By Paul Vieira
OTTAWA -- Most lawmakers on the Canadian legislature's finance committee have urged Finance Minister Chrystia Freeland to impose surtaxes on corporate profits from the grocery and energy sectors because they argue their pricing behavior helped fuel inflation.
The recommendation is contained in a report published Tuesday, and is one of 359 from the majority of lawmakers who sit on the finance committee. The report is aimed at persuading Freeland of what measures to include in the 2024 budget plan, which sets out in broad terms the government's priorities over the next 12 months and accompanying spending and tax policy. Freeland has yet to say when she will unveil the budget plan.
The recommendations aren't binding on the Finance Minister, who is part of a minority government that requires opposition help. The views, though, do reflect those of Liberal Party members on the committee, and from the left-wing New Democratic Party, which through a political accord has agreed to prop up the minority administration. Another party, the Bloc Quebecois, agreed with many of the recommendations but said they wanted other priorities added.
The Conservative Party, which holds a wide lead among voters in public-opinion polls, issued a dissenting opinion.
In a section regarding corporate and business income taxation, it said it heard from witnesses who proposed fresh levies on "windfall profits" earned by large grocery companies, like Loblaw and Metro, and surtaxes on companies that contributed to inflation through their pricing.
Last year, Canadian officials warned grocers of new taxes unless prices of the staples on their shelves come down. At a press conference earlier Tuesday, Canada Industry Minister François-Philippe Champagne said there's been a gradual stabilization of food inflation "but more needs to be done to ensure that all Canadian families can afford the groceries they need."
The committee recommends a windfall tax in industry sectors that "generate oversized profits due to crises," in reference to the pandemic and the war in Ukraine. The committee also calls for surtaxes on profits from grocers and oil-and-gas producers because they "contributed to Canadian inflation."
Other tax-related measures the committee recommends include an average 25% tax rate on multinationals, and a permanent wealth tax on the richest Canadians.
A spokeswoman for Freeland didn't immediately respond to a request for comment about the report's recommendations.
The Bank of Canada has said that corporate-pricing behavior, after a period of frequent and bigger-than-normal price increases, is beginning to show signs of returning to prepandemic norms. However, the central bank wants to see more progress on this front before it becomes comfortable contemplating interest-rate cuts.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
02-27-24 1410ET
