Poilievre Pledges to Cancel Capital Gains Tax Hike

A sign outside the Canada Revenue Agency is seen in Ottawa, on May 10, 2021. The Canadian Press/Adrian Wyld

Conservative Party Leader Pierre Poilievre said a Tory government would cancel the hike on the capital gains tax, citing concerns about job losses and the threat of tariffs from the incoming U.S. administration.

“President Trump has said he wants to tariff our country, we cannot afford economically destructive Liberal taxes that will drive even more business and jobs out of our country,” Poilievre said during a press conference in Delta, B.C. on Jan. 16.

In a post on social media the same day, Poilievre said the idea of hiking the capital gains tax was “bad” before U.S. President-elect Donald Trump threatened 25 percent tariffs on Canada and now it’s “outright insanity.”

“This is a tax on home builders when we have a housing shortage, a tax on doctors when we have a doctor shortage,” Poilievre told reporters. “It is a tax on small business when we have an economic crisis, it’s a tax on farmers when we have a food price crisis, and it will send billions of dollars away.”

The Liberal government announced the capital gains tax hike in Budget 2024 and the measure was subsequently adopted by the House of Commons in June through the passing of a ways and means motion. Conservatives were the only party to oppose it.

The inclusion rate was increased from one-half to two-thirds for annualized gains over $250,000 by individuals, and on all capital gains by most types of trusts. The Parliamentary Budget Officer estimated the measure will increase government revenues by $17.4 billion from fiscal year 2024-2025 to 2028-2029.

Then-Finance Minister Chrystia Freeland said the measure was needed for more “fairness” in Canada’s tax system, and that it would be used to fund housing investments.

“This new revenue will help make life cost less for millions of Canadians, particularly Millennials and Gen Z,” Freeland said in a statement. “It will help fund our efforts to turbocharge the building of 4 million more homes.”

Legislation to include the tax hike by amending the Income Tax Act was subsequently never passed. Freeland tabled a motion to introduce a related bill in September but it was never voted on. The House was seized with the battle over the federal green fund documents in the fall, and Parliament was prorogued in early January, killing the government’s entire legislative agenda.

‘Standard Practice’

The governor general prorogued Parliament on Jan. 6 at the request of the prime minister. Canada Revenue Agency (CRA) spokesperson Nina Ioussoupova told The Epoch Times the agency will continue to administer the proposed capital gains legislation amid prorogation.

Although the proposed changes are “subject to parliamentary approval,” it is “consistent with standard practice” for CRA to administer the capital gains tax according to the motions introduced by the government, said Ioussoupova.

“Parliamentary convention dictates that taxation proposals are effective as soon as the government tables a Notice of Ways and Means Motion; this approach provides consistency and fairness in the treatment of all taxpayers,” she said.

The CRA said it will be ready to support taxpayers and make reimbursements if the government doesn’t pass related legislation or signals its intent to carry on with the tax hike once Parliament resumes on March 24.

The government also faces the prospect of a non-confidence vote from opposition parties. The new leader of the Liberal Party, to be chosen on March 9, could also of his own volition ask the governor general to dissolve Parliament to trigger an election.

The lack of legislation backing the capital gains tax hike and the prospect of a spring election are raising concerns.

Conservative MPs wrote to Finance Minister Dominic LeBlanc this week asking him to tell CRA to stop collecting the tax until after an election.

“You have a responsibility to stop this job-killing tax hike before it does even more damage to our economy,” wrote MPs Jasraj Singh Hallan and Adam Chambers, respectively finance and revenue critics.

They quoted information from the C.D. Howe Institute to the effect the tax hike will lower per-capita GDP by 3 percent and lead to the loss of 414,000 jobs.

The finance minister’s office was contacted for comment but did not reply by publication time.

Business groups such as the Canadian Chamber of Commerce have also asked the government for more clarity on the tax hike amid prorogation.

“With the recent prorogation of Parliament, the capital gains increase remains an acute concern to Canadians and businesses, who remain unsure how to structure their affairs and whether this measure will be enforced in the future,” the Chamber’s senior director Jessica Brandon-Jepp said in a statement.