Capital gains tax change 'shortsighted' and 'sows division' business groups tell Freeland

Forging ahead with increasing Canada's capital gains inclusion rate 'sows division,' and is a 'shortsighted' way to improve the deficit, business groups are warning Finance Minister Chrystia Freeland.

Forging ahead with increasing Canada's capital gains inclusion rate "sows division," and is a "shortsighted" way to improve the deficit, business groups are warning Finance Minister Chrystia Freeland.

In a new letter sent to Canada's chief financial steward and deputy prime minister, six of the country's largest industry organizations are sounding off about the concerns they have that the policy change will stifle economic growth and come at the expense of future generations' prosperity.

"Put simply, this measure will limit opportunities for all generations and make Canada a less competitive, and less innovative nation," reads the letter.

"Whether through the diminishing (of) the creation of new companies and jobs, reducing the availability of medical practitioners, eroding hard-earned pension returns … or threatening the retirement plans of millions of Canadians who pinned their plans on the proceeds of selling a family cottage or a small business … the effects will ripple from coast to coast to coast."

The Canadian Chamber of Commerce, the Canadian Federation for Independent Business, Canadian Manufacturers and Exporters, the Canadian Venture Capital and Private Equity Association, the Canadian Franchise Association and the Canadian Canola Growers Association are signatories.

The 2024 federal budget included a proposal to increase the inclusion rate on capital gains from 50 per cent to 67 per cent for individuals earning more than $250,000 in capital gains in a year, and for all corporations and trusts.

Since releasing the budget, Freeland and Prime Minister Justin Trudeau have faced pushback about the policy from doctors worried about their savings, and start-up-minded entrepreneurs.