Taxpayers frustrated with the proposed capital gains tax changes will have their ears to the ground for an election call. That’s because the leader of the Conservative Party of Canada says he’ll drop the proposed tax changes if elected.
“I am announcing today common sense Conservatives will reverse last June’s Liberal tax hike on capital gains — a tax economists agree will kill 400,000 jobs,” Pierre Poilievre posted on X on Thursday. “This Liberal jobs tax was a bad idea before President Trump’s tariff threat, it is outright insanity now.”
Budget 2024 proposed hiking the capital gains inclusion rate to two-thirds, from half, on gains realized by corporations and trusts, and on annual gains above $250,000 for individuals, effective June 25, 2024.
In a recent report, the C.D. Howe Institute projected that the proposed tax changes would result in 414,000 lost jobs, raising unemployment to 1.9 million workers from 1.5 million. Further, Canada’s capital stock would decline by $127 billion, GDP would fall by nearly $90 billion, and real per capita GDP would drop by 3%, the report said.
“This would not just be a tax on the wealthy,” Jack Mintz, president of the C.D. Howe Institute, said in a release last week accompanying the institute’s report. “Many middle-income Canadians would bear the brunt of this increase, and the economic costs would ripple across the entire economy.”
Following the prime minister’s decision to step down and prorogue Parliament until March 24, the Department of Finance confirmed that the Canada Revenue Agency (CRA) would administer the capital gains tax changes as proposed in a notice of ways and means motion (NWMM) tabled in the House of Commons in September.
Administering changes in a NWMM is standard practice for the CRA, and the agency would also continue to administer the proposed changes if Parliament were dissolved for an election.
Poilievre’s social-media post follows a letter to the finance minister on Tuesday from the Conservative shadow ministers for finance and national revenue calling for the capital gains tax changes to be dropped.
The Parliamentary Budget Officer has estimated that the proposed changes would raise $17.4 billion over the next five fiscal years — revenue that would help tackle the federal deficit of nearly $62 billion for 2023–24.
In a bulletin on Thursday, Fasken Martineau DuMoulin LLP said the uncertainty surrounding the measure has had a “serious” impact for taxpayers.
“Those who had sold property before the June 25th cut-off to avoid the capital gains inclusion rate hike could regret their decisions, while others will have undergone considerable tax planning unnecessarily,” Fasken said.
A federal election must be called by fall 2025 at latest.