Corporate Tax

Canada’s Trudeau guarantees to boost corporate taxes for banks and insurers

From Paul Vieira

OTTAWA – Canadian Prime Minister Justin Trudeau on Wednesday pledged to raise corporate tax rates for big banks and insurance companies, citing their strong earnings performance during the pandemic.

The proposal was halted in suburban Vancouver, British Columbia, in the second week of a campaign for a September 20 national vote. The corporate tax rate for large financial institutions, especially banks and life insurers, would rise three percentage points from 15% to 18% and be applied to profits over C $ 1 billion, or the equivalent of $ 790 million, he said.

In background documents, the Liberal Party said the proposed tax measures would bring in about 2.5 billion Canadian dollars a year over the next four years.

“Our financial institutions have done very well during this pandemic, partly because Canadians moved together and did the right thing and got the support they need from their government,” Trudeau said. “As our banks have made exceptionally high profits and continue to be incredibly successful while others have tightened their belts, we will ask them to do a little more.”

Mr Trudeau’s move is likely to provide the support he needs from left-wing and progressive-minded voters to win a majority government. The Liberal Party’s leadership has declined sharply since the election campaign began, with both the Conservative Party and New Democrats growing, and the goal of converting his minority mandate to a majority seems unattainable based on current polls.

The announcement comes as Canada’s major banks announced their profits this week. The Royal Bank of Canada on Wednesday reported a 34% increase in net income to $ 4.3 billion as it benefited from the strong performance of its private and commercial banking and capital markets businesses. A day earlier, the Bank of Montreal reported net income of $ 2.3 billion for the third quarter, or more than 80% more than the same period last year.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

Aug 25, 2021 1:44 PM ET (5:44 PM GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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