have dismally failed to move on the biggest tax loopholes for the top 1 per cent that allow investment income to be taxed at a much lower rate than wages. The vast majority of taxable investment income is held by the very affluent.

The case for taxing investment income on the same basis as employment income on the grounds that “a buck is a buck” dates back to the Carter Commission of the 1960s when another Liberal government failed to act on it.

According to a recent study in the Canadian Tax Journal, the top 1 per cent of individual taxpayers earn 11.7 per cent of all income, but receive almost all of the benefit of the stock options deduction and 87.4 per cent of the benefit of the capital gains deduction. In the case of both stock options and capital gains, only 50 per cent of income is liable to tax.

The top 1 per cent also receive almost one half (47.8 per cent) of the benefit of special tax treatment of dividends. Even within the top 1 per cent, benefits are heavily tilted to the very rich.

These tax loopholes are costly. Money needed for hospitals, schools and infrastructure is unfairly left in the hands of the rich. Partial inclusion of capital gains in taxable income costs the federal government alone $3.6 billion per year; partial inclusion of stock options costs $725 million per year; and special tax treatment of dividends costs $3.7 billion per year.

Despite an explicit promise in the Liberal platform, the Trudeau government heeded Bay Street and has said there will be no increase in tax on gains from stock options. This is the tax avoidance method of choice for CEOs, investment bankers and senior executives, who tilt their compensation packages to stock options rather than salaries.

Not a whisper has been heard about increasing taxation of capital gains.

The hypocrisy of the Liberals is stunning.

Finance Minister Bill Morneau has told others to pay their fair share but has not attacked the family trusts used by his own family, Prime Minister Justin Trudeau, and prominent Liberal fund raisers. His failure to sell off his assets or to place them in a blind trust is the opposite of leadership.

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Ordinary Canadians have a right to be angry that the very rich are being pampered by our political elites. The response should be broad-based, progressive tax reform to make the system much fairer and more transparent.

Ed Broadbent is chair of the Broadbent Institute.