Canadian corporations made record profit margins in 2021, which are contributing to inflation and will worsen inequality, according to a new report by Canadians for Tax Fairness: The Rise of Corporate Profits in the Time of Covid.
Profit margins in 2021 exceeded 20-year averages for corporations in all of Canada’s major economic sectors, the report showed. Last year’s profit margins averaged 16% overall, with the finance/insurance/real-estate sector boosting margins to 22%.
These profits come at a time when the effective average combined federal-provincial corporate tax rate hit an all-time low of just 16.6%.
“The government can’t justify maintaining ultra low tax rates when these companies are making record profits and inflating prices for our basic necessities” asked the report's author, Dr. DT Cochrane, “It’s time to reign in corporate profits with fair taxation.”
The report calls on the government to tax the excess profits of corporations in all sectors, close egregious loopholes such as the 50% tax rate reduction for capital gains income, increase the federal corporate income tax rate from 15% to 20%, and require transnational companies to be transparent about their earnings and taxes paid.
“Budget 2022 is a chance to address inequality and inflation by rebalancing our tax system so the richest corporations pay more of their fair share,” said Dr. Cochrane. “Canadians across political lines overwhelmingly support fairer taxes, and those with less should not be paying for record profit margins that benefit those with the most.”