Economy
Prime minister’s misleading capital gains video misses the point
From the Fraser Institute
By Jake Fuss and Alex Whalen
According to a 2021 study published by the Fraser Institute, 38.4 per cent of those who paid capital gains taxes in Canada earned less than $100,000 per year, and 18.3 per cent earned less than $50,000. Yet in his video, Prime Minister Trudeau claims that his capital gains tax hike will affect only the richest “0.13 per cent of Canadians”
This week, Prime Minister Trudeau released a video about his government’s decision to increase capital gains taxes. Unfortunately, he made several misleading claims while failing to acknowledge the harmful effects this tax increase will have on a broad swath of Canadians.
Right now, individuals and businesses who sell capital assets pay taxes on 50 per cent of the gain (based on their full marginal rate). Beginning on June 25, however, the Trudeau government will increase that share to 66.7 per cent for capital gains above $250,000. People with gains above that amount will again pay their full marginal rate, but now on two-thirds of the gain.
In the video, which you can view online, the prime minister claims that this tax increase will affect only the “very richest” people in Canada and will generate significant new revenue—$20 billion, according to him—to pay for social programs. But economic research and data on capital gains taxes reveal a different picture.
For starters, it simply isn’t true that capital gains taxes only affect the wealthy. Many Canadians who incur capital gains taxes, such as small business owners, may only do so once in their lifetimes.
For example, a plumber who makes $90,000 annually may choose to sell his business for $500,000 at retirement. In that year, the plumber’s income is exaggerated because it includes the capital gain rather than only his normal income. In fact, according to a 2021 study published by the Fraser Institute, 38.4 per cent of those who paid capital gains taxes in Canada earned less than $100,000 per year, and 18.3 per cent earned less than $50,000. Yet in his video, Prime Minister Trudeau claims that his capital gains tax hike will affect only the richest “0.13 per cent of Canadians” with an “average income of $1.4 million a year.”
But this is a misleading statement. Why? Because it creates a distorted view of who will pay these capital gains taxes. Many Canadians with modest annual incomes own businesses, second homes or stocks and could end up paying these higher taxes following a onetime sale where the appreciation of their asset equals at least $250,000.
Moreover, economic research finds that capital taxes remain among the most economically damaging forms of taxation precisely because they reduce the incentive to innovate and invest. By increasing them the government will deter investment in Canada and chase away capital at a time when we badly need it. Business investment, which is crucial to boost living standards and incomes for Canadians, is collapsing in Canada. This tax hike will make a bad economic situation worse.
Finally, as noted, in the video the prime minister claims that this tax increase will generate “almost $20 billion in new revenue.” But investors do not incur capital gains taxes until they sell an asset and realize a gain. A higher capital gains tax rate gives them an incentive to hold onto their investments, perhaps until the rate is reduced after a change in government. According to economists, this “lock-in” effect can stifle economic activity. The Trudeau government likely bases its “$20 billion” number on an assumption that investors will sell their assets sooner rather than later—perhaps before June 25, to take advantage of the old inclusion rate before it disappears (although because the government has not revealed exactly how the new rate will apply that seems less likely). Of course, if revenue from the tax hike does turn out to be less than anticipated, the government will incur larger budget deficits than planned and plunge us further into debt.
Contrary to Prime Minister Trudeau’s claims, raising capital gains taxes will not improve fairness. It’s bad for investment, the economy and the living standards of Canadians.
Authors:
Business
Premiers fight to lower gas taxes as Trudeau hikes pump costs
From the Canadian Taxpayers Federation
By Jay Goldberg
Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.
You read that right. That’s not the overall fuel bill. That’s just taxes.
Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.
Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.
Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.
Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.
While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.
Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.
In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.
It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.
Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.
When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.
Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”
“Our government will always fight against it,” Ford said.
But there’s some good news for taxpayers: reprieve may be on the horizon.
Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.
With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.
Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.
Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.
Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.
While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.
The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.
That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.
Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.
Business
Bank of Canada admits ‘significant’ number of citizens would resist digital dollar
From LifeSiteNews
A significant number’ of Canadians are suspicious of government overreach and would resist any measures by the government or central bank to create digital forms of official money.
A Bank of Canada study has found that Canadians are very wary of a government-backed digital currency, concluding that “significant number” of citizens would resist the implementation of such a system.
The study, conducted by the Bank of Canada, found that a “significant number” of Canadians are suspicious of government overreach, and would resist any measures by the government or central bank to create digital forms of official money.
According to results from the BOC’s report titled The Consumer Value Proposition For A Hypothetical Digital Canadian Dollar, “cash remains an important method of payment” for Canadians and “[c]ertain groups may strongly resist a digital dollar if they conflate its launch with the end of cash issuance.”
The BOC noted that not only would a “significant number” of Canadians “reject” digital money, but that for some “mindset segments, their lack of interest in a hypothetical digital Canadian dollar was heavily influenced by perceptions of government overreach.”
As reported by LifeSiteNews in September, the BOC has already said that plans to create a digital “dollar,” also known as a central bank digital currency (CBDC), have been shelved.
The shelving came after the BOC had already forged ahead and filed a trademark for a digital currency, as LifeSiteNews previously reported.
Officials from Canada’s central bank said that a digital currency, or electronic “loonie,” will no longer be considered after years of investigating bringing one to market.
However, that does not mean the BOC is still not researching or exploring other options when it comes to digital money. As noted by researchers, despite there being some “interest” in a “hypothetical digital Canadian dollar,” that “interest does not necessarily translate to adoption.”
“Most participants felt well served by current means of payment,” noted the study, adding, “Individuals who support the issuance of a hypothetical digital Canadian dollar did not imagine themselves using it regularly.”
Those most enthusiastic about a government-backed version of Bitcoin were teenagers and young adults. Those older remained especially skeptical.
“They were skeptical of the need for this new form of money and of its reliability,” read the report, which also noted, “They did not trust that concepts were secure or that their personal information would be kept private.”
Given the results from the report, the bank concluded that “[b]road early adoption” of a digital dollar “is unlikely given that available payment methods meet the needs of most users.”
“Financially vulnerable segments often have the most to gain from this payment method but are most resistant to adoption. Important considerations for appeal and adoption potential include universal merchant acceptance, low costs, easy access, simplified online payments, shared payment features, budgeting tools and customizable security and privacy settings,” it noted.
Digital currencies have been touted as the future by some government officials, but, as LifeSiteNews has reported before, many experts warn that such technology would restrict freedom and could be used as a “control tool” against citizens, similar to China’s pervasive social credit system.
Most Canadians do not want a digital dollar, as previously reported by LifeSiteNews. A public survey launched by the BOC to gauge Canadians’ taste for a digital dollar revealed that an overwhelming majority of citizens want to “leave cash alone” and not proceed with a digital iteration of the national currency.
The BOC last August admitted that the creation of a CBDC is not even necessary, as many people rely on cash to pay for things. The bank concluded that the introduction of a digital currency would only be feasible if consumers demanded its release.
In August, LifeSiteNews also reported that the Conservative Party is looking to gather support for a bill that would outright ban the federal government from ever creating a digital currency and make it so that cash is kept as the preferred means of settling debts.
Conservative leader Pierre Poilievre promised that if he is elected prime minister, he would stop any implementation of a “digital currency” or a compulsory “digital ID” system.
Prominent opponents of CBDCs have been strongly advocating that citizens use cash whenever possible and boycott businesses that do not accept cash payments as a means of slowing down the imposition of CBDCs.
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