Trudeau promises tax increase after major banks report surge in third quarter profits
The chief executive officer of one of Canada’s biggest banks has defended the financial sector after Prime Minister Justin Trudeau announced plans to raise taxes on big banks and insurance companies if re-elected.
Speaking at a campaign stop in British Columbia, Trudeau said that the “massive profits” reported by the country’s major banks this week demonstrated that they have recovered better than most industries over the course of the pandemic and therefore should be expected to “pay a little more” in the form of a higher corporate tax rate.
Read more: RBC reveals its Q3 results
“We will raise the corporate income tax rate for Canada’s largest and most profitable banks and insurance companies by three percentage points on all earnings over a billion dollars,” said Trudeau.
“We’ll also establish the Canada recovery dividend, so these institutions contribute more over the next four years of Canada’s recovering.”
Coming to the banking industry’s defence at a recent earnings call, however, was Canadian Imperial Bank of Commerce (CIBC) chief executive officer Victor Dodig.
“Banks have always been in the crosshairs,” said Dodig, according to a Bloomberg report. “Most Canadians, whether through large pension plans or through their own investments, have investments in banks, and they benefit from those dividends that we pay, and they benefit from our economic growth, and that contributes to their livelihood.”
Responding to the idea of bank earnings being regulated by the government in a manner similar to the utilities sector, Dodig said that he “would like that not to happen anywhere in the world.”
Instead, Bloomberg reported Dodig as saying that he would rather see governments focus on ensuring that citizens are well-educated and have universal health care.
“That is where the world should be going,” Dodig said, according to Bloomberg. “Sometimes it leans left, sometimes it leans right, but usually – usually – common sense does prevail over time.”
Earlier this week, CIBC reported a whopping 48% increase in net income to $1.73 billion in the third quarter of 2021 compared to the same period last year – a result that Dodig said reflected the bank’s solid performance throughout the continuing economic uncertainty from the COVID-19 pandemic.
