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Inheritance tax, capital gains hike rejected
At a time when all levels of government are searching for new revenue streams to offset the costs of the COVID-19 pandemic, Liberal delegates rejected a resolution from the party's Ontario chapter to hike the capital gains tax.
Currently, when an investment is sold — a stock, a mutual fund or any one of a number of other assets — 50 per cent of any increase in value is taxed as income.
For example, if a person buys a share in a publicly traded company for $20 and sells it for $40 at a later date, then $10 will be added to a person's income for tax purposes; the other $10 earned goes untaxed.
This preferential tax treatment is designed to encourage people to make investments to drive economic growth and provide companies with easy access to capital. Critics maintain this unfairly benefits the rich.
The Ontario chapter proposed reducing the capital gains tax exemption to zero — meaning all investment gains would be taxed as income.
As part of the same proposal, the Ontario chapter pitched an "inheritance tax" on all assets over $2 million. That proposal did not specify the rate at which these assets should be taxed, or how and when such a system would take effect. Delegates rejected the idea along with the suggestion to increase the capital gains tax by a 62-38 margin.