Conservative Leader Pierre Poilievre rises during Question Period, in Ottawa, on June 11. Poilievre and his MPs voted against the Liberals’ capital-gains tax increase, which was proposed April's budget.Adrian Wyld/The Canadian Press
Conservative Leader Pierre Poilievre and his MPs voted against the Liberals’ capital-gains tax increase Tuesday, ending weeks of uncertainty over where the party stood on a central element of the government’s April federal budget.
Mr. Poilievre issued a statement shortly before the vote that criticized Prime Minister Justin Trudeau’s economic record and pledged that a Conservative government will name a tax reform task force to design what he called a “Bring it Home Tax Cut.”
He further detailed his party’s position through the release of a 15-minute YouTube video, where he argued that the federal government’s policies are driving jobs and investment to the United States.
Finance Minister and Deputy Prime Minister Chrystia Freeland introduced the ways and means motion Monday, which provided further details on the tax plan first introduced in the budget.
The motion passed 208 to 118, with NDP and Bloc Québécois MPs voting with the government.
The issue dominated Question Period Tuesday ahead of the vote, as Mr. Poilievre and his MPs said they were standing with doctors, farmers and small-business owners and against what they described as the Liberal government’s high-tax agenda.
Mr. Poilievre said the Liberals insist that “a rich guy on a hill somewhere” will bear the cost of tax hikes, but higher taxes hurt the broader economy and ultimately workers and consumers.
“It’s incredible that during a housing shortage, he wants to tax homebuilders. During a health care shortage, he wants to tax away our doctors. During a food price crisis, he wants to tax our farmers,” said Mr. Poilievre.
Mr. Trudeau and his ministers countered by saying that Liberals were voting in favour of fairness for the middle class while Conservatives side with multimillionaires.
They also chided Mr. Poilievre for taking two months to declare a position on the capital-gains tax change.
“For eight weeks, since we put our budget forward, the Conservatives have been incredibly careful not to say a thing about the capital-gains rate that we’re raising,” said Mr. Trudeau. “The reality is they have an opportunity to vote with middle-class Canadians and they’re choosing to vote against that.”
The ways and means motion has 56 numbered pages and is written in the form of draft legislation, providing tax practitioners with the details of the tax change. It will be followed up with further information in the summer and legislation in the fall.
The motion states that as of June 25, the capital-gains inclusion rate – the portion on which tax is paid – will rise to two-thirds from one-half on capital gains realized by companies. The increase will also apply to individuals, but only on capital gains above $250,000.
A capital gain is the profit an individual or business earns when they sell an asset, such as stocks or property.
The move has significant implications for Ottawa’s bottom line, with the government saying it will raise $19.4-billion over five years federally and a further $11.6-billion for the provinces and territories.
Ottawa has said the higher tax rate will only apply to 0.13 per cent of Canadians in any given year. But some experts say it will likely capture a wider swath of the population.
Some point out that while very few Canadians have a capital gain of more than $250,000 every year, there are many more who could have a one-time capital gain over $250,000 in scenarios such as the sale of an income property or a cottage.
The tax change was first announced in Ms. Freeland’s April budget, but it was not included in Bill C-69, a government bill introduced last month to implement parts of the budget.
By introducing the capital-gains change as a stand-alone motion, the government forced the Conservatives to take a clear position on that single issue.
In his statement, Mr. Poilievre said his proposed task force on tax cuts would include entrepreneurs, inventors, farmers and workers “but no lobbyists.”
He said the goals will include “lower taxes on work, hiring and making stuff,” reducing the share of taxes paid by the poor and middle class “while cutting tax-funded corporate welfare and cracking down on overseas tax havens.” A third element pledges to simplify tax rules.
Mr. Poilievre’s video argued for policies that will boost productivity and investment. The video points to a recent RBC report that said Canada’s net investment outflow to the United States intensified after 2014.
Several business groups expressed disappointment this week that the government is moving ahead with the capital-gains tax increase.