OTTAWA — The federal Conservatives announced Tuesday they will vote against the Liberals’ increase to the capital gains tax hike, arguing the changes will kill innovation in the country’s economy and punish farmers, retirees, entrepreneurs and doctors.
The party’s leader, Pierre Poilievre, announced his MPs would not be supporting the tax changes ahead of a vote expected Tuesday afternoon, ending weeks of ambiguity on a policy that the Liberals had purportedly designed to strategically ensnare the Conservatives.
“Trudeau is hiking taxes on homebuilding during a housing shortage. He is raising taxes on doctors during a doctor shortage. He’s hiking taxes again on farmers during a food cost crisis. And he’s hiking taxes on small business while Canadians’ paycheques are shrinking,” he said in a statement.
“This job-killing Trudeau tax will drive billions of dollars of machines, technology, business and paycheques out of our country.”
The Liberals proposed the new capital gains tax rules in their spring budget, but rather than include them in the budget bill, which is making its way through the House of Commons, they separated the tax hike into a standalone motion that will be voted on Tuesday afternoon.
With the Conservatives holding a powerful lead over the Liberals in the polls among younger voters, the Trudeau government had reportedly planned to force the Tories to either support their tax hike or portray them as favouring wealthy, older Canadians over younger families struggling to keep up with rising living and housing costs.
Finance Minister Chrystia Freeland on Monday said that opposing the tax hike would benefit the top earners “living lives of luxury… while the wrath of the vast majority of their lesser privileged compatriots burns so hot,” and would lead to copious social ills, including a rise in teen pregnancy.
She said it was not uncommon to have major tax changes voted on separately and denied that making the tax changes a standalone vote was meant to wedge the Conservatives — although she did encourage Canadians “pay attention” to any MPs voting against her motion and to “consider their motivation.”
The Conservatives had in the past criticized the tax hike, but as of Monday afternoon had not indicated how they would vote.
Currently, capital gains are taxed at 50 per cent of the profit of selling an asset. The Liberals’ changes would increase that to 66 per cent for all business capital gains and on annual capital gains over $250,000 for individuals.
The Liberals have estimated the tax will raise roughly $20 billion over the next five years. They have claimed it will impact only 0.13 per cent of tax filers, who earn on average $1.4 million a year.
Poilievre disputed that estimate, ashavesomeeconomists. The Conservative leader said billionaires who have been given two months warning this change is coming will find ways to avoid the tax, but average Canadians will pay it because they have no other option.
“So, who will pay for this tax? Firstly, people who have one-time sales or disposal of long-term assets like a grandmother trying to give some of her farmland to her children for homes. Secondly, 300,000 businesses, and indirectly, their workers will pay this tax hike, based on the government’s own numbers,” he said in a statement Tuesday.
The Conservative leader also promised a tax-reform task force if he become prime minister, with farmers, inventors, entrepreneurs and workers recommending changes to the tax code. He said the goal will be to bring home more production, reduce the share of taxes paid by the poor and middle class, and reduce paperwork.
Before Poilievre’s announcement, Freeland said the tax changes would pay for the government’s spending program, including plans to ramp up housing construction, fund its nascent pharmacare program and expand daycare funding.
“Truly what we are doing now in terms of getting more homes built faster, is a historic plan for Canada and it costs money,” she said.
Freeland said the government wanted to pay for these new programs with new tax revenue, not with new debt.
“We knew as a government that we had to make that investment in a fiscally responsible way, for a number of reasons, partly because we didn’t want to pass on a bigger, ballooning debt to younger generations.”
She argued the plan was paying off, because not taking on as much new debt this year was part of the reason why the Bank of Canada was able to lower interest rates.
The federal debt has doubled from $619.3 billion in 2015-16, when the Liberals were elected, to $1.3 trillion last year.
More to come …
National Post
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