Bill Morneau slams Freeland's budget as a threat to investment, economic growth

Finance Minister Chrystia Freeland's predecessor Bill Morneau says there was talk of increasing the capital gains tax when he was on the job — but he resisted such a change because he feared it would discourage investment by companies and job creators.

He said Canada can expect that investment drought now, in response to a federal budget that targets high-end capital gains for a tax hike.

«This was very clearly something that, while I was there, we resisted. We resisted it for a very specific reason — we were concerned about the growth of the country,» he said at a post-budget Q&A session with KPMG, one of the country's large accounting firms.

Morneau, who served as Prime Minister Justin Trudeau's finance minister from 2015 to 2020 before leaving after reports of a rift, said Wednesday that Freeland's move to hike the inclusion rate from one-half to two-thirds on capital gains over $250,000 for individuals, and on all gains for corporations and trusts, is «clearly a negative to our long-term goal, which is growth in the economy, productive growth and investments.»

Morneau said the wealthy, business owners and corporations — the people most likely to face a higher tax burden as a result of Freeland's change — will think twice about investing in Canada because they stand to make less money on their investments.

«We've created a disincentive and that's very difficult. I think we always have to recognize any measure that creates a disincentive for investment not only impacts us within the country but also impacts foreign investors that are looking at our country,» he said.

«I don't think there's any way to sugarcoat it. It's a challenge. It's probably very troubling for many investors.»

KPMG accountants on hand for Morneau's