Bad government policy on capital gains leads to more distrust, more departures
There’s no shortage of studies, articles and papers on the deployment of public policy by government and the behavioural impact it has on citizens, so most governments say they are well advised by so-called public-policy experts when introducing new laws.
Notwithstanding such academic studies and experts, let’s apply a little common sense: Governments that introduce new policies that are so obviously bad or flawed can expect significant behaviour changes and/or backlash.
That’s what we have had with the proposed capital gains inclusion rate increase, which was introduced as part of the 2024 federal budget. For individuals, the capital gains inclusion rate will increase to two-thirds from its current 50 per cent rate for any annual capital gains realized in excess of $250,000 after June 24, 2024. For corporations and trusts, no such $250,000 threshold will apply.
The government said this would impact only 0.13 per cent of taxpayers, which is both blatantly false and purposely misleading. The simple truth is that these new measures will impact virtually Canadians in a direct or indirect way. In a world where trust levels in government are already low, such misleading messages cause many to push back and further distrust what is being fed to us by governments.
Notwithstanding that, there will always be a significant part of the population that will lap up government pablum. The government knows this and it counts on it in order to garner support and hope that the number of people who backlash against such false messaging is not too great.
Similarly, with the government feeling the heat shortly after the introduction of these proposals, Prime Minister Justin Trudeau took a cheap shot at accountants since they can
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