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Canada’s Budget Watchdog Warns On Bank Surtaxes

The Parliamentary Budget Officer has warned that the federal government in Ottawa is likely to
earn $1 billion less from its bank surtaxes than initially estimated.

The federal budget watchdog said the government is on track to earn about $5.27 billion from
the proposed increase in tax rates on bank profits over $100 million.

That’s about $800 million less than the federal government’s original estimate for $6.1 billion in
revenue from the tax measures over the next five years.

Ottawa has raised the surtax on bank profits to 16.5% from 15%, along with imposing a one-
time 15% tax on earnings over $1 billion for a two-year period. The measures aim to help
Ottawa recover from the budget deficits it incurred during the COVID-19 pandemic.

Canada’s major banks have aggressively opposed the surtaxes, claiming they unfairly punish
financial institutions that worked with government to help rollout pandemic support programs.

The Canadian Bankers Association has said that banks are already among the largest
taxpayers in the country, estimating that Ottawa earned $12.7 billion of tax revenue in 2019
from the country’s financial institutions.