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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

In a special ceremony, former Armstrong Elementary School teacher of 41 years, Helen Sidney, centre, donates $100,000 to the school. (SD83)
Retired Armstrong teacher continues tradition of supporting students with $100K donation

Helen Sidney, who taught at AES for 41 years, made an incredible donation ahead of the school’s centennial

(Black Press file photo)
Detour ahead for Vernon’s 18th Street

The week-long detour in the Crescent Park area will be in effect starting Monday, May 10

Lake Country firefighters assisted the RCMP on Kalamalka Lake Tuesday, May 4. (Fire Department file photo)
Lake Country RCMP interrupt houseboat break-in

Pair in their 30s arrested but no charges laid after alleged Kalamalka Lake incident

Pharmacist Barbara Violo arranges all the empty vials of the Oxford-AstraZeneca COVID-19 vaccines that she has provided to customers at the Junction Chemist which is an independent pharmacy during the COVID-19 pandemic in Toronto, on Monday, April 19, 2021. THE CANADIAN PRESS/Nathan Denette
B.C.’s 1st vaccine-induced blood clot case detected in Interior Health

Interior Health also recorded 52 new cases of COVID-19

The Allan Brooks Nature Centre in Vernon will hold a two-day plant sale fundraiser, run completely by the centre’s volunteers, Saturday and Sunday, May 15 and 16. (ABNC photo)
Vernon nature centre pots plant sale fundraiser

Two-day event by the Allan Brooks Nature Centre runs Saturday and Sunday, May 15 and 16

Protesters attempt to stop clear-cutting of old-growth trees in Fairy Creek near Port Renfrew. (Will O’Connell photo)
VIDEO: Workers, activists clash at site of Vancouver Island logging operation

Forest license holders asking for independent investigation into incident

The Primary Urgent Care Centre on Martin Street officially opened on March 31, 2021. (Brennan Phillips)
Okanagan-Similkameen Regional Hospital District reverses funding decision on care centre

Approval now granted to fund $1 million for Urgent and Primary Care Centre in Penticton

Motorists breaking travel rules can be fined $230 for failing to follow instructions or $575 if the reason for travel violates the essential travel health order, at this Highway 3 check area near Manning Park. Photo RCMP
RCMP begin checking drivers on BC highways

Four check points are set up Thursday May 6 around the province

Starting Tuesday, May 11, B.C. adults born in 1981 and earlier will be able to register for a vaccine dose. (Haley Ritchie/Black Press Media)
BC adults 40+ eligible to book COVID-19 vaccinations next week

Starting Tuesday, people born in 1981 and earlier will be able to schedule their inoculation against the virus

Kelowna City Hall. (Michael Rodriguez - Capital News)
New temporary outdoor shelter in Kelowna opens

The new area on Richter Street and Weddell Place replaces the Baillie Avenue site

Parks Canada and Tla-o-qui-aht Tribal Parks dig the washed up Princess M out from sand along the south shore of the Pacific Rim National Park Reserve. (Nora O’Malley photo)
Rescue attempt costs man his boat off Pacific Rim National Park Reserve

Coast Guard response questioned after volunteer responder’s speedboat capsizes in heavy swells

Al Kowalko shows off the province’s first electric school bus, running kids to three elementary and two secondary schools on the West Shore. (Zoe Ducklow/News Staff)
B.C.’s first electric school bus making the rounds in Victoria suburbs

No emissions, no fuel costs and less maintenance will offset the $750K upfront expense

Road sign on Highway 1 west of Hope warns drivers of COVID-19 essential travel road checks on the highways into the B.C. Interior. (Jessica Peters/Chilliwack Progress)
B.C. residents want travel checks at Alberta border, MLA says

Police road checks in place at highways out of Vancouver area

Victoria police say the photo they circulated of an alleged cat thief was actually a woman taking her own cat to the vet. (Black Press Media File Photo)
Photo of suspected cat thief released by Victoria police actually just woman with her pet

Police learned the she didn’t steal Penelope the cat, and was actually taking her cat to the vet

Most Read