Liberal leadership candidates signal party pivot on capital gains tax rate changes

Candidates vying for the Liberal leadership race are reversing course on the party’s controversial capital gains tax rate changes announced in last year’s budget.

Former Finance Minster Chrystia Freeland’s team confirmed this week that she would not go forward with the policy she once championed, while notable candidates such as former Bank of Canada governor Mark Carney and former House Leader Karina Gould indicated plans to review the policy.

The leadership hopefuls revealed their stances on the policy one week after Conservative Party leader Pierre Poilievre committed to scrapping it if he is able to form government after this year’s federal election.

“We need to change our policies and make a lot of changes to prepare to succeed in this moment.”

The Government of Canada proposed raising the inclusion rate on capital gains—which include profits from the sale of assets like stock or property—from one-half to two-thirds last April. The changes were originally set to take effect in June 2024, but were curiously absent from the Liberals’ motion to introduce the budget to the House of Commons.

The proposed changes drew significant criticism from Canadian tech leaders, and the government has yet to actually make the policy into law. With Parliament prorogued, the Canada Revenue Agency is moving forward under the assumption that the changes will come into effect.

Carney’s deputy campaign manager, Marie-Pascale Des Rosiers, told BetaKit in an email statement that Carney believes making Canada the strongest economy in the G7 will require comprehensive tax changes and tax cuts.

“Since the policy was introduced in last year’s budget, Mark Carney has been clear that it sent the wrong signal at the wrong time to the builders and innovators who make it possible to grow our economy,” Des Rosiers said. “He believes that wealth inequality is one of the most urgent issues of our time, but growth that isn’t created can’t be shared.”

Des Rosiers added that steps like those are best made as part of broad tax reform and indicated Carney plans to make his own announcements on such steps soon.

Gould took a similar approach, saying in a scrum this week that she didn’t believe Trudeau’s Liberals implemented the changes in the right way.

“We didn’t have all the right options on the table,” Gould said in French. “I’m having good conversations with tech leaders and others who are affected by this, and I think we should change this program, but I’ll have more to say in the coming days.”

Meanwhile, a spokesperson for Freeland’s campaign told BetaKit that the candidate would not move forward with the legislation to increase the capital gains inclusion rate. In a media scrum this week, Freeland attributed her changed stance to the economic uncertainty caused by United States President Donald Trump.

“We need to change our policies and make a lot of changes to prepare to succeed in this moment,” Freeland said in French. “I am the person who can and will do it.”

Council of Canadian Innovators president Ben Bergen said in an X post that Freeland’s reversal is “a welcome and necessary course correction,” a sentiment echoed by president and CEO of the Canadian Federation of Independent Business, Dan Kelly. Both interest groups heavily criticized the policy after it was introduced in the 2024 budget.

BetaKit reached out to other declared Liberal leadership candidates, including Nepean MP Chandra Arya, businessman Frank Baylis, Sydney—Victoria MP Jaime Battiste, and former Brampton MP Ruby Dhalla, for their stance on the capital gains tax rate changes but did not hear back by press time.

Carney, Freeland, and Gould are the only candidates to have endorsements from Liberal caucus members as of publication. So far, Carney has 43 endorsements, Freeland has 26, and Gould has two, according to the CBC.

With files from Madison McLauchlan.

Feature image courtesy Wikimedia Commons under CC BY 4.0.