Carney Reverses Capital-Gains Tax Hike Ahead of Election

On Friday, Canadian Prime Minister Mark Carney fulfilled his campaign promise by reversing a proposed hike in the capital-gains tax. This decision comes just ahead of a widely anticipated snap election, likely to occur in late April or early May.

Acknowledging Entrepreneurs’ Role in Economic Growth

Carney’s move to abandon the planned tax increase highlights his recognition of the crucial role entrepreneurs play in the country’s economic development. Justin Trudeau’s predecessor, Carney, initially proposed the tax hike.

Carney’s Vision for Economic Expansion

“Revoking the capital-gains tax hike will spur investment across our communities and motivate entrepreneurs, builders, and innovators to expand their businesses in Canada, generating more high-paying jobs,” Carney stated. The Prime Minister took office only a week ago and remains committed to policies that foster growth.

A Promise Kept During Leadership Campaign

During his leadership campaign, Carney vowed to reverse the tax change. Chrystia Freeland also made the pledge. She lost to Carney in the leadership race. Both leaders recognized the tax’s potential harm to investment and economic growth.

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The Tax Proposal’s History and Opposition

In the final budget under Trudeau and Freeland, a proposal aimed to raise taxable capital gains from 50% to 66%. Business leaders and startups strongly opposed this measure, fearing investment would decline. The proposed change was seen as a potential setback for economic growth. Critics argued it could further impact low productivity growth during challenging times.

The Reversal After Parliamentary Delay

Although the tax increase was never passed by Canada’s parliament, tax authorities were ready to implement it this year. Following public backlash and legal uncertainty, Canada delayed the tax hike until next year. Carney’s decision effectively nullifies the proposed change.

Snap Election Expected Soon

Carney is expected to call a snap election this weekend before parliament reconvenes. The Liberals have gained momentum in the polls and are preparing for re-election. Carney’s background as a central banker positions him as a leader capable of navigating the country through complex economic challenges. His main challenger, Conservative Party Leader Pierre Poilievre, had also pledged to eliminate the tax increase.