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Liberals expected to raise taxes on big banks, insurance companies in budget

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OTTAWA — The final message to Scotiabank shareholders from its president and CEO’s annual address: a higher tax on the country’s biggest banks is a tax on you.

Brian Porter called a tax hike that’s widely expected to be included in Thursday’s budget a “knee-jerk reaction that sends the wrong message to the global investment community.”

He made the comments in written remarks prepared for Tuesday’s annual shareholder meeting, but he did not deliver the address in person.

The financial industry is bracing for changes to its tax rate after the confidence and supply agreement between the Liberals and the NDP included a pledge to move forward on tax changes “in the near term.”

NDP Leader Jagmeet Singh said Tuesday that ensuring those who have benefited from the pandemic “start paying their fair share” was a key element of the deal with the Liberals, though it’s not clear what specific changes the government may be exploring.

During the 2021 election campaign, Prime Minister Justin Trudeau promised a corporate tax surcharge on the country’s biggest banks and insurance companies.

The Liberals estimated taxing profits over $1 billion at 18 per cent instead of 15 would bring in about $1.2 billion a year.

On the campaign trail, Trudeau also promised a four-year “recovery dividend” that he said would be a temporary way for banks to help with the pandemic recovery, given that they’ve fared relatively well throughout.

The Liberals said they’ll use the extra money to help Canadians struggling to afford record home prices — although that was before they struck a deal with the NDP.

The list of the parties’ shared priorities now includes pressing commitments like implementing dental care for the children of low-income earners this year and creating a pharmacare program.

But some economists argue the policy doesn’t make sense.

Ian Lee, a professor at the Sprott School of Business at Carleton University, said a tax hike “makes for great optics.”

“Either directly or indirectly, they’re saying ‘Look, this is how we’re going to go after inequality,’” he said. “We’re going to go after those big fat rich banks.”

The Canadian Bankers Association says the net income of the six largest banks was $46.6 billion in 2019, and that they collectively paid $12.7 billion in taxes to all levels of government that year.

The organization Canadians for Tax Fairness is calling for a suite of changes in this budget that it says will raise another $92 billion a year in government revenue. That includes a “pandemic-based excess profits surtax” on corporations, and raising the corporate tax rate to 20 per cent across the board.

Lee said a higher tax bill won’t translate into lower profits for corporations, which will simply absorb the extra cost and pass it on to customers or workers.

“It’s just another cost of doing business. There’s nothing magical or special about taxes,” he said.

But the next several Liberal budgets depend on the support of the NDP, and that party wants to go further.

“This shouldn’t just be about banks, it should also be about big grocery chains, the big box stores, oil companies,” said NDP MP Niki Ashton.

The Canadian Centre for Policy Alternatives’ senior economist David Macdonald said he thinks a tax for banks is “a certainty for this budget,” and the question for him on Thursday is whether it goes further.

The banks, for their part, are saying little.

CIBC’s president and CEO, Victor Dodig, told a group of investors during an earnings call in August that banks have “always been in the crosshairs.”

“Most Canadians, whether through large pension plans or through their own investments, have investments in banks and they benefit from those dividends that we pay and they benefit from our economic growth,” he said.

CIBC, RBC, Scotiabank and National Bank of Canada did not agree to an interview. TD Bank and BMO did not respond to a request for comment.

The Canadian Bankers Association also declined to comment, pointing to a statement it released during the election campaign arguing that bank profits maintain stability in the financial system, “ensuring the safety and security of Canadians’ deposits,” and highlighting that many banks and their employees donate to charity.

This report by The Canadian Press was first published April 6, 2022.

 

Sarah Ritchie, The Canadian Press

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Are you as a 2SLGBTQIA+ conformist being treated the same as heterosexuals at your place of work?

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Researchers have reported that 2SLGBTQIA+ people in Canada to face significant inequities in the labour market, including with respect to average earnings, job satisfaction, and the likelihood of being employed.

According to research by the Social Research and Demonstration Corporation (SRDC), despite Legislative and socio-cultural advances toward 2SLGBTQIA+ inclusion in Canada in recent years, their findings suggest that 2SLGBTQIA+ individuals continue to face labour market and employment inequities that are systemic and mutually reinforcing than those in other spheres.

