Tories REJECT unlegislated tax hike on capital gains

Parliament passed a June 11 motion to increase taxation from 50% to 67% on capital gains over $250,000, though no tax bill ever followed. The CRA intends on collecting interest on unpaid taxes starting March 3.

Conservatives want voters — not an unelected government agency — to determine if more taxes are necessary for capital gains.

In a letter to Finance Minister Dominic LeBlanc, the Official Opposition laid out their request. “As Minister of Finance, you have a responsibility to stop this job-killing tax hike before it does even more damage to our economy,” reads the letter signed by MPs Jasraj Singh Hallan and Adam Chambers and shared with the National Post.

The critics continue: “If you refuse to do this, then at the very least, you must direct the Canada Revenue Agency to stop collecting this tax until after an election.”

Last year, the Liberal government quietly increased the capital gains inclusion rate, targeting wealthier Canadians and corporations to fatten government coffers.

Parliament passed a June 11 ways and means motion to increase taxation from 50% to 67% on capital gains over $250,000, though no tax bill ever followed. Meanwhile, the CRA warned it would collect interest March 3 on unpaid taxes, reported Blacklock’s.

“Parliamentary convention dictates that taxation proposals are effective as soon as the government tables a notice of ways and means motion; this approach provides consistency and fairness in the treatment of all taxpayers," explained the Department of Finance in a statement to CBC News.

At the time, former finance minister Chrystia Freeland lauded the move as a measure that promotes “tax fairness,” a claim refuted by focus groups last June and July.

Many were under the impression that auditors would target middle and lower classes, with roughly 340,000 tax filers recording less than $50,000 in capital gains from the sale of small businesses, stocks or vacation and rental homes. 

“If Trudeau goes through with this tax, the dream of home ownership will slip even further away from Canadians,” Conservative MPs said in a prior statement. The Liberal government claimed the increase would not target primary residences.

Conservative Leader Pierre Poilievre called the proposal a “job-killing tax hike” at a time when Canadians struggled to make ends meet.

Prime Minister Justin Trudeau and his cabinet then characterized Conservatives as having wealthy friends, citing their opposition to the tax hike. “The Opposition Leader is taking cues from his lobbyist entourage on how to make the rich richer,” claimed Chrystia Freeland, then-finance minister.

Trudeau in the 2021 election campaign promised never to tax home equity in Canada. “I am happy to declare very strongly and clearly we will not be doing that,” he said at the time.

The Commons in 2020 also rejected a New Democrat motion to impose a 1% annual equity tax on assets over $20 million.

After Trudeau prorogued Parliament through March 24, the tax changes — slated to take effect in June — were scrubbed. All cabinet bills in the works effectively lapsed and may only be revived by majority vote. 

“What happens if the government provisionally collects a tax that ultimately never becomes law due to Parliament amending the bill or the bill never passing?” asked Conservative MP Larry Maguire in 2021. “These are questions that ultimately can end up before the courts,” replied then-law clerk Philippe Dufresne. 

Should the House of Commons dissolve, “there’s no ability for the House to consider legislation during that time,” said Dufresne, nullifying the ways and means motion if legislation is not tabled eventually.

The Tories made note of this in their letter to Finance Minister LeBlanc, vowing that should the party form government it will “never allow it to become law.” Poilievre’s office also promised to process returns for affected taxpayers.

The CRA told the Post it would continue to administer the changes, given how they were introduced and passed by the House of Commons. Imposing tax changes before they become law is a longstanding practice, according to the House Of Commons Procedure And Practice.

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Alex Dhaliwal

Calgary Based Journalist

Alex Dhaliwal is a Political Science graduate from the University of Calgary. He has actively written on relevant Canadian issues with several prominent interviews under his belt.

COMMENTS

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  • Bernhard Jatzeck
    commented 2025-01-15 00:46:59 -0500
    It’s a tax hike that wasn’t debated by Parliament nor does it have the consent of the voters. Some “democracy” we’ve got, haven’t we?
  • Bruce Atchison
    commented 2025-01-14 19:12:49 -0500
    What a sleeze bag Trudeau is. And all Liberals seem to understand is taxing, borrowing, and squandering our money. I hope Pierre Poilievre keeps his promises.