EDITORIAL: If it isn’t law, it’s not a tax

Published Jan 09, 2025  •  Last updated 0 minutes ago  •  2 minute read

Canada Revenue Agency national headquarters on Mackenzie Avenue in Ottawa. Photo by Errol McGihon /POSTMEDIA

The shutdown of Parliament has raised an interesting question for Canada Revenue Agency (CRA): When is a tax not a tax? The answer is simple. If it hasn’t been approved by Parliament, then a tax is not a tax.

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Yet, as Postmedia columnist Brian Lilley reports, the CRA is pushing ahead with Prime Minister Justin Trudeau’s plan to change the capital gains tax inclusion rate.

Under the proposed plan, the inclusion rate would go from one-half to two-thirds on amounts of more than $250,000 each year.

The government introduced a Ways and Means motion on Sept. 23 to introduce the change, but it was never voted on. When prorogation occurs, all business of Parliament stops. Bills that haven’t been passed into law die on the order paper. But never mind the niceties of the democratic process, the CRA is going to push ahead anyway.

The agency justified it in an email to Lilley: “In the event that Parliament is prorogued, or dissolved, the CRA will generally continue to administer proposed legislation consistent with its established guidelines.

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“Upon resumption of Parliament, if no bill is passed in the House of Commons, and the government signals its intent to not proceed with the proposed measures, the CRA would cease to administer them.”

Wouldn’t it be wiser to hold off, given the fragile nature of this minority government and the fact all major Opposition parties have indicated they’ll bring down the government at the first opportunity?

It’s not as if Trudeau’s fiscal plan has been heartily endorsed by MPs. In a scathing letter of resignation, his former finance minister Chrystia Freeland slammed what she called “costly political gimmicks” as the government gears up to deal with the new Trump administration. If his former cabinet ministers don’t like his fiscal plan, what are the chances it will survive a vote in the House of Commons? Zero to none.

These are challenging times. With Trump’s threatened 25% tariffs on Canadian imports, now is not the time to be meddling with capital gains.

If, as expected, this government falls at the first non-confidence vote, we can expect a new government by the summer. The CRA should wait for the outcome of that vote before implementing the changes.

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