Former finance minister slams 2024 budget, calls increase to capital gains tax 'very troubling'

'This was very clearly something that, while I was there, we resisted. We resisted it for a very specific reason — we were concerned about the growth of the country.'

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  • April 18, 2024
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Former finance minister slams 2024 budget, calls increase to capital gains tax 'very troubling'
The Canadian Press / Adrian Wyld and The Canadian Press / Justin Tang
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Former Finance Minister Bill Morneau was publicly critical of his successor Chrystia Freeland's budget which she tabled in Parliament on Tuesday, mainly attacking the increase to the capital gains tax.

Morneau said that there were murmurs of increasing the tax while he held the position, but said that the change was never made due to fears that it would discourage investment by employers and job creators, calling the move “very troubling for many investors.”

"This was very clearly something that, while I was there, we resisted. We resisted it for a very specific reason — we were concerned about the growth of the country," Morneau said during a post-budget Q&A session with accounting firm KPMG.

Freeland's federal budget announced increases to the capital gains tax inclusion rate to two-thirds from one-half for all gains made by corporations and trusts. Morneau was critical of the policy, saying that it was effectively a retroactive tax, since investors will not be receiving the profits they expected from investments, CBC reports.

The measure is projected to raise over $19 billion over five years, including nearly $7 billion this fiscal year.

"From my perspective, this is clearly a negative to our long-term goal, which is growth in the economy, productive growth and investment," Morneau said.

Liberal officials have stated that the capital gains tax inclusion rate had been higher in the past when it was at 75 percent from 1990 to 1999.

Morneau also slammed the amount of new spending in the budget.

“We’ve seen significant increases in provincial government spending and that is obviously working against the central bank goals of reducing inflation,” Morneau said. “I don’t think there was enough effort in this budget to reduce spending, to create that appropriate direction for the economy.”

The budget was praised by progressive groups like the Canadian Labour Congress. Freeland said that the move would make the tax system "more fair" by ensuring that the "very wealthiest pay their fair share."

Freeland said she was expecting some blowback from the announcement, saying that she "know[s] there will be many voices raised in protest. No one likes paying more tax, even — or perhaps particularly — those who can afford it the most."

"Tax policy is not only, or chiefly, the province of accountants or economists. It belongs to all of us because it is how we decide what kind of country we want to live in and what kind of country we want to build."

Morneau says, however, that the government was more interested in unveiling new costly social programs over introducing measures aimed at reversing concerning national wealth trends.

"Canada is not growing at the pace we need it to grow and if you can't grow the size of the pie, it's not easy to figure out how to share the proceeds," he said, the Financial Post reports.

"You think about that first before you add new programs and the government's done exactly the opposite."

Morneau also noted that the deficit is now about double what it was when he left office in 2020 amid the WE Charity scandal.

Canada news
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