A new two-per-cent tax on share buybacks unveiled by Prime Minister Justin Trudeau’s government won’t be a huge deterrent to companies looking to repurchase modest quantities of shares at reasonable multiples, according to Canadian Imperial Bank of Commerce -- but it could carry a sting for others.
Canada’s federal government said on Thursday it plans to impose a two-per-cent tax on the net value of all types of share repurchases, in an attempt to encourage reinvestment by public corporations. The tax is double the size of an excise tax implemented in the U.S. through August’s Inflation Reduction Act.
However, a 20 per cent buyback at 30 times earnings would drag down per-share profit by more than 15 per cent, de Verteuil writes.
The PM’s $6000 per night hotel rooms in England aren’t gonna pay for themselves