Budget spares banksYear Published: 1989
Resource Type: Article
Cx Number: CX3642
Abstract: While many Canadians will suffer as a result of the Progressive Conservative government's budget, Canada's banks had the good fortune to emerge unscathed. Finance Minister Michael Wilson's budget exempted the banks from the new federal sales tax. The sales tax is to be applied to virtually all transactions, whether they involve products or services. However, banks and shares traded on the stock market are being exempted. (Minor banking services such as the rental of safety deposit boxes will be subject to the tax.) It had been estimated that the new tax would have cost Canada's banks about $500 million had it been applied to them.
By another stroke of good fortune, the banks were also spared the application of a proposed tax on bank profits. According to Kersi Doodha, a bank analyst at Maison Placements Canada Inc., a tax on bank profits might have collected about $500 million over two years. As a group, Canada's major domestic banks posted a record of $3.3 billion profit in fiscal 1988. Doodha credited the banking lobby with ensuring that the budget spared them any harsh treatment.