Front Burner - Politics! Taxing the rich, birth control and hybrid work

Episode Date: May 16, 2024

CBC’s chief political correspondent, Rosemary Barton, returns to explain the latest dust-ups in Ottawa.Will the tax changes the Liberals are promising impact only Canada’s richest?Why is a fight over public service workers returning to the office three days a week leading to threats about government services?And why are the NDP accusing the Conservatives of attacking women’s reproductive health?

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hey everybody, Jamie here. So on today's show, my colleague Rosie Barton is here. She is the chief political correspondent at the CBC. And we are going to talk about all of the fights unfolding in Ottawa. The changes to capital gains taxes that are getting a ton of attention.

Public service workers who are balking at going back to work three days a week. And the debate over women's reproductive health that's been playing out on Parliament Hill. All right, let's get to it. Rosie, hi. Hey, Jamie. So let's start with the upcoming changes to the capital gains tax. I think that there's still some confusion about what these changes actually mean. So I just wonder if that's a good place to start here. Can you put it for me as plainly as possible? You know, what is a capital gain? And like, what kind of things could that money come from? Totally. And I should start out by saying this is also

something that I had to Google as I realized that this was going to be in the budget. And now, thankfully, I understand a lot more than I did a few weeks ago, which is good for my job. Basically, a capital gain is a profit that's made from the sale of an asset. And the asset could be an investment. It could be stocks or bonds. And it could be real estate. There's a couple caveats to what it doesn't apply to. It doesn't apply to the sale of your primary residence.

So if you're looking to sell your home one day and, you know, live off of that money, you'll still be fine. And it doesn't apply to sort of places that are tax-free zones. So your RRSP, if you have one, your RESP, if your kid has one, those kinds of things. It applies to things above and beyond those. Right. And then just explain to me what this new change is that many people are talking about. Many opinion pieces in newspapers are talking about. Yes, and sectors of the country. And we can talk about the groups that it applies to. So you may need to get out of like a little whiteboard to follow along.

But basically what they're doing is increasing the rate of inclusion for capital gains. So right now you're taxed on 50% of your capital gains, of the profit of your capital gains, right? So this would increase that inclusion rate to 65%. But what it also does is if you make $250,000 off of the sale of your cottage or your stocks or whatever, it applies to the first 50% of that $250,000. And then after that, the next $250,000, that's when the rate goes up to 65%. Remember, it's not the actual tax rate that's changing. You just have to pay tax on a bigger slice of the pie. Individuals would still pay tax on half the money they made, up to $250,000 a year.

But two-thirds would be taxable for every dollar above that level. Previously, if you made $400,000 in gains on the sale of your secondary property, you'd pay $107,000 in taxes. Under the new rate, you'd pay around $120,000. So it is a change, but the government figures that there are not that many people who are making that kind of profit off of the sale of their capital gains. Right. And so I just want to triple underline here, it doesn't mean that people will be paying a 66% tax rate. Before, people just had to add half of these kinds of profits to their regular

income taxes and didn't pay any tax on the other half. Now, after they get above a quarter million dollars of these gains, they'd start adding two thirds of the amount of the money they get taxed on for the year. So they'd pay taxes on a bigger portion of it, essentially. All right. So big surprise when it comes to taxes, there was immediately some anger, some real anger. As you mentioned, there are groups that are unhappy about this, particularly some voices in business. And what are the reasons that they've argued that this won't just hurt them, but also Canadians more broadly. Well, I should also point out that that example that I gave, that's for individuals. Corporations and trusts are taxed at the 65%. Right. And the concern there, and this is primarily, I would say, we heard mostly from the tech industry right out the gate, whether it be the leaders, the bosses of Shopify, or a whole bunch of other corporations, and some of which I've spoken to as well, who say that this is a real damaging thing for their industry, that part of what allows them to attract talent, highly skilled

