Inequality is not inevitable.  It's the product of specific political and economic decisions made over decades, decisions that can be corrected.One glaring cause of inequality is the structure of the tax system itself.  In many cases, richer Canadians pay a lower rate of tax on financial instruments such as stock options than middle-class and working Canadians do on their earned income.  This is both blatantly unfair and deprives the federal government of much-needed revenue that could be spent on valuable social programs.It's time to get specific about the tax loopholes that need fixing.With the federal budget now scheduled for February 27, the Broadbent Institute has a series of simple recommendations that, if enacted, would create a more just and equitable Canada. These recommendations focus on the “Filthy Five” tax loopholes in Canada that must be closed. The revenue recouped from these loopholes would be up to $12 billion.The “Filthy Five” tax loopholes are:Partial Inclusion of Capital Gains loophole (value of $6.26 billion)The partial inclusion of capital gains amounts to a special tax rate for the rich. When a person purchases a stock or property and sells it for more than what it was originally bought at, only half of the  profit is taxed. Ninety per cent of this tax break goes to the top 1% in Canada.  Following the famous Carter Commission observation that a “buck is a buck”, the inclusion rate for capital gains taxation should be increased to 100% (adjusted for inflation).Employee Stock Option loophole (value of $755 million)This is a loophole that taxes income from employee stock options as if they were capital gains (50% deduction) rather than as income. Employee Stock Options are shares that are purchased by employees through their employee stock option plan at a set price. If the stock goes up, the employee can still buy it at the initially set price and sell their stocks at the new rate, while treating the resulting profit as a capital gain. Nearly all deductions go to the top 1% of income earners in Canada. The stock option tax deduction should be abolished for all except small start-up companies.Business Entertainment Expense loophole (value of $200 million)This tax loophole allows businesses to deduct up to 50% of their meals and entertainment. Business deductions can be claimed for sporting events, restaurants and outings, regardless of whether business is actually being conducted. This loophole should be abolished, and only maintained for some small businesses.Dividend Gross-up and Tax Credit loophole (value of $4.87 billion)The dividend tax credit is a special tax break for the rich. It assumes that a company has paid its corporate tax rate; therefore, making the case for individuals to receive a dividend tax credit in order to avoid “double taxation” on dividend shares received. Growing evidence shows that corporate tax rates are in fact quite low, and that some corporations are avoiding paying taxes altogether. Furthermore, most of this tax credit goes to the top income earners: 91% of this benefit goes to the top 10% and half of it is accumulated by the top 1%. This tax credit should reflect what the company actually paid in corporate tax.Offshore Tax Havens (value of $400 million)The Paradise Papers are the latest leaked documents to reveal prominent Canadians and former government officials evading taxation by storing their money in offshore tax havens.  Though progress has been made this week in ensuring increased transparency from the Canada Revenue Agency regarding this so-called “tax gap”, much more needs to be done.We call on the government to support Bill C-362, a bill that will crack down on corporate offshore accounts that continue to receive tax breaks despite not being used for economic activity. Further, we call on the government to examine the usefulness of Canada's Tax Information Exchange Agreements (TIEA) and close the loophole that allows companies who store money in offshore tax havens to transfer money back to Canada without paying domestic tax. According to Statistics Canada, $55 billion has flowed legally from offshore accounts in countries with a TIEA between 2011 and 2015.The federal Liberals must close these tax loopholes in the 2018 budget and fully support Bill C-362 in order to fulfill their campaign promise to put an end to unfair tax breaks for the wealthy. Closing these loopholes will provide the federal government with up to $12 billion annually and will lay the foundation for creating a more progressive tax system; one in which everyone pays their fair share.Rick Smith is the Executive Director of the Broadbent Institute (www.BroadbentInstitute.ca)