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Capital gains tax not aimed at middle class, Freeland insists

Photo: Christine Muschi The Canadian Press On the sidelines of a visit to the premises of Montreal mushroom producer Lab. Red Frog, on Monday, Minister Chrystia Freeland promoted the federal budget unveiled last week.

Stéphane Rolland – The Canadian Press

Posted at 5:56 p.m. Updated at 10:04 p.m.

  • Canada

Faced with the concerns of certain plex owners, the Minister of Finance, Chrystia Freeland, affirms that the increase in the capital gains tax proposed by the federal budget would only affect the better off.

The federal budget proposes that the capital gains inclusion rate increase from 50% to 66% from the threshold of $250,000, starting June 25. Quebec will also follow suit with the federal government.

Several Canadian media have reported criticism from plex owners, who consider themselves unfairly affected by this measure which targets the better off.

Ms. Freeland argues that several terms of the tax measure protect middle-class owners. She mentioned, at a press conference in Montreal on Monday to promote her budget, that the capital gain on the main residence is not affected.

In other words, the owner-occupier of a plex would not pay tax on the proportion of the capital gain linked to his residence, only on the gains linked to the space he rents.

She points out that the taxation of the first annual capital gain bracket of $250,000 remains unchanged. This also means that a home-owning couple would not be affected for the first $500,000 of the capital gain, she said.

“For us it was very important to target this change, not to the middle class, but especially to the better off,” she insists.

The increase in capital gains has been criticized by the business community. Last Friday, the president and CEO of the National Bank, Laurent Ferreira, expressed concern that the measure would discourage investment, by making Canada less competitive with the United States.

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For her part, Ms. Freeland believes that the tax increase is necessary to finance new federal programs, particularly to promote housing accessibility. “To finance these investments in the middle class, including young Canadians, we will ask the better off to contribute a little more to enable these investments which are so necessary now. »

The measure would affect a relatively small number of individuals, according to the Ministry of Finance. Only 40,000 Canadians reported capital gains of more than $250,000 annually. This would represent 0.13% of taxpayers, or 13% of the famous 1%.

Ms. Freeland was in Montreal on Monday to promote the federal budget unveiled last week. On the sidelines of a visit to the premises of Montreal mushroom producer Lab. Red frog, she put forward the aid of $60 million over five years to the organization Futurpreneur Canada, provided for in the budget.

Critics of the provinces

The federal budget has also been criticized by the provinces, who denounce an encroachment on their jurisdictions.

The provincial premiers wrote to Prime Minister Justin Trudeau, in a letter released Friday, asking him to “refrain from encroaching” on their areas of jurisdiction.

Questioned on the subject on Monday, Ms. Freeland said she was hopeful of finding common ground with the provinces. “I am convinced that in the end, we will find win-win solutions,” she assures.

She gave the example of the national daycare program while the network of early childhood centers (CPE) already existed in Quebec. “For this reason, we had a conversation with Quebec and we decided to send the money directly to the province of Quebec to build more spaces in daycares. »

When unveiling the agreement, in 2021, the prime ministers of Canada, Justin Trudeau, and of Quebec, François Legault, spoke of an agreement of $6 billion over five years to create “dozens thousands of places.”

Teilor Stone

By Teilor Stone

Teilor Stone has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining Thesaxon , Teilor Stone worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my teilor@nizhtimes.com 1-800-268-7116