Tax on share buybacks to raise $3 billion in government revenue over five years: PBO
Posted Feb 2, 2023 03:57:27 PM.
OTTAWA — The parliamentary budget officer says the federal Liberals’ planned tax on corporate share buybacks will raise $3 billion in government revenue over the next five years.
A new report prepared by Yves Giroux’s office assesses the projected impact of the tax on government finances between the 2023-24 and 2027-28 fiscal years.
The Liberals committed in their fall fiscal update to imposing a two per cent tax on stock buybacks that would go into effect in 2024.
The mid-year budget update had estimated that the tax would earn the government $2.1 billion in revenue over the next five years.
The policy takes aim at a common tactic used to reward shareholders when a company is doing well, with the hope of incentivizing companies to reinvest profits into their operations.
Corporations sometimes buy back their own stocks to reduce the number of shares available on the market, thereby increasing the value of shareholders’ stakes in the company.
This report by The Canadian Press was first published Feb. 2, 2023.
The Canadian Press