Calls to tax energy sector’s excess profits
Canada’s oil and gas industry has achieved record earnings, with some arguing for a tax on excess profits.
Canada’s Ministry of Finance says it’s aiming to make everyone pay “their fair share of tax” but is not committing to an elevated tax on energy companies who are reporting sizeable windfalls while consumers feel pinched at the gas pumps.
The ministry’s statement comes on the heels of United Nations Secretary General Antonio Guterres sharply criticizing the world’s energy companies for making a profit at the expense of the poor.
On Wednesday, Guterres said the world’s top energy companies made $100 billion in the first quarter of this year and that those profits should be taxed and then used to support the most vulnerable people through difficult times.
He joined other figures who have recently accused oil companies of capitalizing on a global supply shortage to fatten profits and gouge consumers.
“This grotesque greed is punishing the poorest and most vulnerable people, while destroying our only common home, the planet,” Guterres said. “We are seeing excessive scandalous profits of the oil and gas industry in a moment in which all of us are losing money.”
WATCH | UN chief urges tax on ‘excessive profits’ of oil companies
UN chief urges tax on ‘excessive profits’ of oil companies
Governments should tax the ‘grotesque greed’ of the world’s oil and gas companies and use the money to help vulnerable people through this difficult time, said United Nations Secretary General Antonio Guterres.
The day after Guterres’ comments — in which he did not single out any company — Suncor Energy Inc. reported earnings of $3.99 billion in the second quarter of 2022, more than four and a half times the $868 million it earned in the same period of 2021.
Asked if Ottawa has given any thought to a higher tax on such profits, the Ministry of Finance instead pointed to other tax measures taken by the federal government, including permanently hiking the corporate tax rate by 1.5 per cent on profitable banks and implementing a luxury tax on private jets and luxury cars worth more than $100,000.
“We have been, and remain, committed to making sure everyone pays their fair share of tax,” the ministry said in an emailed statement on Friday.
NDP says extra revenue should go to ordinary Canadians
Daniel Blaikie, the New Democratic Party’s finance critic, said there’s “absolutely” a place for the federal government to tax “excess profit” at a time when “people are really under the gun when it comes to being able to afford” rent, food and gas.
“We saw Conservatives in the U.K. do this, for Pete’s sake,” Blaikie said, referring to Britain’s passage last month of a 25 per cent windfall tax on oil and gas producers in the North Sea.
Blaikie suggested profits could be diverted to increase the GST tax credit and the Canada Child Benefit.
The money could also be used to expand a 2021 increase to Old Age Security payouts for seniors aged 64-75, which currently only applies to those over 75, he added.
Kevin Page, a former parliamentary budget officer, agreed that taxed profits could be “put to work with respect to strengthening our social safety net.”
In response, energy companies might argue that elevated taxes amount to an unfair burden on an industry still trying to recover from the global crash in energy prices during the early stages of the pandemic, Page said.
“Those are the tough tradeoffs that we want our political leaders to wrap their heads around,” Page said.
Industry says Ottawa benefiting from increased royalties
The Canadian Association of Petroleum Producers (CAPP) declined an interview but said in an emailed statement that higher commodity prices translate to a bump in federal royalties.
“Canada is set to see a year-over-year growth of 283 per cent in royalties collected from the four producing oil and gas provinces,” the association said in its statement, in which it also cited income taxes, municipal taxes, corporate tax remittances and the auctioning of mineral rights as additional pools of government money flowing from the oil and gas sector.
Increasing production from democratic countries like Canada would help lower consumer costs, CAPP added.