talent to this country and into these kinds of jobs is the ability to say to them, okay, we're going to pay you this, but we're also going to give you these investments, these stocks and bonds that you can cash in at a later date. And it means that they will be, quote unquote, punished. Although when I said that word to the finance minister, she didn't like it. But they will be punished at a higher rate because they are making that kind of money. They're making big coins. So the tech industry is very concerned about that. They're also very concerned about how it contributes to what you'll hear a lot of economists talking about right now in this

country, and that's productivity. That there's simply not enough growth happening in particularly the private sector. So that was where the main complaint came from in the very early days. And then it started coming from other places. Doctors, for instance. Doctors don't necessarily have pensions, particularly family doctors. And a lot of times what they do is they incorporate themselves in their own business. And that's sort of where they put their retirement savings, right? So that at a later date, they can tap into it. And this would obviously affect their ability to do that. There's lots of ways to work around it or to protect a little bit more of

their money. I'm no tax lawyer, but there are suggestions there. But it's still deeply concerning, I think, for doctors, particularly at a time when, obviously, again, we're trying to attract more doctors into the country. And then the final group of people who were heard from very loudly as well are cottage owners. You can own a cottage and not be quote unquote rich. And if people are planning to, say, pass that down to their children or sell it and then give the proceeds of that to their children, there are concerns there, I think, for people who realize that their secondary residence will also be taxed now at this higher rate. Right, right. And so you mentioned the conversation that you had with the finance minister,

Krista Freeland, and how she kind of balked at the term punishment. I saw on Monday, Trudeau really doubled down, releasing this very produced video defending the changes. Starting June 25th, if someone makes up to $250,000 in capital gains, they're still going to pay taxes on only half of that. But for anything they make over $250,000, they're going to pay a little more. See, a fair system creates a fair country. And that's what I want. A fair Canada for every generation.

You know, talk to me a little bit more about the argument that they are making, you know, how this benefits, according to them, the vast majority of Canadians. Listen, when they were putting together this budget, they realized that they needed another source of revenue to do all the other things that the government wants to do right now, including, of course, building a lot of homes as quickly as possible. They think that this change will bring in something like $20 billion. And the way they wanted to go about getting that money was to tax the wealthiest Canadians, something they promised back in 2015. And they did, and it did allow them to do different things

for a broader swath of society. And this, too, is how they're framing did, and it did allow them to do different things for a broader swath of society. And this too is how they're framing this, that it's time for wealthy Canadians to pay their quote, fair share of taxes, and that that fair share is going to then allow them to do things for Canadians. What's interesting here is you're going to hear more and more this word fairness. And that's in part because if you talk to liberals, they say that when the conversation that we've been hearing is about affordability, is about cost of living for Canadians, they lose that conversation. They lose that debate because the conservatives have very successfully said that everything is more expensive under the liberals. of the Liberals. But if they can shift that conversation, that political conversation, to it being about fairness, well, there they have a little bit more room, they think, to try and convince particularly younger Canadians, and I know you've talked about that,

that there is an attempt by the government to make things fair across the generational divide. And so these wealthy Canadians, or maybe not so wealthy Canadians, are older Canadians. And they're saying to older, wealthier Canadians primarily, listen, it's time to help young people get ahead too. Right. I saw him in that video talk about how they're going to take the money and put it into their housing initiative. So sort of related to this, the Liberals announced the changes, as I think you mentioned, as part of the federal budget last month. But then in the liberals' huge bill that would actually put a lot of the budget's proposals into law, they're leaving the capital gains measure out, even though it's supposed to take effect in the next month. Right.

So, like, why would they do that? Why are they leaving it out, especially considering the fact that you're saying, you know, they're probably not going to walk this back? Yeah, so they're expected to take effect June 25. So they actually are running out of time to get this going, because there's probably only five weeks of the House of Commons left. The answer is, it depends on who you talk to. Some liberals will tell you that the finance department didn't realize how complicated it would be. And they needed to hive it off to make sure that they were going to do it properly. Other liberals will tell you that they wanted to also just leave the door open in case there was a little bit of wiggle room that

