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Trudeau to Call Vote on Contentious Tax Change This Week

In Business
June 09, 2024

(Bloomberg) — Canadian Prime Minister Justin Trudeau’s government will call for a vote this week on a planned hike in the capital-gains tax inclusion rate, a measure that would raise billions in additional government revenue and has attracted the ire of the business community.

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Finance Minister Chrystia Freeland will put forward a motion in the House of Commons on Monday, she said in a speech in Toronto on Sunday. The proposed reforms will follow the “broad outlines” that the government has previously announced, she said, including an implementation date of June 25 and no change to the exemption for gains on the sale of primary residences.

“Tomorrow we will introduce changes that will result in a small number of Canadians paying a little more in tax,” Freeland said.

The government said in April that it plans to increase the capital-gains tax on companies and individuals in years when they record gains of more than C$250,000 ($182,000). Currently, half of those gains are subject to corporate or personal income tax; that will rise to two-thirds. Exemptions and reductions are available for owners of certain small businesses, farms and fishing operations.

The move has attracted widespread criticism from business groups, who argue it will hurt Canada’s ability to attract investment and worsen productivity woes.

Trudeau said last month that the tax change is about asking the wealthy to contribute more to society.

Freeland’s budget estimated the measure will raise almost C$20 billion in new tax revenue over five years — though that figure rests on the assumption that some investors will rush to sell assets by June 24. That’s the last day to realize a gain at the current lower tax rate.

–With assistance from Brian Platt.

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