CIBC Chief Defends Canada’s Banks After Trudeau Proposes Tax Hike
(Bloomberg) -- A day after Canadian Prime Minister Justin Trudeau made a campaign promise to boost taxes on the country’s banks if re-elected, one of the industry’s top executives came to the sector’s defense.
“Banks have always been in the crosshairs,” Canadian Imperial Bank of Commerce Chief Executive Officer Victor Dodig said when asked by an analyst on an earnings call Thursday about the government targeting lenders.
Declining to comment directly on Trudeau’s proposal, Dodig highlighted the assistance banks offered during the pandemic and the benefits they provide the average citizen. “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, and that contributes to their livelihood,” he said.
Trudeau on Wednesday pledged to impose a 3% surtax on Canada’s big banks and insurers, a move expected to generate C$2.5 billion ($2 billion) for government coffers over four years. During Thursday’s call, Dodig was asked a follow-up question on whether he sees a leftward shift in the global political arena, and whether he could envision a day when bank profits are managed in a similar fashion to utility earnings, with governments allowing only a certain level of returns.
“I would like that not to happen anywhere in the world,” Dodig said, adding that governments should instead focus on making sure citizens are well-educated and have universal health care, and on creating conditions that allow private capital to be put to productive uses. “That is where the world should be going. Sometimes it leans left, sometimes it leans right, but usually -- usually -- common sense does prevail over time.”
©2021 Bloomberg L.P.