Composite image with themes of business, finance and government

In today’s globally competitive environment, the struggle for talent and investment has reached unprecedented levels. It’s crucial for government revenues to increase to support fiscal responsibility while providing the services Canadians expect. However, achieving fairness for all Canadians should not come at the cost of stifling economic growth through divisive tax measures.

Recently, the Canadian Chamber of Commerce, alongside the Canadian Federation for Independent Business (CFIB) and several other national industry associations, expressed serious concerns about a key proposal in Budget 2024 in a joint letter to the Finance Minister, Chrystia Freeland. The letter, while acknowledging some positive measures, underscores significant apprehensions about the proposed increase to the capital gains inclusion rate.

Key Concerns Highlighted

  1. Impact on Economic Growth and Investment
    • The proposed increase in the capital gains inclusion rate to 67% is seen as a threat to economic growth and investment. The letter argues that this measure will discourage investment in Canadian businesses, potentially pushing investors to seek opportunities elsewhere. Jessica Brandon-Jepp, Senior Director of Fiscal and Financial Services Policy at the Canadian Chamber of Commerce, noted that this move could signal to the world that Canada is an unwelcoming environment for investment.
  2. Generational Fairness and Economic Opportunity
    • The letter contests the government’s rationale of generational fairness, suggesting that the proposed tax hike will have far-reaching negative impacts across all generations. It highlights that one in five Canadian companies could be directly affected over the next decade, which would ripple through the economy, affecting job creation, medical practitioner availability, and the retirement plans of many Canadians.
  3. Complexity and Burden of the Tax System
    • The associations criticize the current tax system as a complex web of carve-outs and caveats, which stifles innovation and growth. They call for a comprehensive review of Canada’s tax system to make it simpler, fairer, and more conducive to economic growth.
  4. Impact on Small Businesses and Multigenerational Enterprises
    • Specific concerns are raised about the impact on small businesses, farms, fisheries, and multigenerational enterprises. The proposed changes are expected to make succession planning and business growth more challenging, which could have long-term detrimental effects on these sectors.

A Call for Rethinking Tax Policy

The letter is a call to action for the government to reconsider the proposed capital gains tax increase. It urges a shift away from tax-and-spend policies towards strategies that promote economic growth and investment. The signatories advocate for a principled, independent review of the tax system to ensure it supports rather than hinders Canada’s economic potential.

The Huron Chamber of Commerce aims to keep our members informed about these national discussions, as they could have implications for our local businesses and economy. While we generally support the positions taken by the Canadian Chamber of Commerce, it’s also crucial to consider the diverse views within our own membership.

For those interested, the full letter sent to the Finance Minister is available below. We encourage our members to read it and share their thoughts on how these proposed changes might affect their businesses and the broader community. Any comments or concerns can be forwarded to our Executive Director through the Contact Us page.

May 9, 2024

The Honourable Chrystia Freeland, P.C., M.P.
Deputy Prime Minister and Minister of Finance Department of Finance
90 Elgin Street Ottawa, Ontario K1A 0G5

Delivered via email:

As national industry associations representing Canadian companies committed to growing our economy, investing in this country and creating more opportunities for Canadians, we are alarmed to see these goals threatened by Budget 2024’s proposed increase to the capital gains inclusion rate. While this proposed measure attempts to provide a solution to Canada’s deficit, it is shortsighted and complex, and it sows division at a time when we need a Team Canada approach to economic growth.

While the 2024 budget includes positive measures to assist small businesses, like increasing the Lifetime Capital Gains Exemption to $1.25M, the increase in the inclusion rate to 67% is deeply concerning to Canada’s business community writ large. Given Canada’s growing productivity crisis which extends across the economy, supports for businesses like those announced in Budget 2024 should be extended equally across sectors and should not be contingent on tax increases.

Under successive governments, our tax system has become a complicated web of carve-outs and caveats. Our country must end its reliance on tax-and-spend politics, which is undermining innovation and growth to the detriment of both today’s Canadians and future generations.

The capital gains increases proposed in Budget 2024 are being defended as a matter of generational fairness. In fact, generational fairness should consider the actions we are taking today at the expense of our future prosperity. At this important juncture, Canadians should be united around a common goal: increasing Canada’s economic opportunity.

The assertion that the increase of the inclusion rate to 67% will only affect a small percentage of the wealthiest Canadians is misleading. In fact, one in five Canadian companies are likely to be directly impacted over the next ten years and the effects of this tax hike will be borne by all Canadians, directly or indirectly. Whether through the diminishing the creation of new companies and jobs, reducing the availability of medical practitioners, eroding hard-earned pension returns, altering the delicate risk-reward balance of countless investments, or threatening the retirement plans of millions of Canadians who pinned their plans on the proceeds of selling a family cottage or a small business grown over a lifetime, the effects will ripple from coast to coast to coast.

This proposed tax hike will only serve to undermine the government’s stated policy objectives: bolstering health and dental care for Canadians, attracting and retaining skilled professionals, increasing investment and innovation, and helping small businesses thrive. If enacted, this change will have significant knock-on impacts, including making it harder for Canadians to access medical practitioners, limiting employment opportunities, and making the prospect of starting, growing or succession planning a business more difficult especially for multi-generational businesses such as farms, fisheries and small businesses.

Put simply, this measure will limit opportunities for all generations and make Canada a less competitive, and less innovative nation. At a time when we are already urgently struggling to reignite our nation’s lagging productivity, increasing taxes on productive investments and throttling Canadian potential will have profound, long-lasting and potentially irreversible repercussions.

We are calling on the government to heed the advice of many of Canada’s most respected leaders and commit to scrapping the ill-advised inclusion rate increase.

Canada needs a simple, fair and principled tax system that works in the best interests of Canadians. We urge all political parties to commit to a comprehensive, independent review of Canada’s tax system, which is currently complicated and burdensome and drives away investment.


Hon. Perrin Beatty, P.C., O.C.
President and CEO
Canadian Chamber of Commerce

Dan Kelly
President, CEO and Chair
Canadian Federation of Independent Business

Dennis A. Darby, P.Eng., ICD.D
President & CEO
Canadian Manufacturers & Exporters

Kim Furlong
Chief Executive Officer
Canadian Venture Capital and Private Equity Association (CVCA)

Sherry McNeil
President and Chief Executive Officer
Canadian Franchise Association

Dave Carey
Vice-President, Government & Industry Relations
Canadian Canola Growers Association