On Wednesday, Canada’s ruling Liberal Party stated that if re-elected, it will increase the corporate tax rate paid by the country’s most successful banks and insurers by three percentage points on all earnings above C$1 billion ($793 million).
The party also promised to establish a special dividend so that, as the country recovers from the COVID-19 epidemic, the same institutions will contribute more over the next four years. Starting in 2022/23, the measures are projected to earn C$2.5 billion each year for four years.
Prior to the Sept. 20 election, polls suggest the Liberals, led by Prime Minister Justin Trudeau, have a slim advantage over their Conservative opponents.
“Given that our banks have posted extraordinarily large profits, have continued to be incredibly successful, including through a pandemic … we’re going to ask them to do a little bit more,” Trudeau told a campaign event in British Columbia.
“Our banks will continue to be strong and profitable but we will ensure they are also doing their part.”
Under the Liberal plan the corporate tax rate would rise to 18% from 15% on all earnings over C$1 billion.
Canada’s largest banks include Royal Bank of Canada (RBC), Toronto Dominion Bank, Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO) and the Canadian Imperial Bank of Commerce.
RBC beat analysts’ expectations for third-quarter profit on Wednesday, with both Scotiabank and BMO exceeded profit expectations on Tuesday.
Canada’s large insurers include Manulife Financial, Sun Life Financial, Intact Financial and Great-West Lifeco.