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MEDIA RELEASE

OTTAWA - Today, the Canadian Community Reinvestment Coalition (CCRC) declared January 19th as "Bank Tax Freedom Day" for the Big Six banks. By the end of this day the banks will have earned enough revenue (counting from the beginning of the calendar year) to pay all their annual income taxes, based on the six banks reaping total gross revenues of, on average, $229 million a day.

"Banks claim that they are good corporate citizens because they pay a lot of income taxes, but their taxes only account for less than a month (or 5.4%) of their annual revenues," said Duff Conacher, Coordinator of Democracy Watch and Chairperson of the CCRC. "We judge whether they are good corporate citizens based upon what they do with our money every month of the year. And there are many questions about whether the banks do a good job in providing access to capital for job-creating businesses, affordable housing and community development or provide access to banking services at a fair price."

The CCRC calculated "Bank Tax Freedom Day" by taking the average amount of income taxes paid by the Big Six banks in the past two years (#6 below); dividing that amount by the average of the Big Six banks' most recent two years' annual revenues (#3 below - to adjust for the unusual drop in revenues in fourth quarter 1998); and then multiplying that amount by 365 days (since the banks make money every day of the year). If other worldwide taxes were included, "Freedom Day" for the banks would be at most 9 days later (based on total taxes paid of approximately $6.7 billion in 1997, according to the Canadian Bankers Association).

The combined figures for the Big Six Banks used in the calculation of Bank Tax Freedom Day are as follows (figures are in billions $ Can.; see individual bank figures on next page):

Another main reason the banks' claim they are good corporate citizens is that they donate millions of dollars to charities. If the banks' annual charitable donations worldwide of about $70 million (0.08% of total annual revenues) are added to the above equation, the banks would be free of this social obligation by 7:33 am tomorrow morning (January 20th). Given that the banks' central roles are as providers of capital and banking services, and that their taxes and charitable donations represent an insignificant portion of their annual revenues and activities, the banks (and any other corporation) should be judged as corporate citizens mainly on how well they serve Canadians' needs and the country in their central roles.

Unfortunately, the federal government does not require banks to disclose enough detailed information to determine whether they are meeting our needs and serving us well. The federal government's task force on financial services (the Mackay Task Force) recommended requiring disclosure of this detailed information (as U.S. laws do) in its September 1998 report, and the House of Commons Finance Committee, the Senate Banking Committee, and a National Liberal Caucus Task Force endorsed the Mackay recommendations, to varying degrees, in their reports this past fall. The Department of Finance is currently reviewing these reports and Paul Martin will introduce legislation amending financial institution laws in May-June.

"As the U.S. did over 20 years ago, the federal government should pass laws requiring financial institutions to disclose their record of lending, investment, and service to business, individuals, and communities," noted Conacher, "Otherwise, we can't judge whether banks and others are good corporate citizens, whether they are gouging their customers, or whether their ongoing record annual profits are justifiable. The federal government should also review each institutions' record and require corrective action for poor service, as the U.S. government does."

In addition, as set out in the Alternative Federal Budget, the federal government's current surtax on financial institutions should be increased and established as an excess profits tax. Such an increase was also recommended by the Mintz Committee on Corporate Taxation, and would increase the surtax amount collected from the current $65 million to between $350 - $500 million annually.