A prescription for savings: Revenue options and their distributional impacts 7 1. Costs and savings of a national pharmacare program Estimates of net overall savings from the introduction of a universal and comprehen- sive pharmacare program range from $4 billion to $10 billion a year — the equiva- lent of between 10% and over 40% of the $34 billion that Canadian households, em- ployers and govern [...] Using the SPSD/M we calculate the net annual impact of each of these measures on the finances of households of different income and family types, then for each decile incorporate the savings from lower spending on prescription drugs and health pre- miums. [...] Corporate tax increase In contrast to increasing the GST, raising the general federal corporate tax rate by 5.25 percentage points (from 15% to 20.25%) to pay for pharmacare would result in the greatest net benefits to households of all the options considered here.19 Overall, Canadian households would be better off in the corporate tax scenario by an estimated $8.6 billion annually — the result of [...] That figure is the result of subtracting the pharmacare savings to employers (an estimated total of $6.5 billion in 2020) from the sum of additional taxes that year (an estimated $8.9 billion) and the extra $1 billion employers would pay on higher taxable income as a result of saved drug insurance premiums. [...] In our assessment, paying for pharmacare by increasing the corporate tax rate would provide the highest net benefits for households — in the range of $550 per household in 2020 — while increasing the GST would be the least progressive and result in an average loss of $50 per household in 2020.
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