Chrystia Freeland will abandon her controversial capital gains tax increase if she becomes Canada’s next prime minister, a source close to her campaign says. This reverses a policy she introduced as finance minister in April, when she argued wealthy investors should pay more to fund government programs.
The leadership candidate sees Trump’s promised tax cuts and protectionist policies as a threat to Canadian investment. Last year, Freeland championed the tax hike, which raised the inclusion rate to two-thirds on gains over C$250,000, calling it a matter of economic justice.
Freeland defended the measure as essential for funding social programs and maintained Canada’s rates would stay competitive with major US jurisdictions. Her policy targeted C$19 billion in revenue over five years, promising provinces C$12 billion of the proceeds.
Related: New Analysis Casts Doubt on Federal Capital Gains Tax Estimates
Former Finance Minister Bill Morneau and ex-Bank of Canada Governor David Dodge warned the change would chill investment. Business groups and medical organizations predicted it would drive professionals like doctors from Canada.
Tax authorities enacted the change through a preliminary motion, but parliament hasn’t passed formal legislation. Freeland, who departed Trudeau’s cabinet in December before his January resignation, will drop the legislation if she wins the Liberal leadership on March 9, the source said.
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