Business groups backtrack on capital gains tax remark

Prominent business groups have backtracked on their claim that one in five Canadians would be affected by the federal government's proposed changes to capital gains taxation.

In a letter to Finance Minister Chrystia Freeland on Thursday, the Canadian Chamber of Commerce and other groups said the government's assertion that only the wealthiest Canadians will be affected was misleading.

“In fact, one in five Canadians will be directly impacted over the next 10 years and the effects of this tax hike will be borne by all Canadians, directly or indirectly,” the original letter reads.

But the study from which that figure was taken suggests otherwise.

The 2023 study by Simon Fraser University's Jonathan Rhys Kesselman estimates one in five Canadians would be affected over a 10-year period if the inclusion rate was increased on all capital gains.

The federal budget only increases the inclusion rate on individuals' capital gains above $250,000, which means a much smaller proportion of Canadians would end up paying higher taxes. The new inclusion rate would also apply to all capital gains realized by corporations.

In fact, one in five Canadians will be directly impacted over the next 10 years …

After The Canadian Press asked questions about the figure, the chamber changed the letter on its website to read that one in five companies would be directly affected.

“We looked into this, and upon review, the language could be more clear to reflect the impact on Canadian companies. We have adjusted the copy in the letter online,” spokesman Karl Oczkowski said in an email.

The chamber of commerce did not immediately clarify how it arrived at the conclusion that one in five companies would be hit.

The joint letter is signed by the Canadian Chamber of Commerce, Canadian Federation for Independent Business, Canadian Manufacturers & Exporters, Canadian Venture Capital and Private Equity Association, Canadian Franchise Association and Canadian Canola Growers Association.

The groups call on the Liberal government to scrap the tax increase, arguing it will ultimately hurt the economy by lessening competition and innovation.