The House of Commons voted Tuesday to approve the Liberal government’s capital gains tax changes despite the Conservatives opposing the measure.
Prime Minister Justin Trudeau voted in person along with his government for the tax changes, which will increase the inclusion rate for taxable capital gains. They are now set to take effect June 25.
The NDP and Bloc Quebecois also voted in favour 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 latest federal budget in April.
The Liberals forced their hand when Finance Minister Chrystia Freeland tabled a stand-alone motion Monday to put the tax adjustment in place.
The government say the changes will help pay for investments in health care, housing and clean technology and will improve “tax fairness” in Canada.
But Conservative Leader Pierre Poilievre on Tuesday called the measure a “job-killing tax on health care, homes, farms and small business.”
During question period Tuesday ahead of the vote, Poilievre and his party accused the government of “hiking taxes in the middle of a food crisis,” which the Liberals denied, arguing the measure will help middle-class Canadians.
“For eight weeks since we put our budget forward, the Conservatives have been incredibly careful not to say a thing about the capital gains rate that we’re raising,” Trudeau said.
“The reality is they have an opportunity to vote with middle class Canadians and they’re choosing to vote against them.”
Capital gains are the proceeds from the sale of an asset like a stock or an investment property. Currently, all capital gains come with an inclusion rate of 50 per cent, meaning half of the profits realized from the sale are added to taxable income in that year.
Under the Liberals’ proposed changes, that inclusion rate would rise to 67 per cent on any gains realized above $250,000 annually for individuals. That two-thirds inclusion rate would apply to all such gains made by corporations and many trusts.
Freeland has insisted it is a fairness tax to make sure wealthy individuals whose income comes from selling assets don’t 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 tax when they sell a successful investment,” she said Tuesday ahead of 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 on health care, home-building, child care and dental care without going deeper into debt.
“It will help make life cost less for Canadians,” she said.
The Conservatives argued Tuesday the Liberals gave billionaires two months to move their assets out of Canada since the measure was announced in April’s budget.
“Nine years ago, the prime minister promised he could spend uncontrollably and there’d be a rich guy on a hill somewhere who would pay the bill,” Poilievre said.
It hasn’t happened, Poilievre said, as the total net worth of the richest Canadians has doubled while the middle class can’t afford homes or food.
He said he would create a “tax reform tax 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 siding with millionaires.
“If it didn’t have real-world impacts on Canadians, it would almost be amusing to watch the Conservative leader tie himself in knots to try and justify voting in favour of advantages for the wealthy Canadians when they sell really profitable investments,” Trudeau said.
—With files from Global’s Craig Lord and the Canadian Press
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