Freeland would scrap capital gains tax changes if elected Liberal leader: source

Liberal leadership candidate Chrystia Freeland has made a significant announcement regarding her stance on capital gains tax changes. As reported by CBC News and Bloomberg, Freeland plans to scrap the changes to the capital gains tax that were introduced in April’s federal budget.

The changes that were implemented included an increase to the taxable amount of capital gains, specifically raising the inclusion rate from one-half to two-thirds on capital gains above $250,000 for individuals, as well as on all capital gains earned by corporations and trusts. This meant that a larger portion of capital gains would be taxed as regular income.

Initially, when Freeland was serving as the finance minister, she defended these changes, citing the need for tax fairness and indicating that the increased revenue would fund important initiatives like new housing supports and social programs such as dental care and pharmacare.

However, in her bid to become the next Liberal leader and potentially the prime minister, Freeland has decided to reverse course on this policy. She also plans to eliminate the consumer carbon tax if she is successful in her leadership bid.

The reasoning behind Freeland’s change of heart on the capital gains tax is said to be related to potential changes to the U.S. capital gains tax under President Donald Trump. There are concerns that if the U.S. enacts changes, Canada must be prepared to respond to avoid losing investment. This shift in policy aligns with Conservative Leader Pierre Poilievre’s promise to reverse the increase to the inclusion rate on capital gains if his party forms government in the next election.

Critics, including NDP national revenue critic Niki Ashton, have accused Freeland of “siding with billionaires” in light of this decision. The legislation to formally introduce the capital gains changes was in progress in the House of Commons but has been stalled due to Parliament being prorogued by Trudeau.

Despite the legislative delay, the Canada Revenue Agency continues to collect the tax at the increased inclusion rate due to a “ways and means” motion passed in Parliament. The Conservatives and various business advocacy groups have called for the CRA to halt collection until official legislation is passed.

In conclusion, Freeland’s decision to abandon the changes to the capital gains tax marks a significant shift in her policy platform and sets the stage for a potential overhaul of tax policies if she were to assume leadership. The implications of this decision, both economically and politically, remain to be seen as the leadership race unfolds.