By Paul Vieira
OTTAWA--Canadian Prime Minister Justin Trudeau promised Wednesday to raise corporate tax rates on big banks and insurance companies, citing their strong earnings performance during the pandemic.
The proposal came at a stop in suburban Vancouver, British Columbia, on the second week of an election campaign toward a Sept. 20 national vote. The corporate tax rate on large financial institutions, mostly banks and life insurers, would climb three percentage points, to 18% from 15%, and apply to earnings above 1 billion Canadian dollars, or the equivalent of $790 million, he said.
In background documents, the Liberal Party said the proposed tax measures would raise about C$2.5 billion a year over the next four years.
"Our financial institutions did very well during this pandemic, partially because Canadians pulled together and did the right thing and got the support they needed from their government," Mr. Trudeau said. "Given our banks have posted extraordinarily large profits and continue to be incredibly successful while others had to tighten their belts, we are going to ask them to do a little bit more."
Mr. Trudeau's move is likely designed to shore up support among left-leaning and progressive-minded voters, which he needs to win a majority government. The Liberal Party lead has narrowed sharply since the start of the campaign, with both the Conservative Party and New Democrats posting gains, and the goal of converting his minority mandate into a majority appearing out of reach based on current polling numbers.
The announcement comes as Canada's big banks unveiled earnings this week. Royal Bank of Canada on Wednesday reported a 34% rise in third-quarter net profit, to C$4.3 billion, as it benefited from strong performances from its personal and commercial banking and capital markets businesses. A day earlier, Bank of Montreal reported third-quarter net profit of C$2.3 billion, or over 80% higher than the year-ago period.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires
August 25, 2021 13:44 ET (17:44 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.