Major Canadian business groups are pushing back against Prime Minister Justin Trudeau’s plan to increase the tax inclusion rate on capital gains. In a letter to Finance Minister Chrystia Freeland, six industry associations, including the Canadian Chamber of Commerce and the Canadian Venture Capital and Private Equity Association, called for the cancellation of the proposed tax hike.
The government’s plan, announced in last month’s budget, would tax Canadian companies and individuals on two-thirds of their realized capital gains, up from half currently. While the government estimates that only a small percentage of Canadians and businesses will be affected, the industry groups argue that the impact will be much broader.
According to the groups, the tax hike will have significant knock-on effects, including making it harder for Canadians to access medical practitioners, limiting employment opportunities, and hindering the growth and succession planning of businesses, particularly multigenerational ones like farms and small businesses.
The letter from the industry associations adds to a growing chorus of criticism against the planned tax increase. The Canadian Medical Association and other groups have also voiced their opposition, citing concerns about the impact on doctors and property owners.
The government estimates that the tax change will generate C$19.4 billion in revenue over a five-year period, which could help contain deficits and fund new spending initiatives. However, critics argue that the tax hike could undermine Canada’s ability to attract investment and talent, ultimately hindering economic growth.
As the debate over capital gains taxes continues, business groups are calling for a reevaluation of the government’s fiscal framework and a focus on stimulating growth through measures like reducing regulatory barriers. The outcome of this debate could have far-reaching implications for Canada’s economy and future prosperity.