More than 1,000 CEOs and Canadian tech business leaders have joined forces to sign an open letter addressed to Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, urging them to reconsider the proposed capital gains tax hike.
The letter, coordinated by the Canadian Council of Innovators (CCI), argues that the tax increase will impede investment in the country. It emphasizes that taxing investment is not a sustainable path to economic prosperity, stating, “You cannot tax your way to prosperity. But in the 2024 federal budget, we see a government trying to hike taxes on investment. Anybody with experience in entrepreneurship and investment can see how this will stifle growth.”
The 2024 budget proposed by Ottawa aims to increase the taxable portion of capital gains to two-thirds from one-half, estimated to generate $20 billion in government revenue over the next five years.
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‘Not Just for the Rich’
According to Jake Fuss, director of fiscal studies at the Fraser Institute, the capital gains tax affects not only the wealthy but also many Canadians indirectly through hindered investment opportunities.
Productivity Crisis
The business leaders who signed the letter also expressed concerns that the tax hike could exacerbate issues within Canada’s labor force.
“Highly skilled talent is more mobile than ever before, and among innovative high-growth companies, stock options—subject to capital gains tax—are a key form of compensation,” the letter highlighted. “Canada’s economy requires productivity growth, innovation, and most importantly, investment.”
Tara MacIsaac contributed to this report.
