The tax wedge cometh

Jun 10, 2024

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By Kyle Duggan

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Welcome to Ottawa Playbook. Let's get into it.

In today’s edition:

→ The Liberals are making their long-awaited move on capital gains.

→ Three things we’re watching this week.

→ Liner notes from JUSTIN TRUDEAU’s latest pod interview on the “Hard Fork.”

DRIVING THE DAY

Deputy Prime Minister Chrystia Freeland rises during QP in the House of Commons on Parliament Hill on June 4.

Deputy Prime Minister Chrystia Freeland is poised to put forward the government’s capital gains changes. | Spencer Colby, The Canadian Press

CAP GAINS, FINALLY — Finance Minister CHRYSTIA FREELAND is poised to put forward the government’s capital gains changes in the House of Commons, in a bid to pinch the Conservatives on wealth inequality.

— Signaled in advance: Per unnamed senior sources speaking to the Globe and Mail and Radio-Canada, Freeland will table a ways-and-means motion today in the Commons, to force the Conservatives to vote for the first time on hiking the capital gains inclusion rate.

That should come some time over the next few days.

— The line: “We will introduce changes that will result in a small number of well-off Canadians paying a little more in tax when they sell a successful investment,” Freeland said in a Sunday speech in Toronto. “But millions more, especially younger Canadians, will benefit from it.”

— The frame: Freeland pitched it as a fiscally responsible move so the government won’t have to take on more debt to back its spending on key files like housing.

— The context: The measure was included in the budget document, but MIA from the implementation bill to draw out a separate fight over “tax fairness.”

— Wedge hopes high: Freeland called on Canadians to “pay attention” to any MPs voting against and “consider their motivation.”

The Conservatives haven’t taken a position yet, but this move doesn’t mean they’ll take the bait. They’ve successfully made their way through a political minefield of wedges already, including:

→ Anti-scab legislation.

→ The morning-after pill included in the pharmacare legislation.

→ The handling of a social conservative MP talking about third-rail issues like abortion on a podcast.

→ Whether PIERRE POILIEVRE would opt to scrap new social welfare policies, like the numerous programs ending in “-care” — or the government’s massive industrial subsidies.

— Red-letter date: The cap gains tax changes are expected to kick into force June 25.

THREE THINGS WE'RE WATCHING

SPICY HOUSE AGENDA — Capital gains is of course not the only big fight headed for the Commons.

— Expand the inquiry: The Bloc is gearing up today for a rumble over the agenda-shattering NSICOP foreign interference report that alleges some lawmakers have been actively helping foreign governments meddle in Canadian politics.

RENÉ VILLEMURE’s Monday Opposition motion would expand the terms of reference for Justice MARIE-JOSÉE HOGUE’s public inquiry to include an investigation of “Canada’s federal democratic institutions,” including members of both chambers.

— Return of the living PMB: Conservative MP BEN LOBB’s controversial private member’s bill, C-234, comes back around to the House today. It’s scheduled to come up first thing in the Commons this morning.

The bill, which would create new carbon-tax carve outs for farmers, has been stuck on the back-burner since the Senate amended it and threw its future into question.

WHEELS UP FOR G7 — The PM is off to the luxe Borgo Egnazia resort in the Puglia region of Italy Thursday to Saturday for the G7 summit.

— Agenda item: Trudeau is angling to bring up protecting democratic institutions against foreign interference and online disinformation. Reuters reports the threat posed by Chinese-Russian trade to the war in Ukraine is expected to be an agenda topper.

— Summit spectacle: It’ll be hard to avoid some of the focus landing on U.K. Prime Minister (for now) RISHI SUNAK and his spectacularly tanking reelection bid.

— Unconfirmed bilats: It’s not clear yet just who all the PM is seeking side meetings with.

Indian Prime Minister NARENDRA MODI, fresh off the heels of his reelection, will be there for one day, on Friday, after being invited by the host, Italian PM GIORGIA MELONI. Modi’s seeking to have “as many bilateral meetings as possible on the margins of the summit,”according to Times of India.

