44th Parl. 1st Sess.

March 21, 2022 11:00AM

Mar/21/22 1:12:58 p.m.
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Madam Speaker, let me begin by saying I will be sharing my time with the member for Terrebonne. On this first day of spring, and I wish you an excellent spring, Madam Speaker, I see that the NDP is dedicating its opposition day to the Liberal Party's election platform. I wonder why. Part of the Liberal platform was to charge this surtax on the profits of the big banks. I think maybe the NDP no longer has confidence in the Liberals. However, the budget is coming up and I have seen the NDP declare its confidence in the Liberals several times. It even did so when it came time to support the emergency measures, even though several legal experts confirmed that those measures breached the fundamental rights of Canadians. I wonder what has the NDP so concerned on the eve of the budget. The Liberals themselves proposed going after the big banks to the tune of $10 billion over four years. I am thinking that it is probably because the Liberals are in the habit of listening to what Bay Street has to say. What happened when the Liberals suggested imposing this small surtax on banks during the election campaign? The banks made threats. Top bankers and their associations came out and started saying that they would increase consumer fees and eliminate jobs in the banking sector and that this would be catastrophic. We are all worried that the Liberals will listen to Bay Street bankers. Not so long ago, a former finance minister came from Bay Street. We understand that he is no longer talking to them, but he was so charming that he surely still has friends there. What surprises me the most is that we are discussing a surtax. The reality is that our banks are undertaxed. Our banks and the businesses that provide all manner of other goods and services are not on an equal footing. Do we pay the GST on financial services? No, because financial services are generally exempt from pretty much all taxes. However, when we purchase goods and other services, they are taxed, even in the riding of the member who just spoke about buying goods. Banks offer financial services and are funded in a somewhat underhanded way. We know what happens. When my constituents put their money in the bank, what kind of interest rate do they get? They basically get no return on their investment. However, the bank turns around and lends money at a rate of 22% on credit cards, 15% on lines of credit, 5% on other things and so on. The bank makes money because of this credit spread, but there are never any financial service transactions. That circumvents the principle of value-added taxation, which all other businesses support. Banks are undertaxed, but there are ways to tax them. Great Britain's Mirrlees Review, a major tax commission led by a Nobel prize recipient, explained that, in order to remedy this problem, banks' cash flow and financial services could be taxed. However, it is surprising that no tax is proposed when it comes time to collect from banks to level the playing field for our companies. When banks need funding, they turn to the Bank of Canada, which loaned them money at a rate of a quarter of a percentage point during the pandemic. This system is supported by the public trust and the taxpayer. Did banks complain when they were charging higher mortgage rates in a completely inflationary market? The answer is no. Bank lobbyists never told us that people were paying too much. When banks seek funding by issuing debt obligations or bonds, they pay less than all other companies with similar capitalizations, and this is because banks will not be able to declare bankruptcy. They are too big to fail. People purchasing obligations from banks know very well that if disaster ever strikes a bank and there are problems with the financial system, Canadian and Quebec taxpayers will come to their rescue through the Bank of Canada as the lender of last resort. This means that banks make more profit because they pay less for their debt certificates. We must stop calling this proposal a surtax. Our banks have access to many tax advantages based on the nature of the services they provide and on the fact that they benefit from a system that is less competitive than in other places, which means that they make more profit. For the sake of fairness, justice and efficiency, we need to get an additional contribution, in the absence of more appropriate tax reform. We hear them talk about the banks. We hear the Conservatives. There is no shortage of arguments against this tax. The first argument is that the banks are owned by large Canadian investment funds and those Canadian investment funds generate dividends. We hear them say that there will be fewer dividends if we tax the banks' profits a little more and that the big investment funds will pay, except that during the pandemic, profits were higher than normal. There were excess profits. No investment fund manager in Canada, whether they work for the Caisse de dépôt et placement du Québec, the Ontario Teachers' Pension Plan or private funds, had anticipated those returns and the difference in performance from companies whose security is not guaranteed by the Government of Canada. We are in a situation where, if we tax a portion of excess profits, we are not even getting back to the profits already anticipated by all Canadian investment fund managers. This is therefore a bad argument. Now we are being told this will affect housing prices. That is both practically and theoretically untrue. Why? The reason is that our banks structure their costs in such a way as to maximize profit. They have revenue and expenses, and their goal is to achieve the biggest gap between the two. That is called profit. However, whether the government taxes that profit at 15% or 18%, the bank's recipe is exactly the same. It will still maximize profit, the same as before. Higher tax rates will make absolutely no difference. In fact, this approach to taxing banks' excessive profits is one of the most effective and one of the least likely to create distortion and to be passed on to consumers. I have been listening to my Conservative colleagues. It almost sounds like they are talking about a sales tax. Taxes vary in the type of damage they can do, in their economic impact. This particular tax is justified and equitable. The Bloc Québécois has already put a similar idea forward. We proposed a retroactive tax because the situation with excessive bank profits was unusual. Our thinking was that, in a full-blown pandemic, what people need is health care and health transfers. Governments are under extreme pressure, and never before have we been in such dire need of government support. That is exactly why we suggested it. When I meet people in my riding, people who have lived through two years of a pandemic, and the hospitals are cutting staff, when the Quebec government is asking for transfers and the nine other provinces and the territories agree but Ottawa turns a deaf ear, I figure that at some point we will have to find a way to finance these services. Now the federal government has a way. I am tired of hearing that the banks will pass on the costs to consumers, and so on. What we are proposing is justice. Banks are undertaxed and are legally avoiding paying tax. Since the 2006 crisis, taxes on corporate profits have been significantly and systematically reduced for all businesses. We are now at a crossroads where we must reflect on this and decide whether all businesses should be treated equally or banks should be taxed differently. Are banks really different? Obviously, the answer is yes. Should we find other ways of taxing financial products and the credit spread? The answer is yes. Let us think about this logically. The government is under pressure. It had to increase service delivery. It has to increase health transfers, listen to the provinces and find new sources of revenue. It is not surprising that the Conservatives and some of my colleagues are against this. They are against everything. The only way they understand how to finance any service is through oil, oil, and more oil. However, because of their oil, before the last increase in the price of a barrel, the government of Alberta projected a $500-million deficit. It is obvious to me that taxes need to be fair and equitable. This is a motion that, in principle, supports this idea, and that is why I will vote in favour.

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