Mr. Speaker, over the past few weeks six major banks have reported their profits for the year ending October 31, 1994. The six largest banks reported profits of over $4.2 billion, a 47 per cent increase over last year. This has prompted some
observers to ask whether the banks are paying their fair share of tax.
Banks do pay considerable amounts of tax. Banks pay income taxes and are subject to two federal capital taxes, the large corporations tax which applies to all corporations with more than $10 million of capital, and the financial institutions capital tax. This latter tax is paid annually at an average rate of 1.25 per cent of capital. This tax is designed as a minimum tax for banks and other large financial institutions.
Over the past five years the six largest banks and their mortgage subsidiaries paid on average $850 million per year in federal income and capital taxes. In 1991 and 1992 they paid around $1 billion per year in federal income and capital taxes.
Banks also paid income, capital, property and other taxes to provincial and municipal governments.
The hon. member is no doubt aware that further measures were introduced in the 1994 budget to ensure that banks and other financial institutions continue to pay their fair share of tax. These changes will improve the measurement of income on securities and loans held as part of their ordinary course of business.