The Humboldt and District Chamber of Commerce expressed concerns about a Federal Budget measure that will impact business owners, farmers and those dispensing commercial property. Chamber Director Sarah McInnis sent a letter on behalf of the Chamber to Federal Minister of Finance Chrystia Freeland expressing “deep concerns regarding the proposed increase in the capital gains inclusion rate outlined in Budget 2024.” 

The chief criticism expressed in the letter is that the measure is “short-sighted and overly complex.” It goes on to state that the measure could be divisive in an environment that’s better served by collaboration to drive economic growth. 

At the heart of the matter is the increase in the Lifetime Capital Gains Exemption, specifically the inclusion rate that jumps to 67% for capital gains beyond $250,000. The current rate is 50% 

“We have heard from some of our farmers and business owners that when they go to sell for their retirement, that this will have a significant impact,” said McInnis in an interview. “The message from the federal government is that this is only going to affect a small number of wealthy Canadians, but that’s actually quite misleading. It’s estimated that one in five Canadian companies will be impacted by this change over the next ten years.” 

A secondary impact could be a reluctance on new businesses to enter the economy given rising exit costs. That could spiral into diminished job creation, reduction in pension returns, and the aforementioned hardship to those trying to sell properties subject to the increased taxes.  

Succession planning becomes more challenging for families looking to pass on businesses or farms. The tax change will likely drive up the costs of businesses as owner try to recoup their losses on the tax front.  

“Another concern from the Chamber is the debt servicing charges we’re going to have in 2024 and 2024 – 53.1 billion dollars in servicing charges. We are concerned with that debt.” 

Notwithstanding the debt woes, McInnis says the Chamber doesn’t see the rate changes proposed in the budget as the answer.  

The letter to the Deputy Prime Minister can be read in its entirety below.  

Dear Minister Freeland,

We, as representatives of Canadian industry associations dedicated to fostering economic growth, investing in our nation, and creating opportunities for Canadians, write to express our deep concerns regarding the proposed increase in the capital gains inclusion rate outlined in Budget 2024.

While we acknowledge the government's aim to address Canada's deficit, we believe that the proposed measure is short-sighted and overly complex. Moreover, it threatens to divide rather than unite us at a time when a collaborative approach is needed to drive economic growth.

Although Budget 2024 includes some positive initiatives for small businesses, such as the increase in the Lifetime Capital Gains Exemption, we are troubled by the proposed hike in the inclusion rate to 67%. We believe that support measures for businesses should be equitable and not contingent upon tax increases, especially given the current challenges facing Canada's productivity across various sectors.

Over the years, our tax system has become increasingly complicated, with numerous exemptions and caveats. We advocate for an end to the reliance on tax-and-spend policies, which we believe hinder innovation and growth, ultimately harming both current and future generations of Canadians.

While some may argue that the increase in the inclusion rate is necessary for generational fairness, we believe that true fairness should consider the long-term implications of today's actions on future prosperity. It is essential that Canadians unite around the common goal of increasing economic opportunity for all.

Contrary to assertions that the increase will only impact the wealthiest Canadians, we believe that it will have far-reaching effects, directly or indirectly impacting businesses and individuals across the country. These effects could include hindering the creation of new companies and jobs, reducing access to medical professionals, and threatening the retirement plans of millions of Canadians.

In summary, we believe that the proposed increase in the capital gains inclusion rate will limit opportunities for all generations and make Canada less competitive and innovative. We urge the government to reconsider this measure and instead focus on fostering a simple, fair, and principled tax system that works in the best interests of Canadians and Saskatchewanians.


Sarah McInnis Executive Director Humboldt & District Chamber of Commerce