Companies should determine their own capital structures, not Ottawa, said Dan Daviau, president and CEO of Canaccord Genuity Group Inc.

“The government should stay out of capital structure decisions,” Daviau said in an interview with BNN Bloomberg on Thursday morning. 

“Companies have enough work to do other than [being] worried about government taxing certain types of behaviour.”

Daviau's comments came hours before the federal government announced plans in its Fall Economic Statement to tax share buybacks.

The economic statement said it would be a “corporate-level two-per-cent tax that would apply on the net value of all types of share buybacks by public corporations in Canada.” The new tax will kick in on Jan. 1, 2024.

U.S. President Joe Biden recently announced a one-per-cent tax on corporate stock buybacks in his Inflation Reduction Act, which will come into effect in 2023.

Amid a potential economic downturn, Daviau said that governments should typically allow private enterprises to operate unimpeded. 

“Allowing investors, allowing the private sector to solve this is the most important part. The government overspending, the government overtaxing, that doesn't help the situation,” Daviau said. 

Central banks, including the U.S. Federal Reserve, are trying to slow down growth, Daviau said. He added that you can’t “slow it down on one hand and speed it up with the other hand.” 

With files from The Canadian Press