Major options for generating public funding needed to implement pharmacare in 2020*
| Revenue source | Total revenues expected in 2020, without pharmacare, $ billions | Estimated amount of funding raised by a 1 percentage point increase in tax rate, $ billions | Pros and cons of tax instrument |
|---|---|---|---|
| Personal income taxes | 175.2 | 7.7 | Pros: large revenue base; progressive Cons: collects from households only |
| General and small business corporate income taxes | 49.4 | 2.5 | Pros: collects from corporations that will benefit from pharmacare; likely progressive Cons: potential issues with tax avoidance; strong business opposition |
| GST | 40.6 | 7.9 | Pros: simple to administer Cons: collects from households only; regressive; politically unpopular |
| Premiums | – | – | Pros: transparent Cons: collects from households only; regressive |
Note: GST = Goods and Services Tax.
↵* Authors’ calculations based on federal budget estimates and Parliamentary Budget Officer tools, including using the Social Policy Simulation Database and Model. (1), (21)