TLDR:
- Tech industry leaders are warning that Ottawa’s proposed capital-gains tax increase will hinder entrepreneurship and innovation.
- The changes could discourage founders and tech workers from starting companies and deter venture funding by reducing profits for investors.
Article Summary:
Tech industry leaders are expressing opposition to the capital-gains tax increase proposed by the federal government. They believe it will have a chilling effect on the innovation economy, impeding investment and risk-taking. The Council of Canadian Innovators published an open letter with over 250 signatures from prominent tech companies and investment funds, stating that the budget is viewed as hostile and will set the country back.
The changes, announced in the federal budget, will result in businesses paying income taxes on two-thirds of their earnings from capital gains each year, up from one-half. Individuals will also be affected by the increase on capital gains exceeding $250,000. These measures are expected to generate $19.4 billion for the government over five years.
Many tech industry players believe that the increase could discourage risk-taking and innovation, as entrepreneurs and investors may be less inclined to take on ventures with lower potential rewards. Some stakeholders have criticized the new measures on social media, calling them shortsighted and disincentivizing.
The budget included measures like the Canadian Entrepreneurs’ Incentive to offset the impact of the tax increase, but there are concerns that small businesses may still be deterred from pursuing growth. Some industry leaders believe that the changes could prompt Canadians to start their companies outside the country, affecting the economy negatively.
Despite opposition from the tech industry, some experts defend the tax hike, citing the need to cover higher expenses for health care and the military. The capital-gains changes have overshadowed other technology-related announcements in the budget.