“The employment experiences of those with whom we spoke were commonly characterized by prejudice, discrimination, stigmatization, and exclusion. In addition to implications for mental health and well-being, participants articulated specific examples where these experiences inhibited their capacity to access, maintain, and advance in employment. At the same time, participants’ accounts conveyed important differences across the 2SLGBTQIA+ community in Canada, pointing to the role of diverse social locations in shaping the experiences of gender and sexual minority individuals. 2SLGBTQIA+ individuals whose experiences were additionally shaped by sexism, racism and other forms of oppression are described distinctly and exacerbate disadvantages in employment.

Although our findings suggest that the employment journeys of 2SLGBTQIA+ individuals in Canada continue to be characterized by prejudice and discrimination, participants’ stories also displayed a great deal of resilience. Furthermore, several participants described jobs they found to be inclusive and affirming and detailed positive experiences that pointed to potential solutions. For instance, they highlighted the significance of supportive colleagues and managers, inclusive employer practices, and people-centred workplaces to their ability to succeed and progress in employment. Even where participants struggled to identify positive workplace experiences, they offered strategies they believed would enhance 2SLGBTQIA+ people’s employment outcomes. While these findings are offered as participant-proposed solutions rather than formal recommendations, we hope they mobilize people to action, with a view to developing policy and program interventions that are evidence-informed, inclusive, equitable, and effective for this population,” read part of the research.

For many 2SLGBTQIA+ people who are not cis- or straight-passing, the job application process can be extremely stressful. Navigating interviews is particularly challenging for them since they do not know how they will be received, given the risk of prejudice and discrimination.

As a result, 2SLGBTQIA+ persons now constantly have to self-identify themselves during the interview process as a means of avoiding being hired by a potentially unsafe employer, even though this might possibly result in losing opportunities.

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Canadian home prices saw 1st monthly decline in two years last month – Global News

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Increasing mortgage rates slowed home sales in April from the frenzied pace they started the year at, the Canadian Real Estate Association said Monday.

The association found the number of homes sold dropped by 25.7 per cent to 54,894 last month from 73,907 in April 2021, when the country set a record for the month.

On a month-over-month basis, sales in April were down 12.6 per cent compared with March, but still ranked as the third-highest April sales figure, just behind 2021 and 2016.

“The demand fever in Canadian housing has broken and, who would have thought, all it took was a nudge in interest rates by the Bank of Canada to change sentiment,” said BMO Capital Markets senior analyst Robert Kavcic, in a note to investors.

CREA attributed much of the slowdown to fixed mortgage rates, which have been on the rise since 2021, but have been more impactful in recent months. The association pointed out that typical discounted five-year fixed rates have leaped from about three to four per cent over the span of a month.

Read more:

Bidding war no more: How to make an offer in Canada’s cooling housing market

The rate is also weighing on how buyers fare with the mortgage stress test, which once required those with uninsured mortgages – borrowers with a down payment of at least 20 per cent – to carry a mortgage rate of either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.

For fixed borrowers, CREA said the stress test just moved from 5.25 per cent to the low six per cent range, another roughly one per cent increase in a month.

“People are nervous. They are thinking, ‘if I take on this mortgage, when mortgage rates are going up and the price to (live) is more, what is going to happen?” said Anita Springate-Renaud, a Toronto broker with Engel & Volkers.

She noticed that many homes were still getting multiple offers last month, but instead of 20 offers, two or three was becoming the norm.

Properties are also taking longer to sell. Homes that used to find a buyer in three or four days are now sitting for two weeks, in some cases, she said.


Click to play video: 'Canadian home prices could rise 15% in 2022: Royal LePage'



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Canadian home prices could rise 15% in 2022: Royal LePage


Canadian home prices could rise 15% in 2022: Royal LePage – Apr 19, 2022

Many other realtors have found buyers and sellers holding off on purchasing or listing properties until they see how much of an effect mortgage and interest rate changes have on the market.

“For buyers, this slowdown could mean more time to consider options in the market,” said Jill Oudil, CREA’s chair, in a news release.

