The chief executive officer of one of Canada’s largest banks is speaking out against the Trudeau government’s plan to raise taxes on capital gains, arguing it won’t spur investment in the country.
“It does not send the right signal for risk-taking, for investments, innovation or long-term wealth creation and ultimately for the social fabric of our country,” Laurent Ferreira, CEO of National Bank of Canada, said in an interview Friday.
Ferreira addressed shareholders of National Bank, the country’s sixth-largest lender, earlier in the day during the bank’s annual meeting in Montreal. He explained why he was the only big bank CEO to sign an open letter last month calling on Canada’s large and influential pension funds to invest more domestically.
“My objective was to stimulate a discussion around the investment and productivity challenges in our country,” Ferreira said at the meeting. “All investors and banks must contribute to strengthening the Canadian economy by investing within our borders.”
Prime Minister Justin Trudeau’s government said this week it has tapped former Bank of Canada Governor Stephen Poloz to head up a “working group” on the topic of pension investment.
Regulatory and fiscal barriers are “hindering Canada’s attractiveness” and must be lifted to increase Canadians’ standard of living, Ferreira said Friday. One of those fiscal barriers is the tax increase, which will only further widen an existing gap between the U.S. and Canada, he said.
The government said in its budget on Tuesday that it will tax Canadian companies on two-thirds of their capital gains, up from half currently, part of a plan to help pay for billions of dollars in new spending on housing.
“This is not going to provide the right incentives for businesses to invest in our country,” Ferreira said in the interview, adding that it runs counter to the goal of encouraging pensions to invest more domestically.
The capital gains tax increase has drawn criticism from a range of players this week, including business lobby groups, Ontario’s finance minister and even Trudeau’s own former finance minister, Bill Morneau.
The Canadian Bankers Association, a lobbying group for the financial sector, has said it is “reviewing budget 2024 in detail to assess its implications.”
The post National Bank CEO slams Canada’s capital gains tax increase appeared first on Bloomberg.
