An excess profit tax would have generated an additional $7.9 billion in revenue for the 2020 tax year, according to a report from the Parliamentary Budget Officer (PBO).
Federal NDP leader Jagmeet Singh proposed such a tax last year, noting that some large corporations have been “making record profits because of the pandemic.” The NDP called on the government to at least double the tax rate on those companies’ excess profits.
Large companies — which the PBO defined as having earned a minimum of $10 million in revenue in at least one of the years from 2016 to 2020 — are currently subject to a 15% federal corporate tax rate.
The PBO estimated that levying an additional 15% tax rate on profits that exceeded companies’ expectations would have yielded an additional $7.9 billion in revenue last year.
In last week’s federal budget, the Liberals pledged to continue support for small businesses during the pandemic, but did not increase taxes on large corporations that have seen profits surge due to Covid-19. The government did, however, say it would introduce limitations on interest deductions on loans for large companies.