(Ottawa) Large corporations paid $30 billion less in taxes last year than would be expected under current corporate tax rates, according to a new report from Canadians for Taxation.
Posted at 11:32 am
The organization analyzed the financial statements of 123 Canadian companies valued at least $2 billion and found that the effective tax rate paid by these companies was about 15% in 2021, which is well below the average: 26.5% of combined federal and provincial taxes.
The group says that compares to an average effective tax rate of 19% between 2017 and 2019, which at the time represented an average shortfall of $13.5 billion in tax revenue for those years before the pandemic.
According to the report’s author, DT Cochrane, this bias can be due to a number of reasons ranging from tax deductions to profit claims in low-tax states.
Canadians for Tax Fairness describes itself as a nonpartisan, nonprofit organization dedicated to promoting fair and progressive tax policies.
She asks Federal Finance Minister Diane Lebouthillier for transparency about the reasons for the tax shortfalls.
The tax returns might explain why these companies paid less tax, but Cochrane says they don’t provide enough detail to understand the discrepancy between taxes paid and expected.
“We’re not saying that one company or another did anything wrong,” says the author.
Cochrane says the group is ready to “sit down and discuss” with Minister Lebouthillier the report’s findings, which suggest some gains are being reported in low-tax states “that are questionable, to say the least”.
The Canadians for Tax Fairness report is based on a collaborative analysis of the Toronto Star and Corporate Knights, published in 2017, which examined the amount of taxes paid by corporations.
The Liberals included measures to reform the tax system and close tax loopholes in the 2022 federal budget. One of the proposed measures would prevent foreign companies from being used to avoid paying taxes in Canada.
The budget projected that this measure would increase federal revenue by $4.2 billion over the next five years.
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