LILLEY: Taxman takes more of Canadians' capital gains — even though hike not law

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The idea of no taxation without representation is as Canadian as maple syrup, a wheat field or an oil jack standing distantly in the field, but don’t tell that to the Canada Revenue Agency. They plan on continuing to collect more taxes from you based on tax changes that have not yet passed the House of Commons.

They are going ahead even after the Governor General prorogued Parliament on Monday.

The Trudeau government announced that it would change the capital gains inclusion rate from one-half to two-thirds — on amounts of more than $250,000 each year — in Budget 2024, which was released on April16. The government’s Ways and Means Motion to introduce the necessary legislation was tabled on Sept. 23, but was never voted on.

For most bills and government business, a failure to pass them before Parliament is shut down means that they die on the order paper. It seems the capital gains tax changes will live on because the CRA says they will be collecting the tax increase as if it had passed.

“Although these proposed changes are subject to parliamentary approval, consistent with standard practice, the Canada Revenue Agency (CRA) is administering the changes to the capital gains inclusion rate effective June 25, 2024, based on the proposals included in the Notice of Ways and Means Motion tabled Sept. 23, 2024,” CRA wrote in response to emailed questions.

“Parliamentary convention dictates that taxation proposals are effective as soon as the government tables a Notice of Ways and Means Motion; this approach provides consistency and fairness in the treatment of all taxpayers.”

That may be the way things have been done, thus the term convention, but that doesn’t make it right, especially since these are tax changes that have not been voted on and the House in no longer sitting.

Not in the view of CRA, which seems to think it lives by its own rules.

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“In the event that Parliament is prorogued, or dissolved, the CRA will generally continue to administer proposed legislation consistent with its established guidelines,” CRA’s email stated.

“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.”

Translation, we think the government still wants to go ahead with a tax change that Parliament has never voted on and we will collect them until told otherwise.

Some Canadians may bristle at the idea that the concept of no taxation without representation is Canadian at all, they will view it as American. They’d be wrong, it goes back to the English Magna Carta, which Parliament deems a constitutional document in Canada.

“No scutage or aid shall be imposed in our realm unless by the common counsel,” the Magna Carta reads.

This principle has grown and expanded over the centuries and is part of the democratic fabric of Canada. There is no way that CRA should be moving ahead with a tax change never voted on or passed into law at this point. It makes a mockery of our democracy.

The people’s representatives, assembled on the House of Commons, are the only ones who can decide on increases taxes, on allowing or denying spending, not a bureaucrat in an agency in Ottawa. CRA itself makes the case that they are not responsible for taxation policies or decisions, only implementing that which Parliament has passed.

“The CRA has no power to impose new taxes, remove existing taxes, raise or lower taxes, or decide how tax money will be spent once it is collected. These powers belong to the elected representatives of the Canadian people in Parliament and in provincial legislative assemblies,” states their website.

“Any changes in taxation must be passed by the House of Commons and by the Senate in order to become law.”

These tax changes should not go through at this point, not unless and until they are passed by Parliament.

Anything short of that is undermining the very basis of our Parliamentary democracy.