The average capital gains tax in developed countries is 19.55%. With the budget this week by the Federal Government, it increases the maximum Capital Gains rate from taxing 50% on the gain, to 66.67%. For high income earnings, who are at a marginal tax rate of 48%, this means that the new rate will effectively be 31.7%, or about 50% more than the average in developed countries. The increased rate in capital gains is hoped to generate an additional $21.9 billion over the next five years.
Canada’s record on attracting investment in the last few decades, and particularly in the last 9 years, has been dismal. As an example, in 2021, the average investment per worker in the USA was US$26,751, whereas the average investment per worker in Canada was US$14,687, or a 55% rate compared to the USA. This has fallen from a rate of 79% in 2014. Former Liberal Finance Minister, Bill Morneau, has criticized the budget for driving out investment even more, through discouraging investments in Canada.
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