On top of the tensions over the HARDEEP SINGH NIJJAR killing, the timing for that would be awkward. There’s the recent NSICOP report naming India as the second biggest foreign interference threat to Canada.

On Friday, Public Safety Minister DOMINIC LEBLANC posted on social media that promoting violence is never acceptable, following “reports of imagery depicting the assassination of Indian Prime Minister Indira Gandhi in Vancouver.”

TRUDEAU, LEGAULT, TÊTE-À-TÊTE — Quebec Premier FRANÇOIS LEGAULT is set for a one-on-one with Trudeau today at the Château Frontenac in Quebec City, where he’s expected to push for more powers over immigration, according to the Montreal Gazette.

Legault is furious the province has been forced to take in more temporary foreign workers and asylum seekers over the past eight years than it can handle.

And it’s not just housing and social infrastructure that’s lacking — he says he’s concerned about what it means to the future of the French language in areas like Montreal.

— Offensive move: Just ahead of the meeting, Legault, flanked by Justice Minister SIMON JOLIN-BARRETTE,announced the creation of a committee that would search for ways to increase provincial autonomy and boost the premier’s powers. That report is due Oct. 15.

— Boiling over: It follows months of the Parti Québécois surging ahead in the polls, and budget-related announcements that wander into provincial areas.

Where the leaders are

— Prime Minister JUSTIN TRUDEAU is set to meet Quebec Premier FRANÇOIS LEGAULT in Quebec City at 2:30 p.m. In the evening, he attends the annual Laurier Club summer garden party, with remarks open to the media scheduled for 7:40 p.m.

— Deputy PM CHRYSTIA FREELAND is in Ottawa and has a 12:30 p.m. press conference scheduled.

— Conservative Leader PIERRE POILIEVRE did not release a public schedule.

— Block Leader YVES-FRANÇOIS BLANCHET will get out in front of the TV cameras in the House foyer at 1:45 p.m. alongside Bloc MP RENÉ VILLEMURE to promote their opposition day motion on foreign interference.

— NDP Leader JAGMEET SINGH will address the media in the Commons foyer ahead of Question Period.

— Green Party Leader ELIZABETH MAY is in the House for her weekly question in QP. She’s also virtually attending the monthly Saanich Gulf Islands forum, and at 12:30 p.m. meets with Tibetans and their supporters in Canada on their lobby day, as they mark 65 years since the Tibetan national uprising.

DULY NOTED

9 a.m. Small Business Minister RECHIE VALDEZ will be in Montreal to participate on a panel at the International Economic Forum of the Americas' conference, “Leading in an Accelerating World.”

11 a.m. Natural Resources Minister JONATHAN WILKINSON is bringing Big Checkbook Energy to Sudbury with a mining-related funding announcement at Laurentian University.

11 a.m. Auditor General KAREN HOGAN will be at the House government operations and estimates committee to take questions related to MPs’ study on federal contracts awarded to McKinsey & Co.

For your radar

POD COMPLEX — JUSTIN TRUDEAU breezed his way through a U.S. podcast interview on AI that published while everyone back home was absorbed in the national guessing game of which lawmakers might’ve aided foreign actors with their political interference efforts.

The PM’s latest appearance: The New York Times’ “Hard Fork” podcast, hosted by NYT tech columnist KEVIN ROOSE and Platformer’s CASEY NEWTON.

— Spinners hustle: It’s yet another pod the PMO comms shop hand-picked and reached out to as he continues his tour of the earbud circuit.

— Barking pods never bite: The appearance was treated by the hosts as a cultural curiosity to a U.S. audience, where they probed his thoughts on a wide range of issues related to how his country plans to deal with the burgeoning artificial intelligence industry.

