Trudeau says Tory vote is one against ‘fairness’
— Prime Minister Justin Trudeau accused the Conservatives on Wednesday of siding with “multi-millionaires” and standing against fairness over their decision not to support the federal budget.
The Liberals’ latest spending plan, tabled in the House of Commons on Tuesday, aims to make corporations and rich individuals pay more tax on capital gains.
Conservative Leader Pierre Poilievre called it a “wasteful, inflationary budget” and said his party would vote against it.
On Wednesday, at a meeting of the Liberal caucus, Trudeau said it isn’t right that multimillionaires are asked to pay less tax on capital gains than a teacher or electrician pays on their income.
He said the change would not affect 99.87 per cent of the population at all and does not apply to the sale of anyone’s primary residence.
He did not mention the New Democrats or Leader Jagmeet Singh, who hasn’t yet promised to back the budget despite his supply-and-confidence agreement with the Liberals.
The budget contains several NDP priorities, including funding for the first phase of national pharmacare and federal standards for long-term care.
Bloc Québécois Leader YvesFrançois Blanchet also said his caucus would not support the budget.
That means if the NDP breaks its agreement, the budget will fail, likely triggering an election.
Singh has said he wants to talk to Trudeau about what is missing from the budget, including any windfall taxes on excess profits for corporations.
He also said he believes the Conservatives would cancel important programs if they form government, including national child care and pharmacare.
Conservative housing critic Scott Aitchison said people shouldn’t believe the Liberals’ plan will ever come to fruition because they have promised a housing overhaul before and it never materialized.
“In 2017, Justin Trudeau stood in front of a large building project with lots of hard-working Canadians behind him and promised a life-changing transformational national housing strategy,” Aitchison said.
“And we see the transformation: house prices have doubled, rent has doubled, mortgage rates have doubled and people can’t afford to put food on their table and pay the rent.”
Aitchison said the solution for housing is that government should get out of the way.
But Trudeau said the Conservatives are the ones trying to stop progress. “They’re voting against fairness,” he said. “They will be voting against asking the ultrarich to pay their share. Canadians need responsible leadership right now — leaders who come to them with solutions ready to invest in Canadians ideas.”
The budget increased spending to more than $530 billion for 2024-25, with more than
$11 billion in new spending largely focused on housing, student aid and grants, along with pharmacare and finally funding the long-promised disability benefit.
That benefit, at $200 a month, falls well shy of what advocates wanted to see.
The budget is in some ways a Hail Mary effort from the government to appeal to millennials and gen-Z voters, who once strongly backed the Liberals but have increasingly been drifting to the Conservatives as the affordability crisis is hitting them hard.
Trudeau and Finance Minister Chrystia Freeland are billing the budget as a fairness plan for younger Canadians.
The people being asked to pay more are among the ones “who’ve benefited from an economy that seems tipped towards them and away from everyone else, particularly young people,” said Trudeau.
“So we’re asking them to pay their fair share so that younger generations can have the same opportunities that Xers, boomers and other generations had when they were starting out in their lives.”
The capital gains tax is expected to raise $19 billion over five years, by increasing the portion of capital gains that is taxed from 50 per cent to 66 per cent. The change will apply to all corporations and trusts, along with individuals whose capital gains exceed $250,000 in a year.
The federal budget has been met with disdain from Canada’s innovation industry, including tech darling Shopify, which called the capital gains measures in the fiscal plan a potential cause of “irreparable harm.”
The sector is disappointed that the Liberal government’s budget, tabled Tuesday, includes a proposed increase to the proportion of capital gain earnings on which businesses pay income tax, to two-thirds from one half.
The hike would also be applied to individuals for capital gains earnings above $250,000 in a year.
It said the increase would only impact the wealthiest 0.13 per cent and result in $19.3 billion in revenue over the next five years. However, the proposal was met with dismay from the tech industry, which derided the changes.
“My phone was exploding with texts from leaders across the country saying: ‘This is a nightmare. You have to fix this. They don’t know what they’re doing,’ ” Benjamin Bergen, president of the Council of Canadian Innovators industry group, said Wednesday.
At the crux of the complaints he fielded was a feeling that the potential changes would encourage entrepreneurs to open their businesses elsewhere and push workers in the sector away from Canada as they try to avoid paying more tax when cashing in on stock options.
“If taxation and capital gains are so punitive that it doesn’t make sense for either someone to stay in the country or choose to leave maybe a more traditional job to go and build a new company, you’re depriving [the country] of the talent that it needs,” Bergen said.
Eighty per cent of 500 businesses consulting firm KPMG surveyed in 2021 said they needed more workers with digital skills, but two-thirds were having trouble finding and hiring such talent. The report was released before artificial intelligence began booming in the wake of ChatGPT’s release in 2022, which has only heightened demand for tech talent.
While capital gains measures are seen as a way to tax the wealthiest, Bergen said what’s in the budget could affect tech workers who aren’t in senior positions.
“Those folks who join startups and scaleups as they’re beginning their journey are provided stock options and other benefits, which are ultimately determined as capital gains in the future,” he said.
“It’s marketing experts, sales experts, legal experts that are traditionally mid-career that you’re completely undermining by this type of policy lever that’s being implemented.”
CCI drafted an open letter to Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, urging them to scrap the tax.
By Wednesday evening, leaders from 150 companies had signed the letter.
Freeland’s office did not respond for a request for comment on the criticisms.
However, the budget also included a new program that lowers how much tax some small business owners pay when selling their companies. Those who qualify will be taxed on only onethird of their capital gains up to $2 million.
Several Shopify Inc. executives, including president Harley Finkelstein, posted about the capital gains changes Freeland proposed on X. Hours after the budget’s release, he wrote: “What. Are. We. Doing?!?”
“This is not a wealth tax, it’s a tax on innovation and risktaking,” he added on Wednesday.
“Our policy failures are America’s gains.”
The Ottawa-based e-commerce giant’s chief executive Tobi Lütke also chimed in, saying a friend had messaged him to say: “Canada has heard rumours about innovation and is determined to leave no stone unturned in deterring it.”
Forbes estimates Lütke’s net worth is valued at $6.4 billion US. While he has been more vocal in his criticism of the federal government’s policy decisions in recent months, he previously chaired a digital strategy table that convened in 2018 and hosted Trudeau at his company’s conference.
Meanwhile, the head of the Canadian Venture Capital and Private Equity Association said on LinkedIn that the capital gains changes left her feeling “baffled.”
“This measure, which effectively taxes innovation and risk-taking, will significantly dampen Canada’s entrepreneurial spirit, stifle economic growth in critical sectors of our economy, and impact job creation,” Kim Furlong said.
“Such a policy change undermines Canada’s position to attract the talent needed to grow and scale companies here.”