Finance Minister Chrystia Freeland intends to ask Parliament to approve proposed changes to capital gains tax rates in a stand-alone bill.
The most controversial measure from her recent federal budget is not included in the motion she tabled Tuesday to introduce the federal budget in the House of Commons.
It includes many other measures announced in the April 16 budget, including:
- enhancements to the home buyers’ plan
- the Canada Disability Benefit
- autoenrollment to RESPs and the Canada Learning Bond
- provisions related to open and cheaper banking
- clarifications to employee ownership trusts
- tax changes for people who own short-term rentals
- doubling the CPP death benefit for contributors who have no survivors and have never collected CPP
The capital gains changes, the Canadian Entrepreneurs’ Incentive and updates to the alternative minimum tax do not appear to be in the bill.
Right now the government taxes 50% of capital gains. Freeland is proposing to increase that to two-thirds for all corporations and trusts, and any individuals whose capital gains exceed $250,000 in one year.
The changes are expected to come in a separate piece of legislation.
Hiving it off will force opposition parties to take a specific position on capital gains, rather than a laundry list of budget policies that are subject to a single vote.
The federal Conservatives have not taken a position yet on the proposed capital gains tax changes, despite coming out against the budget overall.
During a news conference on Tuesday, Freeland would not explain the absence of the capital gains tax changes in the proposed budget legislation.
She said the government needs to raise more tax revenue to pay for priorities like housing.
“Our view is it is absolutely fair to ask those in our country who are at the very top, to contribute a little bit more. And that is why we put forward a plan, which we are absolutely committed to, to increasing the capital gains inclusion rate,” Freeland said.
“And I look forward to tabling implementing legislation.”
When asked point-blank if the reason was to force the Conservatives to take a position on the changes, Freeland said: “No.”
At a time when younger Canadians are increasingly disgruntled about their home ownership prospects, the Liberal government has framed the proposed tax change around the idea of generational fairness.
To help get more homes built and restore economic hope for generation Z and millennials, Prime Minister Justin Trudeau has argued that wealthier Canadians need to pitch in a bit more.
The increase to the inclusion rate is expected to generate more than $19 billion in tax revenues over five years, which will help the Liberals pay for a slew of new spending on things like housing and national defence.
The changes have sparked pushback from businesses, entrepreneurs and doctors who expect to pay more in taxes as a result of the changes.
Trudeau and Freeland have dismissed the pushback.