Taxing Excess Profits In Canada: An Urgent Proposal For ActionTaxing excess profits in Canada: An urgent proposal for action
Posted on November 27, 2024 in Debates
Source: TaxFairness.ca — Authors: Silas Xuereb
TaxFairness.ca – Reports
25 November 2024. Silas Xuereb
Executive Summary
Excess profits taxes are taxes on profits above expected rates of return on investment. Excess profits can stem from monopoly power, wars, or other crises. They were implemented by Canada during both world wars and have been implemented in India, Nigeria, the United Kingdom and across Europe since the onset of the COVID-19 pandemic.
From 2021 through 2023, Canadian corporations collected $441 billion more in profits than expected based on the average rate of return on assets over the previous decade. By definition, these are “excess” profits, and they contributed to the high levels of inflation experienced during this period. These profits could be taxed without affecting future investment decisions.
“From 2021 through 2023, Canadian corporations collected $441 billion more in profits than expected based on the average rate of return on assets over the previous decade. By definition, these are “excess” profits”
Canada has also experienced a decrease in competition over time, which is leading to large firms having an increased ability to raise prices without fear of losing market share. In addition to regulatory changes, the corporate income tax system could be redesigned to discourage mergers between large firms.
To raise funds urgently needed to address the climate and affordability crises and curb growing monopoly power, we recommend the implementation of an economy-wide windfall profits tax that could raise over $50 billion from publicly traded companies and a monopoly profits tax that could raise $8 billion annually.
View as PDF: C4TF Excess Profits Report Nov 2024(PDF)
https://www.taxfairness.ca/en/resources/reports/taxing-excess-profits-canada-urgent-proposal-action
Tags: economy, standard of living, tax
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