Excess profits tax would reap $7.9 billion for government, budget watchdog says

Excess profits tax would reap $7.9 billion for government, budget watchdog says
The Canadian Press

The parliamentary budget officer says a hypothetical tax on big corporations’ excess profits last year would generate $7.9 billion for the federal government.

The estimate by budget officer Yves Giroux, in response to a request from the NDP, was calculated by looking at companies whose profits exceeded their 2020 expectations.

The would-be tax rate on those extra earnings — calculated based on the firms’ average five-year profit margin — would be 15 per cent, on top of the current 15 per cent corporate tax on all profits.

NDP MP Peter Julian says the concept comes from a measure during the Second World War when Canada imposed a 100 per cent tax on profits deemed excessive.

The report shows large companies in finance and manufacturing had by far the biggest jump in profits in the 2020 calendar year, with leaps of 22 per cent and 11 per cent respectively.

The NDP has also proposed a wealth tax on families with a net worth of over $20 million, which Giroux estimated last year would apply to some 13,800 Canadian families and generate $5.6 billion in 2020-21.

The Liberal government’s 2021 budget steered clear of major tax hikes but would introduce a tax on the purchase of luxury cars and personal boats and aircraft as well as a new tax on vacant homes owned by foreigners.

With files to the Canadian Press.


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