The big boss of the National Bank denounces the increase in capital gains tax and instead wants a reduction in the regulatory and tax context.
“The signal sent by the announcement of the increase in capital gains tax is not good. It does not send the right message for risk-taking, innovation, business creation and ultimately the creation of wealth and the social fabric of the country,” said Laurent Ferreira on Friday.
The CEO of Quebec’s largest bank made these comments on the sidelines of the financial institution’s annual meeting of shareholders in downtown Montreal.
“In the long term, we will not see an increase in productivity in the country with such a measure,” he said.
Ottawa announced in its budget tabled Tuesday that gains above $250,000 made in a year will now be taxable at two-thirds instead of half.
Quebec quickly followed by announcing that its tax system would align with that of the federal government. The Quebec government said it was taking this decision to maintain consistency with the federal tax system.
Laurent Ferreira maintains that the key factor to stimulate investment remains the reduction of the regulatory and tax context.
“We have to go faster. It’s difficult right now in many industries. In residential construction, in particular, there is a significant regulatory burden. There is a tremendous amount of complexity in obtaining permits. It has to be simple,” says the 53-year-old banker.
“At the tax level, we are starting to no longer be competitive with the United States. The difference was approximately 6% in capital gains tax between Canada and the United States. It’s down to 16%. Private capital is moving. If we keep these measures in place, I fear that we will see capital heading to the United States instead of remaining in Canada. To encourage entrepreneurship, we must lower the tax rate for SMEs,” he says.
“This is where we will boost risk-taking, investment and innovation. »
Productivity must be a priority, he says, and that requires a strong investment strategy. He points out that the situation was also exposed last month in an open letter presented by Montreal asset manager Letko Brosseau. This letter was signed by dozens of CEOs, including Laurent Ferreira.
Letko Brosseau’s letter aimed in particular to encourage Ottawa and provincial governments to modify pension regulations in order to encourage Canadian pension funds to invest more in the country.
Read our text Group shot for more investment in the country
The head of the National Bank specifies that the intention was to fuel the discussion surrounding the challenge facing investment and productivity in the country.
All investors and banks must contribute to strengthening the Canadian economy by investing within our borders. The role of government is essential to create an operating environment that will stimulate and encourage investment in Canada for our domestic and foreign investors.
Laurent Ferreira, CEO of the National Bank
To do this, he continues, the regulatory and tax barriers that currently hinder Canada’s attractiveness must be removed. “This is the only way to increase productivity and prevent a further decline in the standard of living of Canadians. This involves all of us working in partnership with universities, the private sector and government to build strong ecosystems and competitive industries that will attract capital. »
Laurent Ferreira’s comments echo those of the Canadian Council of Innovators (CCI). This organization created by technology business leaders signed an open letter this week asking the federal government to reverse its decision to increase the capital gains tax.
This organization fears that tax changes will slow down innovation and reduce productivity. This grouping of business people highlights in particular that highly qualified workers are more mobile than ever, and among high-growth innovative companies, stock options (subject to capital gains tax) constitute a key form of remuneration.