Prime Minister Justin Trudeau is proposing to raise taxes on Canada’s banks and insurers if his Liberal Party is re-elected on September 20.
The pledge to hike taxes comes as the country’s big banks report strong earnings. In a news release, Trudeau announced that he would increase the corporate tax rate on the big banks and insurance companies by three percentage points – from 15% to 18% – on all earnings over $1 billion.
The Liberal Party leader also unveiled plans to establish a "Canada Recovery Dividend" to help fund his proposed affordable housing plan.
The measures would only apply to financial institutions with earnings of more than $1 billion. Trudeau said the policies would generate a minimum of $2.5 billion per year over the next four years and would take effect in 2022-23.
The exact structure of the Canada Recovery Dividend is still being developed. Consultations with the Office of the Superintendent of Financial Institutions (OSFI) will help decide how the dividend is calculated, including how to factor in profits, liabilities, and other metrics.
Canada’s big banks have recovered strongly from the pandemic, with Royal Bank of Canada posting a 34% jump in net income in its fiscal third quarter. The nation’s largest lender earned nearly $4.3 billion in the quarter and released more than half a billion dollars that had been set aside for potentially bad or non-performing loans.
