LILLEY: Trudeau's capital gains tax mess not going to plan (2024)

Justin Trudeau must have thought he had an easy win coming by raising the capital gains tax inclusion rate in his budget. The plan was to shift the conversation from the much-hated carbon tax to the capital gains levy, and paint all those opposed as on the side of the rich.

Article content

It hasn’t quite worked out that way.

Article content

First off, Trudeau is still trying to explain his capital gains tax changes and as they say in politics, if you are explaining then you are losing. Secondly, the explaining has gone so badly, the pushback has been so strong that the tax changes aren’t in the government’s budget implementation bill.

See, the presentation of the budget in Parliament is mostly theatre. The government gets to stand up and proclaim all the things they want to do, but to enact those promises, they need to put forward a piece of legislation that spells out all the legal details.

On April 16, the Trudeau government promised to increase the capital gains inclusion rate from 50% to 66% of profits — over $250,000 for individuals and the total earned by businesses — as of June 25. Bill C-69, the budget implementation act, was tabled on May 2, and it doesn’t mention these capital gains tax changes at all.

Article content

Article content

It is beyond strange that any government wouldn’t include a major budget promise in the legislation to enact their budget promises, especially one set to take place just over a month from now.

“We have announced very, very clearly that we believe that this country needs a little more fairness for every generation,” Trudeau said at a campaign-style stop last week.

He had been asked about the tax changes not being in the legislation and whether the government was changing their plans and when legislation might be tabled. It’s a pretty basic question on an issue the government is investing a lot of political capital in, but Trudeau wasn’t going to answer the actual question.

“So yes, we are asking those who have done really well over the past few years to pay a little bit more, to make a little bit less in terms of the profits they’re making off of their capital, off of the properties, off of the assets they own, because it’s about fairness,” Trudeau said.

Article content

Recommended video

From the start, Trudeau and his team have tried to make it seem that these tax changes were only hitting the wealthiest of the wealthy. They were hoping the anger and envy generated by class warfare would have most Canadians saying, “Ya, take more from those guys.”

Maybe we will get to that point, but so far, it hasn’t worked out.

One of the reasons the capital gains changes aren’t in the legislation is the massive pushback from those who will be hurt, which include an awful lot of middle-class professionals and entrepreneurs. The biggest group leading the charge against these changes, though, is one that the Trudeau government is trying not to go to war with – doctors.

Doctors in Canada aren’t government employees; for the most part, they run their own practice set up through a corporation. They bill the health system through their incorporated business, they pay their staff or expenses through that corporation, and they save for their retirement inside the corporation.

Article content

These changes the Trudeau government is proposing will take a big chunk of money out of the retirement of doctors, small business owners, trades people — anyone who doesn’t have a company or government pension.

That doesn’t sound like fairness.

The Trudeau government is keeping up their rhetoric on fairness for every generation while looking for changes that won’t see them go to war with doctors, and won’t see doctors leave Canada for more lucrative jurisdictions. They also want to ensure they don’t lose too much of that $20 billion in new revenue they were hoping for and have already spent.

It’s all a bit of a disaster, but that describes most Trudeau government plans these days.

Article content