Proposed new federal taxes on some financial institutions could generate $5.3 billion over the next five years, the parliamentary budget officer estimated in two new reports issued Thursday.
The documents calculated the expected revenues from the Canada Recovery Dividend and a proposed permanent increase to corporate taxes on banks and life insurance groups.
The PBO said the dividend – a one-time 15 per cent windfall tax on banks and life insurers profits made during the pandemic – will generate $3 billion.
According to draft legislation published in August, the companies would pay the tax on an average of their Canadian-based taxable income above $1 billion for the 2020 and 2021 tax years.
The amount payable will be paid in equal instalments over the next five years.
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Finance Minister Chrystia Freeland is also proposing to hike the corporate tax rate on bank and insurance profits over $100 million.
The PBO report said increasing that rate from 15 per cent to 16 .5 per cent would generate $2.3 billion over the next five years.
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Both measures were introduced in the federal budget published last April. However the initial dividend proposed was to apply the 15 per cent windfall tax only on 2021 Canadian-based income instead of the average income over 2020 and 2021.
Based on the original frameworks, the budget predicted the two measures would raise more than $6 billion.
Canadians have until Sept. 30 to comment on the draft legislation.
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