Achi news desk-
Despite significant criticism from business owners and entrepreneurs that parts of the federal government’s latest budget — particularly changes to capital gains taxes — will stifle innovation, Small Business Secretary Richie Valdez insists it won’t.
“We recognize that this is a very challenging time,” Valdez told CTV’s Question Time host Vasi Kapelos, in an interview that aired Sunday.
She added that the goal of the latest budget is to “create fairness for every generation”, while citing other budgetary priorities, namely building housing stock.
“To be able to increase the cost of accessibility in this country, we have introduced measures to help support small and medium-sized businesses across the country,” she continued, pointing to changes to the lifetime capital gains exemption as an example.
Included in the new federal budget placed on the desk is a proposal to change the capital gains inclusion rate, which the government estimates will affect a narrow group of high-income individuals and about 12% of corporations.
The Liberals plan to increase the taxable portion of capital gains from half to two-thirds for all corporations, and for individuals with capital gains over $250,000. This tax increase is expected to generate $19.3 billion in revenue over the next five years.
But some Canadian business owners and entrepreneurs warn that the change could stifle innovation.
Shortly after the budget was revealed, Shopify president Henry Finkelstein took to X — formerly Twitter — to voice his concerns.
“Innovators and entrepreneurs will suffer and their success will be punished – it’s not a wealth tax, it’s a tax on innovation and risk-taking,” he wrote.
“At a time when our country is dealing with critically low productivity and business investment, our political leaders are failing our country’s entrepreneurs,” he added.
Both the heads of the Canadian Innovators Council and the Canadian Venture Capital and Private Equity Association issued similar warnings.
During a speech in Halifax last month, Bank of Canada senior deputy Carolyn Rogers discussed Canada’s “fertility problem,” calling it an “emergency.”
She also cited Statistics Canada data showing that despite a “small gain” at the end of last year, the country has seen productivity decline for the past six quarters in a row.
When pressed on why Canadians should trust the Liberals to spur innovation and productivity — especially at a time when a top Bank of Canada official is calling the country’s low productivity level “an emergency” — Valdez said her party has implemented several measures to help small- and medium-sized businesses.
“We’re going to continue to invest in our entrepreneurs across the country, and of course, make it a more inclusive environment for them to be able to do that,” she said.
When pressed further on the Liberals’ record, given the number of independent Canadians has been steadily declining since the start of the COVID-19 pandemic, Valdez did not directly address the statistics.
Valdez listed tax breaks for some businesses and initiatives to encourage women to enter the workforce, such as the $10-a-day childcare program.
“I met with many small and medium-sized businesses across the country, and had a conversation with them,” Valdez said instead. “They’re looking to start their own business and we’re trying to encourage, and be able to do that through different means to create a more inclusive environment for entrepreneurs.”
“So I believe there is a lot of interest there,” she also said. “And we’re going to continue to encourage and support small businesses across this country.”
With files from CTV’s The Question Season executive producer Stephanie Ha
