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Trudeau is accused of'singling-out' financial companies after he pledged to tax banks, the insurers Liberals promise to pay for housing initiatives through raising the tax rate on bank profits and insurer profits exceeding $1 billion. Photo by Jennifer Gauthier/Reuters
Article content Liberal leader Justin Trudeau has pledged to increase corporate taxes on banks, insurance companies and other businesses earning over $1 billion annually to finance his new housing policy.
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Article content. The banks of the country quickly responded, criticizing the exclusion of the financial service industry and saying that the tax hit will only redirect bank profits from Canadians into government coffers. This video is not loading. We are sorry.
Tap here to view other videos by our team. Refresh your browser or Trudeau is accused of'singling-out' financial companies after a pledge to tax banks and insurers. Back to video The Canadian Bankers Association stated that the proposed tax increase would decrease income, which would benefit most Canadians who own shares in banks. It also added that pension funds as well as RRSPs are the main beneficiaries of billions of dollars in dividends that banks pay each year. According to the statement, seniors, charities, and endowments who rely on dividends would be penalized.
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Article content According to the CBA, banks are already the country's largest taxpayers. In 2019, the six largest banks paid $12.7 billion each to all levels of government. According to the statement, taxation on specific economic sectors is harmful to economic growth. This has been rejected by previous governments. Trudeau announced Wednesday that he would raise the corporate tax rate for big banks and large insurance companies by 3 percentage points on earnings above $1 billion. To help finance his party's housing plan, the proceeds will be used to fund a Canada Recovery Dividend. This includes increased housing supply and lower costs for Canadians to buy homes. It also includes restrictions on foreign ownership and measures that curb the practice of flipping (speculators buying real estate and selling it quickly).
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Article content According the CBC, Trudeau explained the tax plan while on a campaign visit in Surrey, B.C. He said that the financial services industry had escaped the COVID-19 pandemic more strongly than other industries and therefore was better positioned to offset the recovery costs. RBC reports $4.3 billion quarterly profit, saying Delta variant risks are manageable. Scotia and BMO report above expectations, but consumer loan growth remains slowing. BMO delays office return for investments and corporate banking division. His plan to raise corporate taxes for banks, and insurance companies, was announced the same day that Royal Bank of Canada reported third quarter earnings. This was mainly due to the release of reserves made during the pandemic in order to protect potential loan losses. Royal reported net income in excess of $4.3 billion. The financial results of the National Bank of Canada on Wednesday also beat analyst expectations.
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Article content. Some critics claim that Canada's banks have put their interest in lending loans above efforts to reduce Canada's real estate bubble. With home prices in Toronto and Vancouver soaring, many are unable to afford to buy. To cool down the realty market, regulators and governments have added more stringent credit stress tests to their arsenal as well as foreign ownership taxes. Canada's national life- and health insurance association demanded broad consultations with the industry in response to Trudeaus recent proposal. Stephen Frank, chief executive at the Canadian Life and Health Insurance Association, stated that if a new government introduced tax measures, we expect the government to consult extensively with all stakeholders. He said that Canada's life and medical insurance providers pay more than $8 billion annually in federal and provincial taxes. It is important to be clear about the public policy goals and implications of tax changes.
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