Capital gains proposal to be filed before summer break: Freeland

Nojoud Al Mallees, Canadian Press

Posted Tuesday, May 21, 2024 3:25 pmEDT

Last updated Tuesday, May 21, 2024 6:39 pmEDT

The Liberal government will bring its proposal to increase the capital gains inclusion rate to the House of Commons before the parliamentary summer recess, Finance Minister Chrystia Freeland announced Tuesday.

“In the coming weeks, and certainly before the House adjourns, we will begin the legislative process to implement our increase in the inclusion rate,” Freeland confirmed during a press conference.

The Finance Minister announced the changes to capital gains tax as part of her April budget, but left the new inclusion rate out of the budget legislation she introduced last month.

The Liberals must table a motion in the House of Commons before introducing the current legislation.

The government says that even if a bill has not yet been passed, the change will come into effect on June 25.

The government proposes to tax two-thirds of capital gains. Currently, only half of the gains made from the sale of assets, such as stocks or secondary real estate, are subject to tax.

The higher inclusion rate will apply to all capital gains earned by corporations, while individuals will only face the higher inclusion rate on capital gains over $250,000.

The idea has attracted a lot of attention and rejection.

Lobby groups representing businesses and doctors who expect to be affected by the changes have called on the government to reconsider increasing the inclusion rate.

However, the Liberals have defended effectively raising capital gains taxes, arguing that Canada needs to raise more revenue to pay for things like housing and health care.

The Liberal government estimates the increased inclusion rate will generate $19.4 billion over the next five years.

Introducing the capital gains tax changes in a standalone bill will force all federal parties to take a position on the proposal.

As Conservative leader Pierre Poilievre seeks to court the working-class vote, it is still unclear how his party will navigate the vote.

Freeland took the opportunity Tuesday to criticize Poilievre for not yet taking a stance on the proposed tax changes.

“I have certainly observed over the past week that the Conservative leader has equivocated, dodged and deflected when asked about his position on our plan for tax fairness,” Freeland said.

“It’s important that Canadians insist on a clear answer from the Conservatives on tax fairness. And… depending on the answer we get, Canadians will know which side the Conservatives really are on.”

In response to a question about how the party will vote, Conservative Party spokesman Sebastian Skamski said in an emailed statement: “The legislation you are asking about does not exist yet due to Justin Trudeau’s incompetence, so that it is impossible for us to give an opinion on the matter.”

While they were quick to oppose the budget after it was unveiled last month, they have yet to say whether they will support a capital gains bill.

In an op-ed written for the National Post earlier this month, Poilievre suggested he will not fight the tax changes on behalf of business lobbyists.

Instead, he said the companies themselves must convince Canadians why the policy is a bad idea.

This report by The Canadian Press was first published May 21, 2024.