— Deck the hosts: Pulling a Nardwuar move, the pod pair offered up some Canadian objects as a prompt: Hockey jerseys, Toronto Maple Leafs and Raptors hats, a CBC Radio belt buckle and WAYNE GRETZKY’s Ninety-Nine Proof Whisky. Trudeau’s response: You missed the Montreal Canadiens or the Expos.

— Who’s got his ear: Trudeau mentioned recent meetings with top AI experts such as GEOFFREY HINTON and YOSHUA BENGIO.

He also noted his government followed up after listening to “folks in Silicon Valley” seeking cheap visas for engineers, and created a global skills immigration program that “has a lot of people coming in and setting up shop.”

— Cop a line: The PM at one point used a nautical one-liner that PIERRE POILIEVRE has deployed several times in Parliament,going back to 2016: The have-nots and the have-yachts.

“I love have-yachts. I’ve never heard that one before,” Roose said. Newton asked, “What’s a have-yacht? Is that Canadian?”

— Hey, you broke the Web: One of the hosts said the Online News Act “sort of broke the open web because you’re taxing [big tech firms] just for the right to show a link” and asked if the PM ever considered taxing their digital ad revenue instead. Trudeau rejected that as a tech-industry talking point, and ducked a follow up on whether he would expand the law to deal with companies harvesting online news to train AI.

— Fave deepfake: Trudeau revealed his favorite deep fake spoof of himself is from a series of prime ministers rendered as 1980s hair metal/glam rock band leaders — “one of the ones that made me laugh the hardest.”

— Personal impact: Trudeau offered up that he had a yoga instructor friend who admitted he spent C$300 on “that Bitcoin you were promoting online.”

“I'm like, I don't promote Bitcoin online. You got scammed. How could you fall for that?”

— Seized by the issue: Trudeau said he’s focused on the implications far beyond AI deep fakes being deployed against him and others in the political arena — they’re “now impacting high-school students, impacting people in their work.”

MEDIA ROOM

French President Emmanuel Macron is seen on television June 9, 2024, in Paris.

French President Emmanuel Macron’s snap decision to dissolve the National Assembly was met with disbelief by his supporters. | Lewis Joly/AP

— European elections are meant to be worthy but boring exercises in centrist coalition building. Not this time, report POLITICO's GIORGIO LEALI, NICOLAS CAMUT and EDDY WAX: A surge in far-right populism in France provoked President EMMANUEL MACRON into calling a high-risk national election.

— From Berlin, POLITICO's MATTHEW KARNITSCHNIG and NETTE NÖSTLINGER report that Germany’s ruling coalition suffered a crushing blow, with Chancellor OLAF SCHOLZ's Social Democrats recording their worst result in a national vote in more than a century.

Keep track via POLITICO's rolling coverage of EU results.

— Saskatchewan’s Justice Minister BRONWYN EYRE is urging Ottawa to ban AI voice cloning to protect the integrity of elections, AISHWARYA DUDHA reports for CBC.

— TONDA MACCHARLES details some of the hostile intimidation tactics federal MPs have faced recently, from garage arson to vandalism and death threats.

— Her Star colleague MARK RAMZY has color from watching a week of late-night silly season proceedings.

— TESSIE SANCI writes in The Hill Times about the flimsy language in the pharmacare legislation that has experts and stakeholders raising eyebrows — now a problem for the Senate.

— SHANNON PROUDFOOT in the Globe, with: “What you can learn about politics from ARNOLD VIERSEN’s trip to Pierre Poilievre’s woodshed”

— LUISA D'AMATO reports in the Waterloo Region Record about Poilievre’s visit to a food-bank warehouse in Kitchener Friday, where he blamed Trudeau’s immigration policies for causing food and housing shortages.

PROZONE

For POLITICO Pro subscribers, our latest policy newsletter by ZI-ANN LUM: USMCA review study hot spots.

In other news for Pro readers:

— Following Florida’s lead, New York wants a taste of Canada’s medicine.

— Trump and Musk are friends. Just don’t mention EVs.

— Trump is attacking Covid vaccine mandates. Public health experts fear it's just the start.

