Taxing corporate share buybacks unlikely to boost investment in operations: experts

By The Canadian Press on November 8, 2022.

OTTAWA – Experts say the federal government’s proposed corporate share buyback tax is unlikely to encourage companies to spend more on growing their operations.

In last week’s mid-year budget update, the Liberals committed to imposing a two per cent tax on stock buybacks that would go into effect in 2024.

Finance Minister Chrystia Freeland says the measure is meant to encourage companies to invest their profits in their operations and workers.

Rick Robertson, a professor emeritus at Western University’s Ivey School of Business, says the new tax might be politically popular.

But he doesn’t expect it to encourage corporate investment.

He says companies will still want to reward shareholders when profits are strong and can opt to give out one-time dividends instead.

This report by The Canadian Press was first published Nov. 8, 2022.

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