(Quebec) The Legault government is studying the idea of imitating Ottawa and increasing the tax payable on capital gains, which would bring in hundreds of millions of dollars per year at a time when its finances are in the red .
You should know that Quebec has always applied a tax rate identical to that of Ottawa for decades.
Capital gain is income earned from the sale of property that has increased in value such as stocks, cottages, second homes and plexes. This excludes the main residence. Currently, we pay tax, both federally and provincially, on half of capital gains. This is preferential treatment compared to work income.
Under the federal budget tabled Tuesday, as of June 25, the inclusion rate – the portion of the capital gain that is taxable – will increase from half (50%) to two-thirds for everything over $250,000. This change is expected to affect some 40,000 people and 307,000 companies, according to federal estimates.
The Trudeau government estimates that it will collect in the first year 6.9 of the additional 19.4 billion expected in five years.
The Press contacted the office of Quebec Finance Minister Eric Girard to find out if Quebec will harmonize its rate at 66% with the federal government, as it has always done in the past. He made it known that it is “not automatic”. “We are still studying the relevance and the need to harmonize,” we added. And that is what he is doing now following the tabling of the budget.
With the inclusion limited to 50% of capital gains in the tax payable, Quebec deprived itself of 2.4 billion dollars in terms of personal tax and 1.7 billion in the case of corporate tax in 2023. If the inclusion rate increases to 66%, one would think that the government would receive more than an additional billion. But as Ottawa intends to apply the new rate to any capital gain greater than $250,000, it is difficult to arrive at a precise estimate for Quebec but it could be less than a billion. The operation could bring in hundreds of millions of dollars.
On March 12, Eric Girard tabled a budget showing a record absolute deficit of $11 billion. To get out of the hole by 2029-2030, two years later than planned, the minister affirmed that he does not intend to increase the tax burden. “We have just lowered taxes, we will not raise them,” he replied.
During the 2012 elections, the Coalition Avenir Québec promised to increase the taxation of capital gains, by increasing the inclusion rate from 50% to 75%. “To be able to finance our measures, we are asking an effort from everyone, including those who are a little more fortunate,” said its leader François Legault. This commitment subsequently disappeared from the list of CAQ promises.
In a letter published by The Press recently, professors Antoine Genest-Grégoire (Research Chair in Taxation and Public Finance at the University of Sherbrooke) and Olivier Jacques (researcher at CIRANO) wrote that “82% of capital gains are generated by the top 10%. rich and 57% by the top 1%.
reference: www.lapresse.ca