Parliamentary Budget Officer Yves Giroux waits to appear before the Commons Finance committee on Parliament Hill in Ottawa, Tuesday, March 10, 2020. THE CANADIAN PRESS/Adrian Wyld

Excess profits tax would reap $8 billion for government, budget watchdog says

Manufacturing, mining, oil and gas raked in an extra $21.5 billion during the 2020 calendar year

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

The estimate Tuesday 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 — determined 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.

New Democrat 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.

RELATED: Taxes on sugary drinks, alcohol and streaming services go up April 1

RELATED: Canada’s proposed sports betting law could generate taxes, protect consumers

The report shows large companies in manufacturing and mining and oil and gas gleaned the highest profits in absolute terms during the 2020 calendar year, raking in an extra $12.4 billion and $9.1 billion respectively.

Health care and social assistance, construction, and finance and insurance took in a combined $14.9 billion in excess profits.

In total, corporate windfalls amounted to $53 billion more than what was projected for 2020.

“Big businesses have received lots of help. And we’ve seen them take public money and then turn around and pay out shareholders or increase pay to their executives,” said NDP Leader Jagmeet Singh, who is calling for the “pandemic profiteering tax.”

“But our small community and local businesses have struggled. And that’s where we need to see more supports, to help those small businesses get through.”

The tax would be a temporary measure, and could wind down when vaccination reaches a “certain” threshold, Singh told reporters. It could be used to support small-business owners who have been knocked back repeatedly by lockdown measures and successive waves of the COVID-19 pandemic.

The NDP has also proposed a wealth tax on families with 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.

Ottawa also plans to collect a three-per-cent tax on foreign tech platforms such as Netflix, Amazon Prime and Airbnb starting in January 2022.

The government has projected $2.7 billion in revenue from the levy over five years, or about $540 million annually.

In his report, Giroux did not try to gauge the possible knock-on effects of an excess profits tax, but suggested that rules would be necessary to prevent any accounting alchemy.

“We do not attempt to quantify the effects of taxpayer behavioural response and we implicitly assume that complementary measures are put in place to prevent eligible firms reducing their tax burden in 2020, for example by applying losses or shifting depreciation and amortization otherwise recorded in other tax years,” he wrote.

Some companies’ surprising profitability throughout the pandemic should not be interpreted as evidence of undue price hikes, he added, noting that economies of scale, lower overhead and other factors can boost net earnings.

— Christopher Reynolds, The Canadian Press

Just Posted

Fraser Health registered nurse Kai Kayibadi draws a dose of the Pfizer COVID-19 vaccine into a syringe at a walk-up vaccination clinic at Bear Creek Park, in Surrey, B.C., on Monday, May 17, 2021. To reduce long lines and wait times the first 1,000 Surrey residents to arrive at the neighbourhood clinic on both Monday and Tuesday will receive wristbands and a same-day appointment. The effort is in addition to the provincial vaccination plan which is now open for bookings to anyone who is 18 years and older. THE CANADIAN PRESS/Darryl Dyck
69 new cases of COVID-19 reported in Interior Health

The province, in total, recorded 411 new cases showing a downtrend of new infections

Council has allocated funding in the 2021 budget to upgrade and restore this part of the Gartrell Trail named after Summerland pioneers Fred and Mary Gartrell. (John Arendt - Summerland Review)
COLUMN: Providing answers about Summerland’s Gartrell Trail

This 225-square-metre strip of land lies between the existing Gartrell Trail and the high water mark

WorkSafe BC is out in the Interior making sure wineries, cideries and breweries are adhering to COVID-19 safety protocols. (File photo)
WorkSafe visiting Interior wineries, cideries and breweries ahead of tourist tasting season

40 field inspections and 35 consultations are expected over next few weeks

B.C. RCMP released these two photos of Erick Fryer (left) and Carlo Fryer (right). The two brothers from Kamloops were found dead near a remote road in Naramata May 10, 2021. (RCMP photo)
Slain Kamloops brothers found near Penticton not likely connected to recent B.C. gang wars: RCMP

Police confirm the bodies found near Naramata as Erick Fryer, 29, and Carlo Fryer, 31

Send your letter to the editor via email to news@summerlandreview.com. Please included your first and last name, address, and phone number.
LETTER: Summerland’s lakeshore land should be protected

There is an opportunity to restore this important lakeshore habitat for fish and wildlife

A prowling coyote proved no match for a stray black cat who chased it out of a Port Moody parking lot Friday, May 14. (Twitter/Screen grab)
VIDEO: Little but fierce: Cat spotted chasing off coyote by Port Moody police

The black cat is seen jumping out from under a parked car and running the wild animal out of a vacant lot

A forest of dance-protesters outside the BC Legislature on April 11. These participants were doing the Dance for the Ancient Forest in support of the Fairy Creek blockade and against old-growth logging. (Zoë Ducklow/News Staff)
Arrests begin at Fairy Creek blockade on Vancouver Island

Five protesters arrested as RCMP begin to enforce injunction

A thunderstorm pictured in Fraser Valley in 2021. (Black Press Media/Jaimie Grafstrom)
Wildfire concerns sparked after 320+ lightning strikes blasted B.C. yesterday

Approximately one-quarter of the province is currently listed as being at moderate risk of fire

Coldstream Fire Department was quick to arrive and knock down a fire Sunday, May 16, in a Matner Lane orchard just up the hill from the firehall on Aberdeen Road. (Jennifer Smith - Morning Star)
Coldstream fire crews quick to knock down blaze

Fire broke out just before 2:30 p.m. on Matner Lane, which is just up the hill from the firehall on Aberdeen Road

Several RCMP cruisers stationed out front of Kelowna’s Global Fitness following a shooting on the morning of Monday, March 29. The shooting was later revealed to be gang-related. (Michael Rodriguez/Capital News)
B.C.’s top gangs are operating in Kelowna: RCMP

‘We have all of the major gangs in Kelowna,’ said Supt. Kara Triance

Crews battled a grass fire behind the Tolko mill along the railway tracks off Otter Lake Cross Road in Spallumcheen Monday, April 26. (Caitlin Clow - Morning Star file)
Reports of man lighting Vernon fires with blowtorch

Grassfires sparked near train tracks, behind bottle depot

Kelowna RCMP precinct. (Michael Rodriguez/Capital News file)
Kelowna RCMP promotion process tainted with bias: federal judge

An officer was passed over for a promotion in 2015

A restaurant server on White Rock’s Marine Drive serves customers on a roadside patio. Indoor dining and recreational travel bans have been in effect since late March in B.C. (Peace Arch News)
B.C.’s COVID-19 infection rate falls to 411 cases Tuesday

360 people in hospital, up slightly, two more deaths

The Banff National Park entrance is shown in Banff, Alta., Tuesday, March 24, 2020. THE CANADIAN PRESS/Jeff McIntosh
Minister asks Canadians to camp carefully in national parks as season starts

Kitchen shelters in Banff National Park closed, trails on Vancouver Island will only be one-way

Most Read