COVID wage subsidy ‘benefits the rich,’ says Poilievre because of 'inflation tax'

Years have gone by since Stephen Harper led the country with fiscal prudence. Nearing six years into Prime Minister Justin Trudeau’s mandate, and the wealthiest Canadians are getting wealthier.

Canada’s Bill C-30, Budget Implementation Act, 2021, No. 1., included corporate income tax measures and introduced a Canada Emergency Wage Subsidy (CEWS) repayment obligation for public corporations. Beginning June 6, publicly-listed corporations and eligible employers controlled by such corporations are required to repay CEWS amounts received.

4170 larger companies received CEWS, or just over one percent of all CEWS recipients. Based on CRA data released, about 30 percent of total CEWS payments went to applicants with 250 or more employees.

"I would point out that it is actually not profits that are most enriching the wealthy; it is capital gains," said Jobs and Industry Critic Pierre Poilievre: "It is the monstrous increases in capital gains that have resulted from flooding the economy with $350 billion of new monopoly money, that money has gone into asset inflation making the rich vastly richer." He added this "[creates] an aristocratic feudal economy as opposed to a free market bottom-up economy."

Large CEWS recipients are in different sectors of the economy than others. About 33 percent were in wholesale or retail trade sectors, compared to about 15 percent in the general population of CEWS recipients. In contrast, a higher proportion of applicants in the construction and other service sectors are small businesses.

190 CEWS recipients were companies owned by individuals in the 2017 list of billionaires created by Canadian Business magazine.

The Irving family, with $7.4 billion in estimated net worth, controlled 23 companies that have received CEWS. The Quebecor group of the Péladeau family, with a net worth of $1.8 billion, owned 14 recipients, including the TVA television network and other media companies. The Thomson family group, with a net worth of $41.1 billion controlled 12 recipients, including retail, aviation and manufacturing companies, and The Globe and Mail.

Other names on the list include Rogers, Reisman-Schwartz, Shaw, Pattison, Desmarais, Bombardier. According to the Toronto Star, Bell received $122.9 million, Rogers $82.3 million and Telus $38.6 million in CEWS support payments as of February 2021. The companies did not report the total CEWS support they received in disclosures to investors, but had to disclose government support as part of lobbying records.

Rogers and Bell reported full-year financial numbers for 2020, which revealed that Rogers paid out over $1 billion in dividends and Bell paid shareholders close to $3 billion. Rogers maintained its payout at the same level it has been at for several years while Bell said it increased its annual dividend by 5.1 percent.

Poilievre blamed the "inflation tax" established by the Bank of Canada, who created cash to fund the government with a new revenue source. "Last year, cash newly created by the Bank of Canada was the single-greatest source of revenue for the government. It was not income tax, the GST, tariffs or even borrowing from private sector lenders, but new cash creation that constituted a $303 billion source of revenue for the current government," said Poilievre on June 22 to the House of Commons.

"The Prime Minister might like to see this go on into the future. The problem is that, like all taxes, it increases costs for Canadians," he said. "This tax would be paid in the form of higher prices. The price of housing went up by 30 percent. The prices of food, lumber, automobiles and transportation have all broken recent records." He attributed the government flooding the marketplace with cheap money for why everything suddenly became more expensive.

"In the last year of inflationary money printing, we saw a large increase in economic disparity between the rich and the poor,” said Poilievre: "The rising inflation benefited the extremely wealthy." He added: "In the first six months of the central bank's money-printing bonanza, the 28 richest Canadians got 32 percent richer." He noted that happened while Canada’s economy tumbled by $120 billion

In February, the CEWS program approved about $57 billion in subsidies for approximately 2.1 million applicants. 420 applicants received more than $5 million. According to a June 23 report by Statistics Canada, the CEWS program accounted for $83.5 billion, or 37 percent, of the plan’s estimated total spending for the current fiscal year.

"We support going after people who do not pay what they owe, especially the richest," said Poilievre: "The richest are making off like bandits when it comes to tax evasion in this country, despite the rhetoric from the other side."

In April, the CBC reported that the Canada Revenue Agency received nearly 1,200 complaints about companies supposedly misusing federal support money that aimed to protect jobs during the pandemic. The CRA did not penalize a single company.

Critics said the CEWS program did not restrict how companies manage the profits that might result from receiving federal support for wages, granted the subsidy was used for that purpose. There's nothing that said a company receiving CEWS money could not also pay or increase dividends to shareholders or hike executive pay.

"What does that mean? Less competition always means higher prices for consumers and lower wages and fewer career opportunities for workers," said Poilievre.

For example, Yellow Pages collected $7.3 million in CEWS funds in 2020, and paid out $8.8 million in dividends. In an email to the CBC, Yellow Pages said they "did not reduce employee wages, impose mass layoffs, or furlough its employees."

The StatsCan report showed that larger CEWS recipients observed a 20 percent decline in average monthly employment following the start of the pandemic in 2020. Rehiring CEWS recipients also experienced a larger decline in average monthly employment than non-rehiring CEWS recipients.

TFI International, a large Montreal-based shipping and logistics company with 16,000 employees across the continent, received $52.3 million from CEWS and paid out over $67 million to shareholders in 2020.

Among other examples include Tourmaline Oil, an oil and natural gas producer based in Calgary, and Alamos Gold, a multinational gold producer based in Toronto. They raised their dividends and received CEWS, but neither published the amount of money received from the program. However, Tourmaline increased its dividend by 17 percent, and Alamos by 33 percent.