Freeland Says Liberals Will Introduce Capital Gains Tax Legislation, Calls for Parties to Clarify Positions

Finance Minister and Deputy Prime Minister Chrystia Freeland responds to a question during a weekly news conference in Ottawa on Feb. 27, 2024. (The Canadian Press/Adrian Wyld)

Deputy Prime Minister Chrystia Freeland says the Liberal government will bring its proposal to increase the capital gains inclusion rate before Parliament, calling for the other parties to clarify their positions on the matter.

“In the coming weeks, and certainly before the House rises, we will begin the legislative process to increase the capital gains inclusion rate,” Ms. Freeland told reporters on May 21.

“But let me also take this opportunity to point out that all members of Parliament, all political leaders in our country, are going to have to make some decisions and take some clear positions when it comes to what is a fair and responsible economic plan for our country.”

Currently, only half of any capital gain is taxable in Canada and the other half is excluded. The Liberal government is proposing to increase the capital gains tax exclusion rate from one-half to two-thirds on capital gains above $250,000 for individuals. For corporations and trusts, the exclusion rate is proposed to increase from one-half to two-thirds on the entire gain.

But the government has also separated the change from its budget implementation legislation, promising to introduce it as a separate bill in Parliament at a later date.

The proposed capital gains tax increase has proven to be controversial among business groups, with the the Canadian Federation for Independent Business and the Canadian Chamber of Commerce telling Ms. Freeland in a May 9 letter that the change would “limit opportunities for all generations and make Canada a less competitive, and less innovative nation.”

Prime Minister Justin Trudeau has defended the tax hike as a measure to allow for “more fairness for every generation,” claiming that the tax will impact less than 1 percent of Canadians.

“At a time when the richest are only getting richer, I think it’s fair to ask those people to pay a little more,” he said in a video on social media platform X, formerly Twitter.

The Liberal government estimates that the higher inclusion rate will bring in $19.4 billion in revenue over the next five years.

Conservatives’ Position on Tax

During the May 21 press conference, Ms. Freeland accused Conservative Leader Pierre Poilievre of “dodging” and “deflecting” questions about his position on the tax increase.

“It is important for Canadians to insist on a clear answer from the Conservatives on tax fairness. And you know, I think depending on what answer we get, Canadians will know whose side the Conservatives are really on,” she said.

While Mr. Poilievre has made tax fairness a centrepiece of his political platform, repeatedly promising to “axe” the federal carbon tax if elected as prime minister, he has been relatively silent on the capital gains tax increase.

During a May 16 press conference, Mr. Poilievre refused to answer a reporter’s question on whether he would support the increase in the capital gains tax.

“There is no such increase. They pulled that out of the budget. Thank you,” the Tory leader replied.

A spokesperson for Mr. Poilievre told The Epoch Times on May 21 that the party would vote against the Liberal’s budget but said it was “impossible” to say whether the Conservative leader would vote in favour of a capital gains tax increase as “the legislation you are asking about doesn’t exist yet.”

With files from The Canadian Press.