Yes, Profits Have Risen With Prices

Silas Xuereb

There are a lot of different things that we could do. One, and this is already happening to some extent, is strengthening the labor movement. I think firms were able to get away with all this was partially because they were able to exploit weaknesses in labor that didn’t exist in the past.

Various policy mechanisms could be introduced, such as a windfall profits tax, similar to the one imposed on the banking sector. A Canada Recovery Dividend could be applied more broadly across all sectors, or targeted specifically on sectors like oil and gas. This would not only raise revenue that would allow us to democratically decide how to distribute that money — whether we want to spend it on affordable housing, investing in renewable energy, or a just transition — but also discourage firms from seeking excessive profits if they know that governments are willing and able to tax those extra earnings.

We can also permanently increase the corporate income tax rate. It’s been progressively decreased over several decades with the promise that it would promote investment. But, as we know, it has not promoted investment.

We can also do more to prevent mergers. We’ve made some progress here as well. The Competition Act was strengthened last year, but we need to ensure that it’s actually used in the future so that we don’t see continued increasing concentration in these industries.

Finally, international coordination on taxation is crucial. There’s a growing movement for a UN framework on taxation that could help prevent this international race to the bottom on corporate taxation.