Business Groups Warn Against Canada’s Capital Gains Inclusion Rate Hike

Business leaders across Canada are voicing strong opposition to the proposed increase in Canada’s capital gains inclusion rate, cautioning Finance Minister Chrystia Freeland against a move they believe will sow division and hinder economic growth.

In a joint letter addressed to Freeland, six prominent industry organizations, including the Canadian Chamber of Commerce and the Canadian Federation for Independent Business, expressed concerns about the detrimental impact of the policy change on Canada’s competitiveness and innovation landscape. They argue that the proposed measure will curtail opportunities for future generations and undermine the country’s economic vitality.

The contentious proposal, outlined in the 2024 federal budget, aims to raise the inclusion rate on capital gains from 50 per cent to 67 per cent for individuals earning more than $250,000 annually in capital gains, as well as for all corporations and trusts. While the government defends the move as a fair means to generate additional revenue from the wealthiest earners, critics warn of broader repercussions affecting a wider segment of Canadians, including entrepreneurs and property investors.

Despite mounting opposition, Freeland remains steadfast in her commitment to advancing the tax change, signaling her intention to introduce separate legislation focused on this measure. This decision has prompted calls from industry groups for the government to reconsider its approach and conduct an independent review of Canada’s tax system to explore alternative solutions.

The debate surrounding the capital gains inclusion rate hike underscores the complexity of tax policy and its far-reaching implications for economic growth and prosperity. As stakeholders await further developments, the clash of interests between fiscal responsibility and economic stimulus continues to shape the discourse surrounding Canada’s fiscal landscape.