While the Liberals say that the capital gains tax increase will only affect 1 in 769 Canadians, recent polling shows Canadians feel it will affect nearly a quarter of the population.
The capital gains tax hike, effective June 25, will force Canadians making over $250,000 in capital gains annually to pay tax on two-thirds of their profit instead of half. Primary residences are exempt from capital gains tax.
Finance Minister Chrystia Freeland has claimed that the capital gains tax hike will only affect 0.13% of Canadians. However, results of a poll released by the Angus Reid Institute on Wednesday show that 23% of Canadians believe they will pay more over the next five years on their personal after-tax income due to the increased capital gains inclusion rate. The figure is over 17,500% more than the figure the Liberals originally reported.
12% of Canadians said they would pay a little more, while 11% said they would pay a lot more.
Prime Minister Justin Trudeau said the tax increase would generate $20 billion in new revenue.
“At a time when the richest are only getting richer, I think it’s fair to ask those people to pay a little more,” he said.
Freeland said the revenue is required for the Liberals to pay for the four million new homes Trudeau promised to build by 2031, to fund dental care, the National School Food Program, early learning and childcare, $5 billion to research investments into universities, handouts for the AI industry, $200 billion into healthcare, and more.
“We know we need to make these investments in a fiscally responsible way based on fiscally responsible foundation. And so the fair way to finance them is with tax fairness,” said Freeland.
The Liberals’ 2024 budget announced $111.2 billion in new spending and a $40 billion deficit with no plan to balance the budget.
Despite so many Canadians saying they would pay more, 32% still said they support the increase. Conversely, 49% of Canadians opposed the increase, 29% of whom strongly opposed it.
The most support came from Liberal voters, while 84% of Conservative supporters opposed the increase.
Freeland claimed the capital gains tax increase will only affect Canada’s top earners.
Despite the Liberals framing the capital gains tax increase as only affecting the country’s top earners, even 13% of Canadians who make less than $25,000 per year said they would pay more thanks to the increase. 17% of those who made between $25,000 and $50,000 said the same, increasing with every income bracket. 47% of Canadians who made $200,000 or more yearly said they would pay more.
Canadians who make less than $25,000 per year were the most uncertain, with 35% saying they weren’t sure whether they supported or opposed the increase.
“If this capital gains inclusion change is, indeed, to generate billions for fairness, geared towards those with the lowest income levels, it is not an encouraging sign for the government that the most uncertainty about the policy exists among those with the lowest household incomes,” reads the report.
Considering that nearly a quarter of Canadians feel the capital gains tax increase will cause them to pay more than the Liberals claim, a policy expert gave the Liberals’ tax increase a failing grade.
“Unfortunately, it’s a cheap political gambit that isn’t even going to pay off political dividends and will do a lot of economic damage in the process. So basically a zero out of ten, pretty bad policy,” said Aaron Wudrick, director of the Macdonald-Laurier Institute’s domestic policy program.