Flaherty Dithers Over Capital Gains Tax Cut

by Mike Godfrey, Tax-News.com, Washington

14 November 2006

Canadian Finance Minister Jim Flaherty has said that the government may not include its pledge to cut capital gains tax in the forthcoming budget.

Flaherty told the Canadian Institute of Mortgage Brokers and Lenders that the government was struggling to draft a new capital gains tax system that was free from loopholes and not an administrative burden on taxpayers.

"It is not easy to do," he stated.

On whether he will include the measure in the next budget, expected in February, Flaherty was vague.

"We won't be able to do everything but I hope we will be able to move forward on that commitment," he told reporters after the speech, later adding when pressed on the issue that: "I won't speculate, it's an outstanding platform commitment."

The Conservative proposal to eliminate capital gains tax on all profits that were reinvested within six months was one of their main manifesto pledges in last winter's general election campaign. However, since taking power, the policy has fallen down the agenda as government officials took into account the revenue cost and potential complexity of the new legislation.

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