The Liberal government is proceeding with its controversial capital gains tax change proposal set to be introduced in the House of Commons on Monday.
The tax hike could have been included in the 2024 budget bill tabled in April, but the Liberals gave it a separate legislative treatment in the hope of scoring some political points against their chief rivals, the Conservatives.
Finance Minister Chrystia Freeland reminded Canadians at a press conference on Saturday that only a small number of wealthy individuals and corporations — about 40,000 or so — will be paying more in capital gains taxes.
“Tomorrow we will introduce changes that will result in a small number of well-off Canadians paying a little more in tax when they sell a successful investment,” Freeland told reporters.
Freeland tabled the federal government’s 2024 budget on April 16, which included a proposal to raise the inclusion rate — the portion of capital gains on which tax is paid — to 66.7 per cent for individuals realizing more than $250,000 in capital gains annually.
People realizing up to $250,000 in capital gains will continue to pay tax on 50 per cent of their capital gains. For corporations and trusts, however, there is no threshold. The inclusion rate for them will increase to two-thirds for all realized capital gains.
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Freeland has maintained that the small hike in capital gains taxes will draw in an estimated $19 billion in new revenue over the next five years, which will help the Liberals pay for a slew of new spending on programs such as housing and national defence.
Prime Minister Justin Trudeau recently announced the tax change is set to come into effect on June 25. That deadline can still be met if the House votes in favour of the motion Monday.
“This week will be an important political moment for our democracy. It will be a moment when Canadians will be able to see what each one of their members of parliament believes and stands for,” Freeland said Saturday.
Doctors, lawyers and other professionals have objected to the capital gains tax change since it was announced, saying their ability to retire and take time off is contingent on profits made from their practices.
The Canadian Medical Association (CMA) said in a statement Saturday that it is “deeply disappointed” in Freeland’s announcement that the federal government plans to proceed with the tax change. It warned the change will “add undue pressure and financial strain on physicians, undermining the stability of our health-care system.”
CMA resident Dr. Kathleen Ross said in an earlier statement that physicians are feeling “betrayed, discouraged and deflated” by the tax change.
“We must not create more roadblocks that will add further stress to the health workforce or prevent prospective physicians from choosing to practise in Canada,” Ross said.
Though the Conservative Party has not indicated how it will be voting Monday, leader Pierre Poilievre has been vocal about his objection to the capital gains tax change and proposed 2024 budget.
Poilievre called Trudeau a fiscal “pyromaniac” in the House of Commons after the budget was tabled, accusing the Liberals’ “wasteful” budget of stoking the flames of inflation.
“It is getting too hot and too expensive for Canadians,” he said.
— with files from Motorcycle accident toronto today’ Craig Lord
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