In the latest budget, the federal government of Prime Minister Justin Trudeau has introduced a series of new taxes on high-income earners to help fund social programs across Canada.
The Liberal government plans to increase taxes on capital gains for Canada’s highest earners, which it says will add $19.30 billion to federal coffers over the next five years.
Specifically, the government is targeting the wealthiest 0.13% of Canadians by raising the capital gains inclusion rate for people who have more than $250,000 in capital gains in a year.
The rate will increase from one-half (50%) to two-thirds (67%) and will also apply to all capital gains realized by corporations and trusts.
The new tax is expected to impact 12% of Canada’s corporations and Canadians with an average annual income of $1.42 million.
The Liberals government stressed that the tax change will not impact 99.9% of Canadians.
The new tax revenue will be used to fund a myriad of social programs across Canada, including housing for immigrants and low-income Canadians.
Ottawa has pledged to build nearly four million homes by 2031 at a cost to taxpayers of $8.5 billion.
The federal government announced a myriad of other social programs in their 2024-25 budget, including $1.5 billion over five years to launch a universal pharmacare plan and $6.1 billion for a new disability benefit.
In all, the 2024 federal budget includes $52.90 billion in new spending.
The new spending is largely being funded through deficits, with the federal budget deficit projected to reach $39.80 billion in the current 2024-25 fiscal year and hit $64.30 billion by 2028-29.
