(Ottawa) Major groups of Canadian companies and business people are adjusting their assessment of the impact of the federal government’s proposed changes to the capital gains tax.
In a letter addressed to the federal Minister of Finance, Chrystia Freeland, the Canadian Chamber of Commerce and some other large national organizations still believe, on the other hand, that Ottawa’s assertion that only the richest Canadians would be affected was “misleading”.
The organizations initially argued that because of this tax measure, one in five Canadians would end up paying more taxes over the next decade. But the study from which this figure is drawn does not go in this direction.
The study, carried out in 2023 by Professor Jonathan Kesselman of Simon Fraser University, estimates that one in five Canadians would be affected over a period of 10 years, but if the inclusion rate was increased on all earnings in capital.
However, the most recent federal budget only increases the inclusion rate for capital gains above $250,000, meaning a much smaller fraction of Canadians would end up paying higher taxes – and not “one in five Canadians”.
When The Canadian Press asked about this figure, the Chamber of Commerce edited the letter to Minister Freeland on its website. It now reads that “one in five Canadian businesses is likely to be directly affected within ten years”.
The joint letter from the Canadian Chamber of Commerce and other organizations still calls on the Liberal government to abandon this tax measure.
The federal budget presented last month proposes making two-thirds, rather than half, of capital gains – profits made from the sale of assets – taxable. The increase in this so-called “inclusion” rate would apply to capital gains above $250,000 for individuals, as well as to all capital gains realized by corporations.
The federal government estimates that in a given year, 0.13% of Canadians would pay higher taxes on their capital gains.
The letter to Minister Freeland is signed in particular by the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters and the Canadian Federation of Independent Business.
Three days after tabling the federal budget, the Quebec government announced that its tax system would be adjusted in order to harmonize it with five measures proposed in Ottawa, including this capital gains inclusion rate.