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Canada’s ruling Liberal Party said on Wednesday that if re-elected it would raise the corporate tax rate paid by the most profitable banks and insurers by 3 percentage points on all earnings over C$1 billion ($793 million).
The party also vowed to establish a special dividend, so that those same institutions contribute more over the next four years as the country recovers from the COVID-19 pandemic. The measures are expected to generate C$2.5 billion per year over four years, starting in 2022/23.
Polls show that the Liberals, led by Prime Minister Justin Trudeau, have a slender lead over their Conservative rivals ahead of the Sept. 20 election.
“Given that our banks have posted extraordinarily large profits, have continued to be incredibly successful, including through a pandemic … we’re going to ask them to do a little bit more,” Trudeau told a campaign event in British Columbia.
“Our banks will continue to be strong and profitable but we will ensure they are also doing their part.”
Under the Liberal plan, the corporate tax rate would rise to 18% from 15% on all earnings over C$1 billion.
Canada’s largest banks include Royal Bank of Canada, Toronto Dominion Bank, Bank of Nova Scotia, Bank of Montreal, and the Canadian Imperial Bank of Commerce.
RBC beat analysts’ expectations for third-quarter profit on Wednesday, with both Scotiabank and BMO exceeded profit expectations on Tuesday.
Canada’s large insurers include Manulife Financial, Sun Life Financial, Intact Financial, and Great-West Lifeco.
