Sure, Justin Trudeau is pretty damn easy on the eyes. And – compared to his counterpart south of the border – we can feel safe with his inclusive values and the fact that he’s a self-proclaimed feminist.
But a few weeks back, concerned Canadians got vocal about potential initiatives on the agenda of Canada’s Liberal Party.
Last Wednesday, the government tabled its second budget – and the anxious eyes of many were on the review of the current tax credits. With a focus on investing in infrastructure, the Liberal government sought to add billions to the national treasury and was feared to do so by making some major changes to current tax credits.
One of the most controversial solutions was the idea of raising the inclusion rate on capital gains from the current 50 per cent to 66.67 per cent, or even 75 per cent – a pretty massive hike. For those in need of a little refresher, a capital gain refers to the profit from selling stocks, a business or an investment property. If both the corporate and the personal inclusion rate were jacked from 50 per cent to 75 per cent, the plan was said to raise about $5 billion in annual revenue.
To the collective relief on many, it didn’t happen. But the attention of investors and entrepreneurs remains set on the government’s next move.
What many are calling a “wait-and-see approach” to the current budget, many business and property owners are wondering if it’s only a matter of time before the threat of capital gains tax becomes a reality. After the release of the budget, Finance Minister Bill Morneau assured the Globe and Mail that he had no plans to raise the rate on capital gains tax. But it doesn’t mean affected parties are out of the woods yet. While no amendments were made this time, Morneau said that changes to the way profits from selling off personal assets are taxed could become a reality in the near future. He also said that he wanted to move quickly on tax changes to higher income Canadians.
As an artist, trust me when I say that I can use all the help I can get from the government. Opponents call an increase in capital gains tax a way to cool the out-of-control Toronto and Vancouver housing markets and to neutralize wealth inequality. Of course, I support initiatives that can bring the housing market down to more realistic levels whereby owning a home in Toronto is more than a pipe dream. But at the same time, I can appreciate the frustration of some of my hard-working friends and family members surrounding the capital gain issue. Let’s put ourselves in their shoes: Say you have worked your butt off passionately pounding the pavement for decades, resulting in sleepless nights, cancelled plans and premature grey hairs.
How much of a slap in the face would it be if you finally became rich and relaxed in your golden years, only to face the threat of losing so much of your profits/retirement fund?
Furthermore, how does the fear of this happening offer any motivation to start a business in the first place? Paying tax on a greater amount of profits after the sale of an asset to the point it feels like robbery doesn’t really offer much incentive to the would-be entrepreneurs out there. Not to mention, higher taxes would dwindle business investment (the good news is that this budget features no new taxes for investors).
While the budget contained progressive policies and spending to make the country more attractive for researchers and scholars, an increase in capital gains tax would pretty much contradict the federal government’s commitment to innovation. In the ever-growing tech industry, selling a company is a common exit strategy among savvy entrepreneurs – something a raise in capital gains tax would surely affect.
Furthermore, the rise in entrepreneurism has created a growing freelance economy where companies turn to contract workers more than ever and where job security is increasingly a thing of the past. Meaning, we need to support the young entrepreneur like never before.
Some say that the decision not to announce major tax changes on the budget was an attempt by the Liberals to wait to see the fate of promised tax reforms in the US. Although Morneau says that Canadians shouldn’t speculate on capital gains tax, many remain afraid that a hike hasn’t been ruled out.
In the meantime, when the books will be balanced remains to be seen
What are your thoughts on the Canadian Government’s second budget and the threat of a capital gains tax? Let us know in the comment section below or tweet us at@ViewtheVibe.