Liberal Leadership Candidates Freeland and Gould Vow to Scrap Capital Gains Tax Hike

Liberal leadership candidates Chrystia Freeland (L) and Karina Gould. The Canadian Press

Liberal leadership contenders Karina Gould and Chrystia Freeland have both pledged to scrap the capital gains tax increase if they become the leader of their party.

Former Finance Minister and Deputy Prime Minister Chrystia Freeland addressed her capital gains plans during a Jan. 23 press scrum after a reporter questioned her about changing her stance.

Freeland said the election of U.S. President Donald Trump had been a “major change for the U.S., for the world, and for Canada” and Ottawa needed to respond with changes of its own.

The former deputy prime minister said Trump’s goal of attracting foreign investment to America meant Canada needed to adjust its policies.

“We must make a lot of changes to be ready to succeed when the time comes,” she said. “I am the person who can do this. I am the person who will do it.”

The federal government’s Budget 2024 proposed an increase of the capital gains exclusion rate for amounts exceeding $250,000, raising it from 50 percent to 66 percent. The Canada Revenue Agency indicated it would administer the tax at the higher rate despite the legislation failing to receive approval in the House of Commons after Prime Minister Justin Trudeau prorogued Parliament on Jan. 6.

Former Government House Leader Karina Gould also addressed the capital gains tax during a Jan. 23 press briefing. She said the Liberal government had not gotten the capital gains tax increase “right” in 2024, saying many in the tech sector were negatively impacted by it. 

Ottawa needs to “encourage growth and have more entrepreneurship,” she said, adding that she would have more to say about the capital gains increase in the coming days.

She said the Liberal government did a poor job of listening to Canadians in the aftermath of the COVID-19 pandemic and, as a result, voters “lost trust in our party.” She said the government should have reacted more quickly to rising inflation, housing prices, and grocery costs.

Gould called for the Liberal Party to “give back power to our membership” by bringing back policy conventions, decentralizing the party by having more field organizers across the country, and bringing back the position of national youth director.

Freeland also told reporters that the Liberal Party should put an emphasis on reviving its grassroots past and making it more democratic.

“We can never again be in a position where the leader is the only person who decides who the leader is,” she said. “I think Liberal Party grassroots members and caucus need to have a greater say in what we do and how we do it.”

The Liberal Party has no official mechanism for its members to democratically remove the leader of the party. Prime Minister Justin Trudeau announced on Jan. 6 that he would step down when the Liberal Party choses a new leader. The announcement came following several weeks of mounting pressure from Liberal MPs urging Trudeau to submit his resignation.

Both Gould and Freeland have also distanced themselves from the federal government’s carbon tax, which has become unpopular with many Canadians.

Freeland said last week the carbon tax was not “resonating” with Canadians. “We have heard very clearly from Canadians in provinces where there is a consumer-facing price on carbon that they don’t like it. That’s something that we have to listen to,” she told reporters on Jan. 19.

Gould has also said she would cancel the upcoming carbon tax hike on April 1, saying on Jan. 19 that the policy does not reflect “what and how [Canadians] think they can contribute and how they can make a difference.”

Former Bank of Canada Governor Mark Carney, another front-runner in the Liberal leadership race, also came out against the carbon tax when launching his campaign on Jan. 16. He said if the carbon tax were to be replaced with another policy, it would need to be just as effective in reducing emissions while also supporting Canadians amid cost-of-living challenges.