A new 15 per cent tax on companies that made "excess profits" during the COVID-19 pandemic would net nearly $8 billion to the government's coffers, according to the Parliamentary Budget Officer.
"With a pandemic profiteering tax, the PBO has (concluded) that it could raise in one year alone $8 billion of new revenue that we can invest back into small businesses, we can invest back into people," NDP Leader Jagmeet Singh said Tuesday.
The PBO's new report was done at the request of NDP MP Peter Julian, whose party has been advocating for an excess profits tax in addition to a series of new taxes on wealthy individuals and corporations since the early months of the pandemic.
The NDP's proposal targets corporations with over $10 million in annual revenue and would double the income tax payable - 30 per cent instead of the average 15 per cent - on all 2020 profits that exceed their annual average since 2014.
In other words, the federal government would doubly tax every dollar of profit that a large corporation has made during the COVID-19 era that goes above and beyond its normal profits in pre-pandemic years.
In total, PBO Yves Giroux determined that the new tax would generate $7.9 billion in 2020.
"That's a massive amount of new revenue," Singh said. "These are just ideas that we want the Liberal government to consider. Why not look at making the ultra-rich pay their fair share? Why not bring in an excess profit tax we've done in the past during the world wars?" In his study, Giroux determined that the highest contributing sectors to an excess profits tax would be manufacturing companies ($1.87 billion) followed closely by mining, quarrying, and oil and gas extraction businesses ($1.37 billion).
But he says that's mostly because those sectors represent such a huge part of the Canadian economy, and not specifically because they made much higher earnings during the pandemic.
Unsurprisingly, the sectors hardest hit by COVID-19 lockdown measures such as tourism, arts and educational services would pay virtually nothing.
The PBO also warned that this "excess profit" isn't necessarily attributable to controversial business practices such as price gouging in a time of limited supply during the pandemic.
"Our estimate should not be interpreted as evidence of undue price increases in response to the pandemic. Several factors can lead to an increase in profits, such as productivity improvements, economies of scale, or reduction in the cost of inputs," Giroux's report reads.
For the NDP leader, the tax is necessary to level the playing field between large corporations and small businesses.
"While we see big corporate grocery stores like Loblaws take public help or make record profits and then cut benefits to the frontline workers and then payout massive bonuses to their executives, we see small businesses struggling," Singh said.
During his press conference, the NDP leader was accompanied by Jay Roy, who owns a comic book store in Sackville, N.S. He said the pandemic hit his business hard just as he was finally getting out of debt.
"All my small business friends and myself are working so, so hard every day trying to find new solutions and new strategies to make it through every single day," Roy said. "And then we watch these big businesses make billions of dollars and not have to pay anything. It's just not fair."
Tuesday, a spokeswoman for Finance Minister Chrystia Freeland would not say if the Liberal government was considering an excess profit tax following the PBO's report.
Instead, Katherine Cuplinskas insisted that the government was committed to making Canada "fairer and more equitable for all" and then listed many tax measures announced in the government's 2021 budget last week.
"We are moving forward in Budget 2021 to implement a tax on multinational digital giants; limit stock option deductions in the largest companies; tackle tax evasion; lower the cost of credit card transaction fees to help small businesses; and implement a national tax on the unproductive use of domestic housing that is owned by non-resident, non-Canadians," Cuplinskas said in an email.
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Photo: Patrick Doyle, Reuters / NDP Leader Jagmeet Singh is calling for a tax on above-normal profits in 2020 made by large businesses.;
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