Toronto's financial district is the second largest financial services centre in North America and home to Canada's largest banks.Nathan Denette/The Canadian Press
Imagine that the Liberal government in Ottawa had decided to slap the big energy companies with a new tax in its recent budget. They were making huge profits, the government said. They deserved to pay more.
You don’t need much of an imagination to picture what would have happened. The government of Alberta would have screamed bloody murder. The oil and gas industry, it would surely have argued, was a pillar of the provincial economy. Why punish it for its success?
You would have seen similar outrage from British Columbia if Ottawa had targeted the forest industry, from Saskatchewan if it had targeted the potash industry or from Ontario if it had gone after the automaking industry. Yet when the Liberals squeezed the banks and the insurance companies again in last month’s budget, the reaction from the government of Toronto, where Canada’s biggest financial firms have their home, was utter silence. Not a word from city hall. Not a peep from the campaign trail, where a host of candidates are getting ready to compete for the suddenly vacant mayor’s chair. Nothing, for that matter, from Queen’s Park, which claims to stand up for the interests of Ontario’s capital city.
The banks, after all, are Canada’s favourite punching bags, the companies everyone loves to hate. The federal Liberals and their legislative partners, the NDP, knew that was true when the government took steps to change the tax rules for dividends that banks and insurers get from Canadian firms. And they knew it when they took two earlier whacks at the industry, bringing in a corporate tax increase and a one-off windfall tax, the Canada Recovery Dividend.
These measures will cost the banks billions. That is bound to mean higher fees and changes for their clients and lower returns for their millions of shareholders. But who on earth is going to rush to the defence of the banking industry? Not the parties of the left, who seem to think that bankers still go to work in shiny top hats. Not the parties of the right, either. Even conservatives like taking shots at big business these days.
That’s a shame, because the banks matter, especially in a place like Toronto. As the city’s website reminds us, Toronto is “the second largest financial services centre in North America,” with close to 210,000 workers. These days, many of them are striving newcomers who find their first foothold on the ladder to success in bank branches or bank towers. Those towers have dominated the city skyline for decades, a visible sign of their contribution to the growth of the city. Their success and stability are important to everyone who lives in Toronto, from the mortgage holder to the small depositor to the pensioner whose income depends on the money invested in bank stocks.
A 2020 report by the Conference Board of Canada said that the financial services sector was the biggest contributor to Toronto’s GDP and the third biggest private employer, trailing only manufacturing and professional services.
Well before Ottawa started picking on them, the banks were contributing billions in taxes to federal, provincial and local coffers. Targeting them now is like aiming a shotgun at the goose that laid the golden egg. It’s shortsighted and it’s illogical.
Why should Ottawa reach deeper into the pockets of the banks while with the other hand filling the pockets of wealthy international auto giants who claim they need help to build plants here? Why should a heavily urban nation such as ours spend billions on supports to agriculture while penalizing an industry that creates thousands of jobs in the city?
Why do we insist on demonizing big companies and lionizing small ones?
There is nothing particularly virtuous about small business, though political parties fall all over each other to boast how dearly they love it. Nor is there anything distinctly evil about big companies, many of which are excellent employers and solid corporate citizens.
The banks should expect to pay their share in taxes and submit to the close oversight and careful regulation that is their due, given their importance to the functioning of the economy. What they should not expect is to be singled out for extra fleecing simply because Ottawa knows they are unpopular.
It is unfair to them and unfair to the city where many of them are headquartered. Wouldn’t it be nice if those who purport to represent Toronto found the courage to say that?