David Wiseman calls the federal government's delay in capital gains tax changes a "Ponzi scheme," arguing it benefits the wealthy and undermines public trust
The federal government's decision to delay implementing proposed changes to the capital gains tax aims to collect additional tax revenue in the near term, according to BNN Bloomberg.
Mark Wiseman, the former chair of AIMCo and former CEO of the Canada Pension Plan Investment Board, told BNN Bloomberg that if the government wanted to take a principled stance on capital gains, the tax would already have been implemented.
“The government, when they announced the budget, should have made the change to the capital gains inclusion rate immediately,” he said.
“Why have they waited until the end of June before the implementation? The reason is, and they actually say it if you read the fine print in the budget, to encourage people to realize capital gains now before the implementation on June 25, at the lower rate.”
Wiseman said that by doing this, the federal government is essentially bringing forward government tax revenue from future years. “This to me is the Ponzi scheme that is being put in place with this capital gains tax,” he said.
“In other words, what the government is doing is stealing tax revenue from future governments in order to bring it in to the fiscal 2025 year.”
Wiseman argued that if the proposed capital gains changes come into effect, they would act as a “tax on innovation,” which will discourage investment in Canada.
“I happen to believe that this will have an impact in terms of capital spending in the country. Why spend here? We're in a competitive environment for capital,” he said.
“Why, if I was a business, would I spend in Canada when I can spend in another country, whether it be in Europe with lower rates or in the US with lower rates? But to me, even leaving that aside, the implementation of this is disingenuous.”
Finance Minister Chrystia Freeland officially introduced a motion in parliament on Monday to amend the capital gains tax inclusion rate as proposed in the Liberals’ budget tabled in April.
“As of June 25, 2024, the capital gains inclusion rate—the amount of capital gains that are taxable—will increase from one-half to two-thirds on capital gains realized annually above $250,000 by individuals and on all capital, gains realized by corporations and most types of trusts,” the Finance Department said in a Monday news release.
“This will make Canada’s tax system fairer and raise $19.4bn over five years to pay for investments to build nearly four million new homes, to make life cost less, and to grow the economy—for every generation, particularly Millennials and Gen Z.”
The motion will be voted on by members of parliament later this week, Bloomberg reports.
