(Bloomberg) – Some of Canada’s largest business groups are calling on the prime minister. Justin Trudeau This is to reverse the government's plan to increase the tax rate on capital gains.
Most Read Articles on Bloomberg
Six major industry groups, including the Canadian Chamber of Commerce and Industry and the Venture Capital and Private Equity Association of Canada, said in a letter to the finance minister on Thursday that the government should halt the proposed tax increase. Chrystia Freeland.
“We call on the Canadian government to heed the advice of many of Canada's most respected leaders and reverse this reckless rate increase,” the groups wrote.
In his budget last month, Freeland announced plans to tax Canadian businesses and individuals on two-thirds of their realized capital gains, up from half the tax currently. The government said the changes are scheduled to come into effect on June 25 and will affect just 0.13 per cent of Canadians and 12.6 per cent of businesses. For individuals, only profits exceeding CAD 250,000 (approximately $182,000) will be taxed at the higher rate.
Industry groups disputed the government's estimates, which initially claimed one in five Canadians would be “directly affected” over the next 10 years. The group later revised its letter to specify that one in five Canadian companies “may be directly affected.”
The impact of the tax increase will be borne, directly or indirectly, by all Canadians, the group argued.
The letter adds to the chorus of groups criticizing the planned tax increases. The Canadian Medical Association also opposes the change, saying many doctors who adopt the practice will face a higher tax burden. More than one in 10 Canadians own an investment property and would pay more for it if they could sell it for a big profit, according to a report from Royal Lepage. In Canada, your primary residence is exempt from capital gains tax.
“These changes, if implemented, will make it harder for Canadians to access doctors, limit employment opportunities and limit business start-up, growth and succession planning, especially in multi-generational businesses such as: There will be significant knock-on effects, including a more difficult outlook for “farms, fishing, and small businesses,'' the groups said.
Read more: Companies say Canada's tax reform risks deepening productivity slump
The other four industry associations that signed the letter are Manufacturers and Exporters of Canada, the Canadian Federation of Independent Business, the Canadian Franchise Association, and the Canadian Canola Growers Association.
“Our country must end its reliance on tax-and-spend politics that harms innovation and growth, to the detriment of Canadians today as well as future generations,” the group wrote.
The government estimates that the tax changes are expected to generate C$19.4 billion in revenue over five years. The money could help rein in the budget deficit even as the government ramps up new spending, including measures aimed at supporting housing affordability and improving future prospects for young people.
Freeland said he would not include the tax changes in his main budget bill on April 30, but instead would introduce a standalone bill.
In a separate letter to Freeland on Thursday, the Business Council of Canada said it was concerned the proposed changes would further undermine Canada's ability to attract investment and talent and stifle economic growth. said.
“More importantly, we believe the debate over capital gains tax overshadows the larger issue of the unsustainability of the government's fiscal framework.”
“Tax increases would not be necessary if governments took proactive steps to promote growth, such as reducing planned spending and removing regulatory barriers.”
–With assistance from Jay Zhao-Murray.
(Updates paragraph 5 to reflect changes to group letter.)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
