Budget 2022: Ottawa raising taxes on big banks and life insurance companies - Yahoo Canada Finance

Ottawa is raising taxes on Canada’s big banks and life insurance companies.

The government says the country’s major financial institutions made significant profits during the pandemic and have recovered faster than other parts of the economy — in part due to the federal pandemic supports for people and businesses.

The federal budget includes a one-time, 15 per cent charge on taxable income above $1 billion for the 2021 tax year for the country’s big financial institutions.

Ottawa also plans to permanently increase the corporate income tax rate for banking and life insurance groups by 1.5 percentage points for taxable income above $100 million.

The increase would bring the tax rate on income above that threshold to 16.5 per cent from 15 per cent.

The budget estimates the two measures combined will raise $6.1 billion over five years with some $4.05 billion attributable to the one-time tax.

The Canadian Bankers Association, which represents more than 60 domestic and foreign banks, said it opposes singling out specific economic sectors for special taxation.

It noted that banks are already among the largest corporate taxpayers in Canada with the six largest banks paying more than $12.5 billion in taxes to all levels of government in 2020, including $6.5 billion to Ottawa.

“During the pandemic, Canada’s banks provided hundreds of thousands of Canadians with mortgage relief, waived millions in fees for individuals and small businesses, and were instrumental in standing up essential programs like the Canada Emergency Relief Benefit and the Canada Emergency Business Account,” spokesman Mathieu Labrèche wrote in an email.