A Conservative government will reverse the latest capital gains tax increase if elected.
Conservative Leader Pierre Poilievre said for the first time Thursday that he would roll back last year’s increase, which he called a “job-killing Trudeau tax (that) will drive billions of dollars of machines, technology, business and paycheques out of our country.”
The hike on the capital gains tax was included as part of the Trudeau government’s 2024 federal budget announced last April. It took effect on June 25, although it has still not been passed by Parliament.
The increase requires Canadians making more than $250,000 in capital gains annually to pay taxes on two-thirds of that profit instead of half, marking the first hike of its kind in 25 years.
“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,” said Poilievre in a statement released Thursday. “This Liberal jobs tax was a bad idea before President Trump’s tariff threat, it is outright insanity now.”
Poiloevre’s announcement was accompanied by video breaking down what he believes the long term effects of such a tax increase will have on the country.
“Taxing farmers drives up food costs, taxing doctors makes it harder to find one, taxing home builders means fewer homes and taxing small businesses means fewer paycheques,” he said in the video. “Businesses, jobs, doctors and food production will leave Canada.”
His announcement was championed by the Canadian Taxpayers Federation, which said Poilievre is “right to oppose” a tax hike that “will punish Canadian doctors, entrepreneurs and people saving for their retirement.”
The CTF has already called for the hike to be halted on the grounds that the Canada Revenue Agency shouldn’t be enforcing it since the legislation for it has yet to be passed.
Poilievre noted how the very architects of the hike have themselves taken measures to skirt paying such gains, citing how Trudeau “kept his family fortune” in a “tax shelter trust fund to avoid taxes.”
“And Freeland gave billionaires an escape hatch,” he said. “She waited two months after she announced the tax hike before it took effect, giving billionaires plenty of time to sell their holdings without paying the higher rate and move their money to lower-tax foreign countries where it will build businesses, factories, mines, railroads and other job-creating investments, over there.”
The opposition leader pointed to the government’s budget projections as evidence that this response from Canada’s wealthiest class was already underway.
“This year, the tax change is only in place for six months, from June onward yet it generates $6.9 billion. Next year, it’s in place for all 12 months, yet the revenue from it crashes to $3,4 billion and the year after that it drops to $375 million. About what the government spends every seven hours.”
Poilievre attributed the downward trend not from people paying the tax hike, but avoiding it, by “quickly selling investments and realizing gains before the hike comes into force on June 25.”
He called the recent high volume of transactions a “short-term sugar high of revenue” for the government, but that it won’t be there in the years following.
A study released by the CD Howe Institute said the hike will “reduce Canada’s GDP by $90 billion, real per capita GDP by 3 percent, its capital stock by $127 billion and employment by 414,000, with most occurring within five years.”
Additionally, the increase will also hurt the country’s competitiveness globally with research from the Fraser Institute saying that the number of Canadians included in the new capital gains tax bracket will ultimately lower the country’s competitiveness.
“At a 50% inclusion rate, Canada’s top capital gains tax rate ranked between 17th and 23rd, depending on the province, out of 37 OECD countries,” it said.
The government’s decision to raise the inclusion rate to 66.7% moves Canada up the ranks of between eighth and 13th highest of any OECD country, depending on the province.
Capital gain is the difference between what an investor paid to buy and later what he got to sell his investment, which is already taxed multiple times in between.