was needed. But I think another group of liberals, and this is the one that I would tend to, all these things can be true, by the way, but this is the one that I would lean into more. That it's political. That it's political. Surprise, surprise. All these things can be true, by the way, but this is the one that I would lean into more. That it's political. That it's political. Surprise, surprise. That if you have Conservatives who have already said we're going to vote against the budget, they can easily vote against the Budget Implementation Act. That's that piece of legislation you're talking about. But it becomes much more challenging for Conservatives to vote against a measure that seeks to make the tax system fair

and go after wealthy Canadians. If you're a Conservative, it'd be pretty hard to stand up and say that you don't think that wealthier Canadians should pay their fair share. And indeed, even as of this taping, we don't know where the Conservatives stand on this issue. Pierre Poiliev, just on Tuesday, was asked, what do you think of this? Would a Poiliev government cancel the effective raise in capital gains tax? There isn't one right now. So we're going to see what Justin Trudeau, again, has promised something. He looks like he's backing down.

He's taken the promise out of his budget. And with only a month to go still no legislation his rote answer right now is there's no legislation right now so i don't have to take a position on it yeah and that's because it's a real real tricky one it's a very um smart tactical wedge that the liberals have put in place here whether it was because it was too confusing, or whether they also realized they could do this, I'm not sure. But it is an effective way to paint them into a corner, for sure. Yeah. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem.

Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. Canada's entrepreneurs through angel investment and industry connections. own household income. That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. All right. So moving on from the capital gains tax, let's talk about something that I've heard a lot of chatter about. I imagine that you have too in Ottawa, which is the fight surrounding how often federal public service workers, so government workers, have to go into the office. If you could just recap for me, at the start of the month, how did the Liberals change the policy around that? So I don't think lots of people realize, but public servants right now typically only have to go in the office two days a week still. This is post-COVID. This is where they landed in terms of their hybrid work situation.

It leaked out, which is probably not the best way to tell your employees something's going to happen. But it leaked out a number of weeks ago that this was going to change. employees, something's going to happen. But it leaked out a number of weeks ago that this was going to change, that as of September 9th, public servants were now going to have to be in the office three days a week. So one additional day. And if they are executives, managers, four days a week. This didn't go over well. It did not. It did not. I mean, it didn't help, as I said, that it was leaked out, that the unions and employees weren't consulted, that it came after their contract negotiations were over. Lots of ways that it could have been handled better in terms of communications. But the union is pissed off, to say the very least, and say that they're going to create a, quote, summer of discontent for the government if they don't roll this back.

And they are filing tens of thousands of grievances from employees about this idea. Yeah. And what is it? I don't want to ask maybe such an obvious question, but like, what is it that the unions are objecting to? Like, why are they saying it's untenable for their employees to go back? Yeah, there's a couple of reasons. I mean, they say that the hybrid work environment was something that the government had committed to, and that's true. That is still an option.

But nowhere did it say how many days they had to be in the office and how long that would go on. But the other big complaint that the unions are making, and this applies, I would say, mostly for the national capital region where most public servants are, and that is that offices have not been maintained since the pandemic, I would say mostly for the national capital region where most public servants are.

And that is that offices have not been maintained since the pandemic, that they are not well equipped, and that employees don't really have their own space anymore, that things have changed, that they've given up real estate. There are lots of departments that gave up floors or whole buildings, and that the working environment isn't as good as it used to be. And of course, the other big thing that everybody who was able to work from home during the pandemic, I am not one of them, knows is that it's nice to have some flexibility in your life, right? To be able to do things or whatever, or you need to get your laundry done or whatever the issue is. And so they also think that public servants should still be allowed to do that.

