Breaking down the capital gains tax changes

Reuters

Canada's capital gains tax rise will further knock productivity, say economists

Canada's plan to raise taxes on the savings of wealthy people and corporations is likely to hold back investment, potentially adding to the productivity malaise that has held back economic growth in recent years, say economists. In a bid to increase revenue to pay for housing and other programs, Canada's annual budget on Tuesday proposed increasing the share of capital gains that is subject to taxation to two-thirds from one-half for people with annual investment profits greater than C$250,000 ($181,752) as well as for companies and trusts. Raising capital gains taxes could discourage savings, say economists, a key driver of business investment, which fell in the fourth quarter for the sixth time in the last seven quarters and has been unable to sustain a move above the 2014 peak.