The House of Commons voted Tuesday to approve changes to the Liberal government’s capital gains tax despite Conservatives opposing the measure.
Prime Minister Justin Trudeau voted in person with his government in favor of the tax changes, which will increase the inclusion rate for taxable capital gains. They will now come into effect on June 25.
The NDP and Bloc Quebecois also voted in favor of the measure.
The opposition Conservatives had not previously stated their position on the changes in the weeks since the proposal was first introduced in the last federal budget in April.
The Liberals were forced when Finance Minister Chrystia Freeland introduced a separate motion on Monday to implement the fiscal adjustment.
The government says the changes will help pay for investments in health care, housing and clean technology and improve “tax fairness” in Canada.
But Conservative Leader Pierre Poilievre on Tuesday called the measure a “tax that kills jobs in health care, homes, farms and small businesses.”
During question period Tuesday before the vote, Poilievre and his party accused the government of “raising taxes in the middle of a food crisis,” which the Liberals denied, arguing the measure will help middle-class Canadians.
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“For eight weeks since we presented our budget, the Conservatives have been incredibly careful not to say anything about the capital gains rate we are increasing,” Trudeau said.
“The reality is that they have the opportunity to vote with middle-class Canadians and they choose to vote against them.”
Capital gains are the proceeds from the sale of an asset such as a stock or investment property. Currently, all capital gains have a 50 percent inclusion rate, meaning that half of the gains made from the sale are added to that year’s taxable income.
Under the Liberals’ proposed changes, that inclusion rate would increase to 67 percent on any earnings earned above $250,000 annually for individuals. That two-thirds inclusion rate would apply to all profits made by corporations and many trusts.
Freeland has insisted it is a fair tax to ensure that wealthy people whose income comes from asset sales do not pay a lower tax rate than middle-class Canadians who have less overall wealth.
“These changes will result in a small number of well-off Canadians paying a little more in taxes when they sell a successful investment,” he said Tuesday before the vote.
The change is expected to raise $19 billion over five years, according to the government, and Freeland said that means Canada can make “fiscally responsible” investments that help the middle class, including in health care, housing construction, child care and dental care. without getting into more debt.
“It will help make life cost less for Canadians,” he said.
The Conservatives argued Tuesday that the Liberals have given billionaires two months to move their assets out of Canada since the move was announced in the April budget.
“Nine years ago, the prime minister promised that he could spend uncontrollably and that there would be a rich guy on some hill who would foot the bill,” Poilievre said.
It hasn’t happened, Poilievre said, as the total net worth of the wealthiest Canadians has doubled while the middle class can’t afford housing and food.
He said he would create a “tax reform force” within 60 days of becoming prime minister that would simplify tax rules, cut taxes and reduce corporate welfare.
Trudeau said in question period that Poilievre is on the side of the millionaires.
“If it didn’t have real-world impacts on Canadians, it would be almost funny to watch the Conservative leader try to justify his vote in favor of advantages for wealthy Canadians when they sell really profitable investments,” Trudeau said. saying.
—With files from Craig Lord of Global and the Canadian Press
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