So it's a pickle. It may sound to some people, and I get it, who are not in the public service, kind of insane that they are not back working more than two days a week in the office. But these are good unionized jobs where you are not badly paid for most of them. And people want to keep those jobs and they want to keep the conditions that they've grown accustomed to. Yeah. And I just want to acknowledge, while it probably might seem insane to some people listening to realize that they've only been going in two days a week, I'm sure there are a lot of people out there that are even more frustrated at the fact that there's this level of fighting over this going on as well. Do you think this

matters politically? Do you think the fallout from this could hurt or help the current government? Yeah, I mean, I think, listen, lots of Canadians who either always had to go in the office or have been back in the office for some time probably roll their eyes at this. I understand that. But this does have the potential to hurt the government, particularly, again, in the area where I am, where they do have a number of seats. And those seats could be up for grabs if the union can mobilize large groups of the public sector. That would be a problem. It's also a problem because the NDP is supporting the union's call, even though it also supports the government. So that creates kind of a tricky situation for them and the NDP. I think it could have a bigger

impact if the union does go ahead and make things difficult for the government through the summer. If, for instance, they start saying, well, we're going to slow down the services we provide to Canadians. I don't think people are ready to deal with another passport nightmare through the summer. And people will see that and feel that effect, and they're not going to blame public servants. They'll blame the government. So that's something I think that they have to be really cautious of. Okay. All right. So we will keep an eye out for the possibility of a summer of discontent. Let's end by talking about Pharmacare.

The NDP has been using all their channels, essentially, to accuse the conservatives of trying to block Pharmacare. And they're singling out birth control. Pierre, I'm giving you 48 hours to decide. Because women have worked way too hard to see their rights rolled back. So you have two days to decide whether you're going to stop blocking our attempt to bring in free birth control for women or new Democrats will force through that legislation whether you want it or not.

So what are they talking about? What have the Conservatives been doing here? I mean, remember, the Pharmacare was a big piece of what the NDP wanted to get from the government in its agreement with the government to support them. And it's just the very beginning of a Pharm pharmacare program covering birth control, as you said, and diabetes medications. All kinds of birth control and all kinds of diabetes medications. The Conservatives, though, have tried to block the bill that allows for the coverage of that.

And they've tried to do it through an amendment that would have essentially killed the bill entirely. This is helpful in some ways for the NDP and the Liberals who will get it passed, let's be clear. But it does allow them, again, to talk about a woman's right to choose and access to birth control. That is not what this is about for the Conservatives. The Conservatives do not believe another billion-dollar program is necessary for Canadians, many of whom are insured and get these things covered anyway. But if there's an opening there for the NDP or the Liberals to punch through on that issue, they're going to take it because it remains a vulnerability for the Conservatives, even though, even though their leader has said, Pierre Poiliev, that he is pro-choice. Yeah. And this was kind of like there was another issue that got looped into this,

right? Last week when a Conservative MP raised an anti-abortion petition in the Commons, which is something that we have seen before, like when backbencher Conservative MPs do this. The Honourable Member of Peace, River Westlock. Well, thank you, Mr. Chair. And I want to present a petition today signed by Canadians from across the country. These Canadians are concerned about the nearly 100,000 pre-born children who die every year since the Morgantaller decision. Canada is only one of two nations in the world that have zero laws protecting the pre-born. But just talk to me a little bit more about how Polyev has been handling

all these accusations coming at him from both the liberals and the NDP that his conservative government would come after women's reproductive rights, particularly abortion. Yeah, I mean, the reason that petition partially got attention

was because last week was also the annual rally on the Hill for people who are anti-abortion. And there were a number of conservatives who went out there to meet with them, as well as this conservative who put forward this petition inside the House of Commons, which, as you that this is less, so far, so far, let's just say less of an issue for Pierre Poiliev right now than it has been for Andrew Scheer or even Aaron O'Toole. And that's because I think he's been pretty clear with his own position. That's not to say that there aren't people in his party and his caucus who do not believe that a woman should have the right to abortions and all kinds of different abortions. But it is to say that he has done a better job at managing what the policy for the party is under his leadership and what he's willing to accept. Nevertheless, that tiny little opening that conservatives with the petitions, conservatives out out on the Hill, Conservatives trying to block access to birth control, I think it does allow some attempts by the left to raise the specter of the possibility of something happening. I think that they're going to have to come up with a lot more if this is going to be one of the main ways they kind of scare Canadians, because so far I don't see evidence that that's where the Conservative leader is going. Okay.

Rosie, thank you, as always. Thank you so much. All right, that is all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow.