The Parliamentary Budget Officer recently estimated that a one-time tax on corporations whose profits rose during the pandemic would generate $7.9 billion in revenue. A tax of this kind was implemented during World War II, with the reasoning that those who were able to profit from a crisis should help pay for the cost of rebuilding.
Canada’s excess profits tax rate during World War II was 100 per cent. The PBO’s estimate is based on doubling the federal corporate income tax rate from 15 per cent to 30 per cent on the portion of profits deemed ‘excess,’ defined as profits greater than expected based on average margins from 2014 to 2019. The PBO applied this higher rate only to the excess portion, and restricted their review to corporations that had $10 million or more in annual revenues in any year from 2016 to 2020.
There is no shortage of corporations that had profits go up during the pandemic. Canadians for Tax Fairness research found that Extendicare, which owns and operates private long-term care facilities, is one of the companies that would have had to pay an excess profits tax. During a pandemic that killed thousands of residents in long-term care facilities, Extendicare’s profit margin grew from 2.8 per cent to 5.1 per cent.
Missing data masks inequality
During the pandemic, Canadian policy makers have found that much of our data is missing specifics that would help address inequalities. While most data collected by the federal government includes information on two genders, men and women, it is less common to have information on the other ways that discrimination and oppression commonly work in our society, such as racialization, indigeneity, sexual orientation, and gender expression.
This is slowly changing. The 2021 Census broke new ground by asking questions about sex at birth and gender identity for the first time. During the pandemic the Labour Force Survey started collecting disaggregated data by race, asking people to report which racialized population groups they belong to. Budget 2021 advances this effort further with $172 million over five years for a Disaggregated Data Action Plan to improve government data on race, gender, and sexual orientation. Information like this could help governments uncover systemic discrimination and make better decisions to address it.