(Ottawa) Finance Minister Chrystia Freeland plans to provide an economic and fiscal update in early December. Main measure on the menu: an increase in the tax rate for banks and insurance companies, which would come into force on 1er January, according to information obtained by Press.
The Trudeau government thus wishes to mark a major blow by implementing one of the flagship promises of the last electoral campaign aimed at making “the rich pay”: to increase the taxes of banks and insurance companies whose profits exceed 1 billion dollars a year. Their tax rate will therefore drop from 15% to 18%.
This measure, combined with a stimulus dividend that the Liberal government also intends to impose on companies that have performed well during the pandemic, is expected to bring in $ 2.5 billion per year to the federal treasury over the next four years. .
The Trudeau government is proposing to use part of this jackpot to help young families who want to buy their first home, among other things. Access to affordable housing was an important issue in the last election.
The Canadian banking sector, which reacted badly when Justin Trudeau’s Liberals made this promise during the last campaign, has resigned itself to seeing the tax rate rise at the start of the new year.
Before retiring in October, the former CEO of the National Bank, Louis Vachon, had flayed the government of Justin Trudeau, urging him to show more budgetary rigor before thus targeting the banking sector or the companies of ‘assurance.
“Before increasing taxes on banks and on the business world in general, we should perhaps be a little more rigorous in terms of government spending now,” said Mr. Vachon in an interview with Journal of Montreal a few hours before retiring.
“What annoys us now in the situation is that we are targeted in a context that is not budgetary, but electoral,” he added.
For his part, John Aiken, banking analyst in Toronto and head of research for the firm Barclays in Canada, had argued in an interview with BNN Bloomberg that the increase in the tax burden could put a brake on profitability. banks. “We find it surprising that they are targeting the financial sector in particular and not other sectors that have done really well during the pandemic. ”
December 2
According to information obtained by PressOn Wednesday, Minister Freeland circled the date of Thursday, December 2 to provide an economic and fiscal update. This date could change, however, depending on the results of parliamentary contests that inevitably arise when a government has a minority in the House of Commons. Parliamentary work is due to resume on November 22. The Trudeau government will set out the top priorities for its third term in a Speech from the Throne to be read by Governor General Mary Simon in the Senate on November 23.
“The economic and financial update is due to take place in early December. And raising the tax rate on banks and insurance companies must be part of it, ”said a source well aware of the Trudeau government’s intentions.
This update will also provide an update on the health of the Canadian economy as we work in Ottawa and the provinces on stimulus plans.
Minister Freeland should also be able to clarify the size of the federal deficit. In campaign, Justin Trudeau’s Liberals have pledged $ 78 billion in new spending over the next five years, but only $ 25 billion in new revenue.
In April, the Minister of Finance tabled a budget that included a $ 100 billion three-year stimulus package and projected a deficit of $ 154 billion in the current fiscal year and about $ 60 billion in 2022-2023. This budget was the first tabled by the Trudeau government in two years, as the COVID-19 pandemic upset all spending and revenue projections last year.
Since taking office, the Trudeau government has presented a deficit budget approaching $ 20 billion annually during its first term. During his second term, the deficit exploded because of the COVID-19 pandemic and the many support measures adopted to help families, workers and businesses during the health crisis. According to the last federal budget, the deficit was to stand at 354 billion in 2020-2021.
Former Finance Minister Paul Martin instituted the practice of doing an economic and financial update in the fall of the mid-1990s. Since then, this practice has become part of political mores in Ottawa, and indeed in most of the city. provinces.