The Commons Agriculture committee on Tuesday suggested that Parliament should consider implementing a special tax on grocers who make excessive profits. . Grocery Store Fruits and Vegetables .According to Blacklock’s Reporter, the committee heard from grocers who were questioned about their pricing practices and they denied the accusation of taking advantage of food inflation to earn additional profit..“Despite the range of inflationary pressures, some large firms in certain sectors have reported record earnings, leading some to question whether firms may be contributing to inflation by driving up prices,” said a committee report Grocery Affordability: Examining Rising Food Costs in Canada. .“The committee heard from several economists on this topic, but their opinions varied.”.“The committee recommends that if the Competition Bureau finds evidence in its upcoming market study that large grocery chains are generating excess profits on food items,.The report did not outline the scope of a windfall profits tax. New Democrats in the 2021 election proposed a 30% tax on excess profits, defined as any net earnings above a corporation’s previous five-year average. A 30% tax would be worth $7.9 billion annually, according to a 2021 Budget Office report Cost Estimates of an Excess Profits Tax..The Competition Bureau last Oct. 24 said it was reviewing a lack of competition in the grocery trade. No findings have been released to date. The same Bureau in 2013 approved a $5.8 billion takeover of 213 Canada Safeway Limited stores by Sobeys Incorporated and in 2014 approved a $12.4 billion takeover of Shoppers Drug Market Corporation by Loblaw Companies..At the Agriculture committee hearings, the grocers who testified denied making too much profit from the increase in food prices. Gonzalo Gebara, CEO of Walmart Canada, testified on March 27 and said that the profit margin on groceries for Walmart went down last year. However, he did not provide specific numbers..“I want to state clearly Walmart Canada is not attempting to profit from these inflationary conditions,” said Gebara. .“In fact, Walmart Canada’s gross profit rate from its food business actually declined last year.”.Loblaw Companies and other grocers have reported annual food profit margins ranging from 3% to 4%. Lobbyists have stated that these figures have remained unchanged from the profit margins before the COVID-19 pandemic..On Tuesday, the Agriculture committee also suggested that regulators enforce a Code of Conduct for grocers. This proposal was initially raised in 2014 by the former Commissioner of Competition John Pecman..“If the government expresses a desire to move in the direction of a Code of Conduct and if we are asked to participate, we would certainly implement it and include it as another tool in our enforcement kit,” Pecman said at the time.
The Commons Agriculture committee on Tuesday suggested that Parliament should consider implementing a special tax on grocers who make excessive profits. . Grocery Store Fruits and Vegetables .According to Blacklock’s Reporter, the committee heard from grocers who were questioned about their pricing practices and they denied the accusation of taking advantage of food inflation to earn additional profit..“Despite the range of inflationary pressures, some large firms in certain sectors have reported record earnings, leading some to question whether firms may be contributing to inflation by driving up prices,” said a committee report Grocery Affordability: Examining Rising Food Costs in Canada. .“The committee heard from several economists on this topic, but their opinions varied.”.“The committee recommends that if the Competition Bureau finds evidence in its upcoming market study that large grocery chains are generating excess profits on food items,.The report did not outline the scope of a windfall profits tax. New Democrats in the 2021 election proposed a 30% tax on excess profits, defined as any net earnings above a corporation’s previous five-year average. A 30% tax would be worth $7.9 billion annually, according to a 2021 Budget Office report Cost Estimates of an Excess Profits Tax..The Competition Bureau last Oct. 24 said it was reviewing a lack of competition in the grocery trade. No findings have been released to date. The same Bureau in 2013 approved a $5.8 billion takeover of 213 Canada Safeway Limited stores by Sobeys Incorporated and in 2014 approved a $12.4 billion takeover of Shoppers Drug Market Corporation by Loblaw Companies..At the Agriculture committee hearings, the grocers who testified denied making too much profit from the increase in food prices. Gonzalo Gebara, CEO of Walmart Canada, testified on March 27 and said that the profit margin on groceries for Walmart went down last year. However, he did not provide specific numbers..“I want to state clearly Walmart Canada is not attempting to profit from these inflationary conditions,” said Gebara. .“In fact, Walmart Canada’s gross profit rate from its food business actually declined last year.”.Loblaw Companies and other grocers have reported annual food profit margins ranging from 3% to 4%. Lobbyists have stated that these figures have remained unchanged from the profit margins before the COVID-19 pandemic..On Tuesday, the Agriculture committee also suggested that regulators enforce a Code of Conduct for grocers. This proposal was initially raised in 2014 by the former Commissioner of Competition John Pecman..“If the government expresses a desire to move in the direction of a Code of Conduct and if we are asked to participate, we would certainly implement it and include it as another tool in our enforcement kit,” Pecman said at the time.
