NDP's proposed tax on 'excess' profits could rake in $8B: budget watchdog
The NDP wants to see a federal tax on excess pandemic profits
A proposal to tax excessive corporate profits during the pandemic could generate nearly $8 billion in tax revenue, according to Canada's independent budget watchdog.
A new report from the Parliamentary Budget Office estimates corporate income tax revenues could increase significantly if Canada hikes its corporate tax rate on businesses that have seen their profits soar during the pandemic.
"We estimate that an excess profits tax would generate $7.9 billion in federal corporate tax revenues for the 2020 year," says a new PBO report.
The PBO crunched the numbers in response to a request from NDP finance critic Peter Julian. With the federal deficit now pegged at $354 billion for 2020-2021, New Democrats have called on the wealthy and profitable corporations to pay for increased government spending in response to the pandemic.
Citing similar measures taken during the Second World War, the NDP proposes to hike corporate taxes on firms that earned more than $10 million last year and exceeded their profit expectations.
"If the Liberal government doesn't actually get down to making the ultra-rich pay their fair share, what's going to happen is the burden is going to fall on people, or the Liberal government is going to cut the help that people need," NDP Leader Jagmeet Singh said, reacting to the report.
"Both those options are wrong. We're providing a third alternative, which is let's make those at the very, very top, the ultra-rich, pay their fair share with the pandemic profiteering tax."
WATCH/ Jagmeet Singh talks about his party's proposal for an excess profits tax
In Canada, corporate income is taxed at 15 per cent, although some businesses qualify for lower deductions. The NDP proposal would slap an additional 15 per cent on profits over a set amount. The measure would be temporary and likely would end once Canadians are vaccinated and the pandemic is over, Singh said.
How much of a deficit dent would it make?
Parliamentary Budget Officer Yves Giroux said such a one-time tax could not be relied on to slay the deficit and would account for only about 3 per cent of total government revenues.
"Its not insignificant but it's not something that would save the government from a deficit," Giroux told CBC News.
Others warn that taxing some corporations, such as grocery store chains, could have the effect of driving up the cost of essential goods and services.
"If you are forced to pay more taxes as a company and you have shareholders to please, guess what you need to do with your own prices," said Sylvain Charlebois, a professor and director at Dalhousie University's Agri-Food Analytics Lab.
The NDP also has proposed applying an annual 1 per cent wealth tax to families with fortunes of more than $20 million and taxing web giants like Amazon, Google and Facebook.
Last week's Liberal budget announced the government would be moving ahead with a tax on the web giants and a new tax for luxury cars, aircraft and boats.