Canada Cancels Unpopular Tax Hike Amid Political Revival

Canada's government cancels a proposed increase in the capital gains inclusion rate, a move seen as boosting Liberal Party's poll numbers. Prime Minister Mark Carney aims to catalyze investment by maintaining current exemptions. The tax hike's removal may impact government revenues and housing plans.

In a significant policy reversal, Canada has withdrawn its plans to raise the capital gains inclusion rate, Prime Minister Mark Carney's office announced. This decision aims to placate industry critics and bolster the Liberal Party's diminishing popularity.

The federal government will maintain the increase in the lifetime capital gains exemption limit to C$1.25 million for small business shares and farming and fishing properties. The proposal had encountered widespread opposition from businesses, economists, and political leaders.

The abandoned tax measure could affect government revenue, initially projected to generate C$19.4 billion over five years. Notably, the funds were earmarked to facilitate affordable housing development, leaving a fiscal gap amid an already expanding budget deficit.

(With inputs from agencies.)