“For sellers, it could necessitate a return to more traditional marketing strategies.”

This shift in sentiment was reflected in the number of newly listed homes, which, on a seasonally adjusted basis, fell by 2.2 per cent to 70,957 last month from 72,557 in March.

On a non-seasonally adjusted basis, new listings amounted to 91,559 last month, down 10.5 per cent from 102,294 in April 2022.

Even though CREA reported slowing sales and fewer listings, Canadians were shelling out even more for homes than they did in 2021.

The national average home price was a little over $746,000 in April, up 7.4 per cent from about $695,000 during the same month last year.

Read more:

Efforts to ramp up Canadian housing supply accelerated in April, CMHC says

Excluding the Greater Toronto and Vancouver areas from this calculation, cuts $138,000 from the national average price, CREA said.

However, on a seasonally adjusted basis the national average home price slid by 3.8 per cent to $741,517 last month from $771,125 in March.

The home price index benchmark price hit $866,700 last month, down 0.6 per cent from a month ago but up 23.7 per cent from a year ago and 63.9 per cent from five years ago.

The benchmark price was lowest in Saskatchewan, where it totalled $271,100 and highest in B.C.’s Lower Mainland, where it amounted to more than $1.3 million.

Kavcic found Ontario markets “weakening most and fastest, especially further outside the core of Toronto (these were also the hottest markets in the country during the pandemic).”


Click to play video: 'No ‘silver bullet’ when it comes to fixing Canada’s housing crisis, Freeland says'



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No ‘silver bullet’ when it comes to fixing Canada’s housing crisis, Freeland says


No ‘silver bullet’ when it comes to fixing Canada’s housing crisis, Freeland says – Apr 13, 2022

Ontario’s suburban markets are the “shakiest” because of how prices have fallen from February peaks, but he said single-detached and townhomes look to be cooling quickest.

“Sales in the province slid 21 per cent in April and are now back in-line with pre-pandemic activity levels,” he said.

“The market balance has gone from drum tight with ‘not enough supply,’ to one that resembles the 2017-19 correction period.”

Within the province, TD Economics economist Rishi Sondhi found Toronto be an outlier because sales and prices dropped more there than in the country overall.

Sondhi believes the Toronto market is now close to tipping in favour of buyers, but in the coming months, expects prices to continue falling nationally, reflecting the cooler demand backdrop.

© 2022 The Canadian Press

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McDonald's to pull out of Russia for good – CBC News

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McDonald’s says it is pulling out of the Russian market for good, after that country’s invasion of neighbouring Ukraine has made doing business in the country “no longer tenable.”

Like many global companies, the Chicago-based fast-food chain announced it would temporarily close all of its restaurants in Russia in February, when Russian President Vladimir Putin launched his invasion. The move from McDonald’s was said to be temporary at the time, as extricating itself from 850 locations and 62,000 employees would be painful to do over the long run, and the chain was hopeful of finding solution that would be beneficial for all parties.

But according to Monday’s announcement, the company is closing up shop in the country for good.

“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values,” spokesperson Joseph Lapaille told CBC News in an emailed statement.

After the temporary closure was announced, McDonald’s was one of a few foreign chains to discover it didn’t have as much control over its restaurants in the country as it thought it did, as many locations owned by independent franchisors stayed open and continued to serve customers the same fare they always did.

WATCH | Why some McDonald’s in Russia are staying open, despite being told to close:

Why some fast-food chains are still open in Russia

2 months ago

Duration 2:06

Hundreds of fast-food restaurants remain open in Russia, despite global chains such as McDonald’s, Burger King and KFC announcing plans to suspend operations in the country over the Ukraine war. These restaurants are likely owned by franchisees, making it difficult for companies to shut them down.

The company says it will seek to have a Russian buyer hire its employees and pay them until the sale closes, but the company did not identify who that potential buyer would be.

It did say that it plans to start removing golden arches and other symbols and signs with its name from the country immediately, so it’s unclear what will happen to the signage of the many McDonald’s-branded restaurants inside Russia.

The company’s locations in Ukraine are also temporarily closed, but all staff are being paid and the company says it plans to reopen there as soon as it can.

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