Canadian Conservatives Postpone Capital Gains Tax Cut

by Mike Godfrey, Tax-News.com, Washington

30 March 2006

Canadian Finance Minister Jim Flaherty has assured investors and businesses that the new Conservative government will not scrap plans for a cut in capital gains tax, although he indicated that the government will find it difficult to accommodate the tax cut in the budget in the near term.

Speaking to reporters on Monday, Mr Flaherty admitted that the government will find it "challenging" to follow through on an election pledge to eliminate capital gains tax on the sale of assets if the profits are reinvested after six months.

"I would be less than candid with you if I said that was not quite challenging to accomplish in the short term," Mr Flaherty remarked.

The minister also told a meeting of the Chamber of Commerce in Surrey, British Columbia, that the government will be "taking some time" to consult Canadians before moving forward with the initiative.

"We have to be fiscally responsible so we're not going to do everything at once. Nor did we say in the platform that we would do everything at once, but we will keep our commitments over time," he added.

However, Mr Flaherty was keen to emphasise that the Conservative administration will stick to its promise to cut GST by 2% to 5%.

"Everyone from a newspaper carrier to a senior on a fixed income will see a savings," he told the Chamber.

The budget is expected to be presented within the next two months. However, the Conservative administration, elected earlier this year, holds a minority government and could find its legislative program derailed by a lack of parliamentary support.

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