In the first two years of the pandemic, Ottawa provided emergency assistance to 37 large companies that are not paying their fair share of taxes. Worse, 30 of them have a subsidiary in a tax haven, 29 have increased the dividends paid to their shareholders and 24 have nevertheless reduced their workforce in 2020, denounces the organization Canadians for Fair Taxation.
In an analysis signed by economist DT Cochrane and published on Thursday, we looked at 74 Canadian companies listed on the stock exchange that benefit from a “tax gap” of at least 100 million. This gap is defined as the difference between what a company actually pays and what it should pay according to the theoretical rates established by tax law.
From this group, Mr. Cochrane specifically selected the 37 companies that benefited from the Canada Emergency Wage Subsidy (CEWS) set up by the Trudeau government at the start of the pandemic to help them keep their employees. It was abolished in October 2021, following having made it possible to allocate 100.6 billion to 460,110 applicants.
“The criteria for receiving the CEWS were both broad and overly lax,” said the analyst. Some very lucrative companies have taken advantage of this to increase their value by avoiding paying taxes, paying dividends, buying back shares and making acquisitions. Some of these companies have even reduced their workforce. »
173.5 billion spent
It’s unclear how much the 37 companies in Cochrane’s analysis received in total under the CEWS. However, he was able to establish, through their financial statements and “other sources of public data”, that 30 of them have “at least one subsidiary in a tax haven”. In particular, he identifies in this group Alimentation Couche-Tard, CN, Cogeco, Intact, the Royal Bank, the National Bank and Power Corporation.
Also in this group, 29 increased the total dividends paid to their shareholders and 16 of them also had fewer employees in 2021 than in 2019.
In total, in 2020 and 2021, the analyst calculates that the 37 companies that received the CEWS paid $81.3 billion in dividends, spent $41.1 billion on stock buybacks and $51.1 billion on acquisitions of other companies.
“The $173.5 billion spent on dividends, share buybacks and acquisitions represents almost half of the combined gross profits of CEWS recipients,” writes Cochrane. By comparison, these companies paid the relatively meager $29.3 billion in taxes while avoiding paying $20.7 billion. »
Ten recommendations
He also denounces the fact that it is not known how much these companies have received in CEWS. “This information should be public,” he said.
The report released by Canadians for Tax Fairness makes ten recommendations to “recover corporate tax revenues for the public good” and “limit corporate tax avoidance”.
Suggestions include a windfall tax on large corporations to support post-pandemic recovery, a minimum tax on accounting profits, an increase in the corporate tax rate from 15% to 20%, and an end to agreements with tax heavens.
Learn more
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- 610
- Number of Canada Emergency Wage Subsidy (CEWS) applications over 5 million awarded between March 2020 and October 2021
SOURCE : service canada
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- 22 %
- Market valuation increase at the end of 2021, compared to 2019, of the 37 companies receiving the CEWS, for a combined total of 238 billion
SOURCE: Canadians for Tax Fairness
