The Trudeau government’s capital gains tax hike is near death. But instead of pulling the plug, Finance Minister Dominic LeBlanc has decided to keep it on life support by delaying implementation until January 2026.
“The deferral of the increase to the capital gains inclusion rate will provide certainty to Canadians, whether they be individuals or business owners, as we quickly approach tax season,” said LeBlanc in a news release. “Given the current context, our government felt that it was the responsible thing to do.”
But this delay wasn’t about providing economic certainty to Canadians, who have largely opposed the tax hike. It was about legality.
The government attempted to implement the change without legislative approval. So, the Canadian Taxpayers Federation triggered a legal challenge on democratic grounds. Rather than risk an embarrassing court defeat, LeBlanc chose to push the implementation date back.
However, with Prime Minister Justin Trudeau on his way out, keeping the tax hike on the books makes no sense.
This is especially true when no major political leader likely to become the next prime minister supports it.
Conservative Leader Pierre Poilievre has opposed the tax hike from the beginning, calling it what it is — a job-killing tax grab that will drive investment out of Canada.
Liberal leadership candidate Chrystia Freeland, who originally introduced the measure as finance minister, has now distanced herself from it. That’s right, the very person behind the policy no longer wants to be associated with it.
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And Freeland’s top competitor, Mark Carney, has also come out against it. That means two of the most prominent Liberals in the country don’t support this tax hike and have pledged to get rid of it.
So if Poilievre, Freeland and Carney all oppose it, why is LeBlanc keeping it alive?
The impact it will have on the economy is damning. A report from the C.D. Howe Institute estimates the tax hike will strip $90 billion from taxpayers and cost more than 400,000 Canadian jobs.
These aren’t just abstract statistics. It means real businesses shutting down. Real Canadians losing their jobs. Doctors moving south of the border. Tech entrepreneurs relocating their startups to the U.S. or Europe. Investors parking their money elsewhere.
And then there’s the global picture.
Canadian businesses are already facing periods of economic turbulence due to the constant threat of new tariffs from the administration of U.S. President Donald Trump.
While tariffs have been paused until the end of February, there is a real risk of them returning.
The Trudeau government’s insistence on keeping this tax in place plays right into Trump’s hands. Piling on more taxes will make it even harder for Canadian businesses to compete and could accelerate the shift of operations to the United States.
And despite the spin from the Trudeau government, this isn’t just a tax on the ultra-wealthy. It hits small business owners, farmers and middle-class Canadians who have saved and invested wisely.
For example, 50% of those who will be hit by the capital gains tax hike have incomes less than $118,000 a year, with 10% earning less than $18,000 annually.
LeBlanc’s delay solves nothing. It only prolongs uncertainty, making it even harder for businesses to plan. Entrepreneurs and investors don’t make decisions based on election cycles. They need stable, predictable policies — not a government that keeps moving the goalposts.
This tax hike was a bad idea when Freeland introduced it. It’s a bad idea today. And it will still be a bad idea in 2026.
LeBlanc should stop playing political games and do what’s right for Canadians: Scrap the capital gains tax hike for good.
Devin Drover is general counsel with the Canadian Taxpayers Federation