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A decision by Quebec to follow Ottawa’s lead and increase its capital gains inclusion rate is drawing fire from the province’s manufacturing sector.
“This measure will harm the investment by manufacturing companies, which is not desirable as we are going through a difficult economic period and companies must invest to modernize and decarbonize,” Véronique Proulx, CEO of Manufacturiers et Exportateurs du Québec, said in a statement.
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Proulx’s remarks come after the government announced in a statement late Thursday that it would follow Ottawa’s lead and adjust its tax system to harmonize it with five measures contained in the federal budget tabled on Tuesday, including the key measure of increasing the capital gains inclusion rate.
Ottawa announced that beginning June 25, two-thirds rather than one half of capital gains — the profit made on the sale of assets — will be subject to taxation. The increase on the inclusion rate will apply to capital gains higher than $250,000 by individuals as well as all capital gains made by corporations.
Other measures in the federal budget being eyed by Quebec include an increase in the cumulative exemption for capital gains and the creation of an incentive program for Canadian entrepreneurs.
The provincial finance ministry said it intends to apply the modifications on the same dates as those of the federal budget.
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