Table 2:

Major options for generating public funding needed to implement pharmacare in 2020*

Revenue sourceTotal revenues expected in 2020, without pharmacare, $ billionsEstimated amount of funding raised by a 1 percentage point increase in tax rate, $ billionsPros and cons of tax instrument
Personal income taxes175.27.7Pros: large revenue base; progressive
Cons: collects from households only
General and small business corporate income taxes49.42.5Pros: collects from corporations that will benefit from pharmacare; likely progressive
Cons: potential issues with tax avoidance; strong business opposition
GST40.67.9Pros: simple to administer
Cons: collects from households only; regressive; politically unpopular
PremiumsPros: 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