A recent poll shows Canadians are concerned about the impact of the new capital gains tax increase
The federal government announced that a tenth of one percent of Canadians will be affected by the upcoming increase to the capital gains tax inclusion rate, as reported by Financial Post.
Canadians, however, disagree according to a recent Angus Reid Institute poll. One in five surveyed believe their after-tax income will be impacted over the next five years.
“Not unlike Canadians’ reactions over the last several months regarding the impact on their household wallets from carbon pricing and rebates, people in this country — and critically — the young people Liberals desperately need to woo back from the Conservatives and NDP – aren’t convinced an increase in the capital gains tax will make their lives more affordable or their opportunities more equitable,” said Angus Reid in its report.
Currently, Canadians pay tax on 50 percent of capital gains, which are profits made from the sale of assets like secondary residences and investments.
Starting June 25, all corporations will pay tax on 66 percent of capital gains, and individuals will pay 66 percent on any capital gains exceeding $250,000 in a single year. Primary residences remain exempt.
The Liberals state the aim is to level the playing field between lower- and middle-income Canadians who earn their money mostly from their jobs and the wealthy, who earn more of their money from investments.
The change is estimated to impact just 0.13 percent of Canadians and 12.6 percent of businesses.
The move, however, has been controversial. Business leaders and groups ranging from doctors to farmers have opposed the inclusion rate hike, arguing it will burden the middle class, discourage investment, and lower the country’s productivity.
Half of the Canadians in the Angus Reid poll opposed the tax change, while one third supported it. The survey suggests the government’s “generational fairness” message is not getting through.
“In terms of selling this policy, there is a clear gap in communication from the Liberals to those who the government says will gain most from this change,” said the report.
Half of the people polled aged 18 to 34 said they’ve heard little or nothing about the capital gains tax change, and 30 percent said they don’t know if they support it or not.
Uncertainty was also evident among the 35 to 44 age group. Older generations were better informed and more opposed, with over 55 percent of people aged 45 to 54 against it, and almost 60 percent of those aged 55 to 64.
When broken down by income, more than 60 percent of households with incomes higher than $200,000 a year oppose the higher inclusion rate, but 40 percent of lower-income households are also against it.
“Another 27 percent are unsure, suggesting the Liberal government’s communication on this file is not punching through,” said the report.
Politically, Liberal voters showed the most support at 58 percent, while Conservative supporters were 84 percent against it.
