(Ottawa) Finance Minister Chrystia Freeland is staying the course on increasing the tax rate for capital gains despite criticism. She filed a motion Monday for this measure to be passed quickly so that it comes into force on June 25.
Ms. Freeland, who also serves as Deputy Prime Minister, defended herself from trying to corner the Conservatives by separating the capital gains provisions from the implementation bill from other measures in the last federal budget, but at the same time she invited voters to pay attention to the vote on this issue.
“Pay attention to the MPs who will vote against these changes and think about their motivations,” she said at a press conference. Pay attention to those who defend a tax system that favors the wealthiest, to those who oppose greater tax fairness for everyone, to those who want millionaires who make a big profit on their investments to pay less. tax than a teacher or a nurse, a carpenter or a plumber. »
In her latest budget, Minister Freeland announced that the inclusion rate – the taxable portion of the capital gain – will increase from 50% to 66% if this gain exceeds $250,000 in a year. She estimates that this measure should generate 19.4 billion over five years and plans to use it to finance the construction of 4 million homes. Are excluded:
The government expects the change to affect some 40,000 people and 307,000 companies. It has drawn criticism from doctors and owners of small and medium-sized businesses (SMEs) who feel they are being unfairly penalized.
She recalled that doctors can incorporate to obtain tax advantages and that SMEs will be able to benefit from two other measures. First, the lifetime capital gains exemption will increase from approximately 1 million to 1.25 million for the sale of SME shares and agricultural or fishing property. Second, entrepreneurs will have access to a new incentive that will reduce the inclusion rate on a $2 million lifetime capital gain from 50% to 33%. However, the details of this program will only be known during the summer.
The Canadian Federation of Independent Business (CFIB) said it was “very disappointed” to see the federal government stay the course. Nearly two-thirds of its members are against increased taxation of capital gains.
“The announcement made by the government confirms in some way that it is proposing these changes to the capital gains tax for political reasons, and not for economic reasons,” reacted in a press release the vice-president for affairs members of the CFIB, Jasmin Guénette.
The organization, which has more than 97,000 members across the country, is calling for the new SME incentive to be extended to agricultural and fishing businesses, as well as non-founder investors investing in businesses. He also calls for measures to mitigate the impact of this tax increase on capital gains, such as allowing this income to be spread over five years when it is realized after the sale of a property.
The CSN rather welcomed this measure and was delighted to see that it will be the subject of a separate vote. “Conservative Leader Pierre Poilievre’s inability to speak out on increasing the capital gains tax shows that his interest in workers is not as sincere as he would like us to believe. This vote will help clarify things,” declared its president, Caroline Senneville, in a press release.
However, they were careful not to indicate whether they would oppose it. “Common-sense Conservatives will study the motion very carefully before determining the next steps,” said Marion Ringuette, spokesperson for Conservative Leader Pierre Poilievre.
The Bloc Québécois was also unable to indicate how it was going to vote. Everything indicates that the motion will be adopted since it will have the support of the New Democratic Party, which has been calling for this change for a long time.
The changes will apply from June 25 once the motion is adopted even though it is a first step. The Ministry of Finance will have to publish its legislative proposals during the summer, after which a bill will be tabled, which will not happen before the fall, since parliamentary work will break no later than June 21.
