Ottawa could reap $4.4 billion from extending windfall tax to other sectors: PBO

By Nojoud Al Mallees, The Canadian Press on November 9, 2022.

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OTTAWA – New analysis from the parliamentary budget officer suggests the federal government would pocket $4.4 billion in additional revenue if it extended the Canada Revenue Dividend to the oil and gas sector as well as big-box stores.

The dividend is a one-time 15 per cent windfall tax the Liberals plan to levy on excess profits made by banks and life insurers during the pandemic.

The PBO previously estimated that the dividend would bring in $3 billion in revenue from banks and life insurers over the next five years.

Two NDP members of Parliament asked the PBO to assess the financial impact of extending the temporary tax to the oil and gas sector and big-box stores.

In its analysis, the PBO found the federal government could raise an additional $4.4 billion in revenues by extending the tax to those sectors.

Environment Minister Steven Guilbeault recently lashed out at oil companies for making very limited investments in climate action even as massive inflation-driven profits allowed them to pad the wallets of shareholders.

Not long after those comments, the Liberals proposed a two per cent tax on share buybacks in the fall economic statement.

The tax aims to incentivize companies to spend their profits on growing their operations, but New Democrats say the tax doesn’t help Canadians who need relief.

“Canadians are living in a really tough time right now “¦ the cost of everything is going up,” said NDP finance critic Daniel Blaikie.

Blaikie said corporations can find ways to get around the buyback tax, whereas a windfall tax would allow for less “wiggle room.”

Corporations have been facing intense public scrutiny for raking in exceptional profits during record inflation. That has prompted discussions globally about the appropriateness of windfall taxes.

In September, the European Union adopted a windfall tax on fossil fuel companies and said it planned to use the revenue to send relief to people.