POLITICS
05/01/2019 09:14 EDT | Updated 05/01/2019 11:35 EDT

Chrystia Freeland Promotes Tax Hikes For The 1% To Avoid 'Crummy Society'

She suggested that middle class insecurity fuels divisive populism.

Adrian Wyld/CP
Foreign Affairs Minister Chrystia Freeland responds to a question during Question Period in the House of Commons on April 30, 2019 in Ottawa.

OTTAWA — Foreign Affairs Minister Chrystia Freeland promoted tax hikes for the rich as a way of helping a "hollowed-out" middle class Tuesday, but sidestepped questions on whether the country's top one per cent will be asked to pay more in the Liberals' upcoming platform.

Freeland told an audience at Ottawa's Global Centre for Pluralism that "real structural issues" with capitalism in the 21st century are feeding disruptive populist trends.

Global capitalism is a machine that works extremely well for the super rich, she said. But in this century, Freeland explained, it hasn't delivered a comfortable, secure life to the broad middle class. "Failure to do that, will mean failure to sustain democracy."

Watch: Should Canada's super-rich pay a supertax?

Freeland, a former economics journalist, shared an anecdote about going door knocking in an upscale neighbourhood in her Toronto riding during the last election. She said one man told her that a Liberal government would cost him $30,000 more in taxes.

"He said, 'I kind of like you guys, I really like Trudeau. I sort of think you would be a better government, but $30,000 a year — that's a lot to pay just because I like you a little more.'"

Not only because she's a politician, she joked, but also because she said she truly believes it, Freeland told the man that it's in his self-interest to pay more to help his "compatriots."

Failure to pay what it costs to keep the middle class feeling secure — good schools, safe communities — will lead to living in a "crummy, crummy society" that would be "really scary for you and scary for the children."

She suggested that divisive populism grows parallel to middle class insecurity.

After her talk, the foreign affairs minister would not confirm if she believes there's an increased appetite to see higher taxes for Canada's wealthiest one per cent.

The problems that are currently facing the middle class are really hard and complicated, Freeland told HuffPost Canada, adding that nobody would say the government has figured everything out.

"I've described for our approach, and I think our approach right now is the right one."

She pointed to the Canada Child Benefit, increased support for seniors and students as examples of measures the government has taken to help the middle class.

Ryan Remiorz
Prime Minister Justin Trudeau speaks to the media about changes to the Canada Child Benefit on Oct. 27, 2017 in Saint Bruno-de-Montarville, Que.

Child poverty rates have been falling since 2012, but the government's income-tested benefit catalyzed the trend. The extra money in families pockets helped to lift 278,000 children from poverty, according to Statistics Canada.

"I think as a government, we can say we've made a good start and we are going to continue to work at it," Freeland said.

The foreign affairs minister did not share details of the Liberal party's upcoming election platform, instead she hinted that Canadians will find "some more concrete measures" to address challenges facing the middle class.

Shortly after taking office, the Liberal government followed through on an election promise to cut taxes for middle-class income earners, and increase rates for the "one per cent."

To do that, the government increased the tax rate from 29 per cent to 33 per cent for people who earn more than $200,000 annually. The new rates were effective January 1, 2016.

More from HuffPost Canada:

The results have been mixed. A report released by the C.D. Howe institute last year called the new tax-the-rich measure a "loser" national policy that failed to generate the billions promised by Liberals.

According to a report by Canada's budget watchdog published earlier this month, the federal government lost $1.6 billion in potential revenue in the 2015 tax year after its middle class tax cut measures.

Because the government announced the measures at the end of 2015, some top earners had time to move their money around before the higher rate became effective, the report states.

It also noted there was no noticeable decrease in the number of individuals in the top high-income group between 2015 and 2016, putting ice on theories that higher taxes would force Canada's rich to pack up their bags and leave.

With files from Althia Raj