By Paul Vieira
OTTAWA--Canada's Conservative Party has formally asked the country's finance minister to cease collecting higher capital-gains taxes because implementing legislation never passed.
In a letter the Tories published on the social-media platform X, they ask Finance Minister Dominic LeBlanc to abandon the measure altogether, or at the very least direct Canada's tax-collection agency to stop collecting the higher tax until after an election.
"You have a responsibility to stop this job-killing tax hike before it does even more damage to our economy," Conservative Party lawmakers said in the letter to LeBlanc. Some of Canada's biggest business groups have made similar demands of the finance minister, arguing the increase in capital-gains tax lacks legitimacy because the country's parliament never formally approved implementing legislation.
A spokesman for LeBlanc directed queries to the Canada Revenue Agency, or the country's version of the Internal Revenue Service. A representative for the agency didn't immediately respond to a request for comment.
The Conservatives hold a sizable lead over the governing Liberals in public-opinion polls, between 20 and 25 percentage points, and are widely tipped to form the next government with an election set for this year. They had previously opposed the tax, and have pledged, should they win power, to appoint a special committee charged with recommending wholesale changes to the country's tax code.
Prime Minister Justin Trudeau stepped down last week as leader, but will remain prime minister until Liberal Party members pick a new leader on March 9.
In the meantime, parliament is dissolved and won't return to work until March 24. Most political watchers expect a spring election, as all three main opposition parties have vowed to defeat the minority Liberal government in a confidence vote as soon as the legislature reconvenes. An election must be held no later than October.
Legislation that was before lawmakers prior to dissolution has been expunged and must be reintroduced, thereby restarting the entire legislative process.
The Liberal government unveiled in April an increase in how much profit, or capital gain, realized in an asset sale is subject to tax. The measure stipulates that 66% of a realized capital gain is subject to tax, up from 50%, and that took effect in late June. Lawyers and financial advisers say clients sold assets ahead of that late June deadline to avoid that higher rate.
Under Canada's parliamentary system, taxation measures are effective as soon as a minister introduces a so-called ways and means motion in the legislature. Legislation may be introduced at a later date.
A report from the C.D. Howe Institute, a think tank that tends to favor business-friendly policies, warned the capital-gains tax increase threatens to dissuade business investment, and lead to a decline in Canada's economic output.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
01-14-25 1112ET