— Biden administration backpedals on tailpipe standards.

— US trade agency advances probe into solar products from Southeast Asia.

PLAYBOOKERS

Birthdays: Sen. VICTOR OH, former MP PIERRE NANTEL. Bluesky’s MANUELA BOEIRA and Crestview’s ANDREW BRANDER.

Got a document to share? A birthday coming up? Send it all our way.

Spotted: DOUG FORD pollster NICK KOUVALIS, coming to Ontario Cabinet minister STEPHEN LECCE’s defense over a dig by MP JAMIL JIVANI.

At the McMichael Canadian Art Collection in Vaughan: Retired Sen. FRANK MAHOVLICH.

On the shelf of “Curse of Politics” podcaster DAVID HERLE: an ELTON JOHN Funko Pop.

A rare two-column ballot for the Toronto–St. Paul's by-election, listing a record-setting 84 candidates thanks to the electoral reform activist group the Longest Ballot Committee.

Academic rockstar RICHARD FLORIDA telling the tale of how installing security bollards in his Toronto driveway did not protect his car from thieves.

Nominations: The Windsor-Tecumseh-Lakeshore CPC nomination race is heating up, with Tecumseh town councillor James Dorner entering against Ward 4 Windsor City Councillor Mark McKenzie and the previous election’s candidate Kathy Borrelli.

Movers and shakers: The Hill Times’ CHELSEA NASH is taking a year-long sabbatical to explore writing outside of politics.

ON THE HILL

→ Find House committees here.

→ Keep track of Senate committees here.

8:30 a.m. Statistics Canada will release new April numbers on farm product prices, and May data on leading indicators of international arrivals to Canada. The national statistics agency will also make an announcement on the impact of Covid-19 on inbound visitors to Canada.

11 a.m. A coalition of Canadian human rights groups led by the Black Class Action Secretariat will hold a press conference in West Block to discuss a UN body’s “special review” of the Canadian Human Rights Commission’s accreditation status.

11 a.m. Canada’s Special Representative on Combatting Islamophobia AMIRA ELGHAWABY will join the House justice committee as a witness in its study on Islamophobia.

11 a.m. Auditor General KAREN HOGAN will be at the House government operations and estimates committee.

11 a.m. The House industry committee will meet to study NDP Leader JAGMEET SINGH’s private member’s bill, C-352.

11 a.m. The House Indigenous and northern affairs committee will meet to continue its study on tax revenues from businesses on First Nations territories.

12 p.m. The standing joint committee on the Library of Parliament will convene to consider the nomination of CHRISTINE IVORY to the position of parliamentary librarian.

2 p.m. The Senate national security committee will meet to study Bill C-70.

3:30 p.m. The House public safety committee will take Bill C-70 through clause-by-clause consideration.

3:30 p.m. The House health committee will begin a new study on breast cancer screening guidelines.

3:30 p.m. The House official languages committee will meet to continue debate on the motion of Bloc MP MARIO BEAULIEU and on an amendment by Liberal MP DARRELL SAMSON.

3:30 p.m. The House natural resources committee will hear from Energy Storage Canada and Energy Storage Canada.

3:30 p.m. The House human resources committee will study federal housing investments with help from the Canadian Alliance to End Homelessness, Effort Trust Company and McMaster University.

6:30 p.m. Philippines Ambassador MARIA ANDRELITA SACRAMENTO AUSTRIA will be at the special Canada-China committee as members continue their study on bilateral relations.

Behind closed doors: The House national defense committee will meet to review two draft reports; the House veterans affairs committee will meet to discuss “committee business”; the House citizenship committee will meet to review a draft report and a draft letter

We're tracking every major political event of 2024 on a mega-calendar. Send us events and download the calendar yourself for Google and other clients .

TRIVIA

Friday's answer: In 2018, Prime Minister JUSTIN TRUDEAU formally apologized for Canada’s decision on June 7, 1939, to deny entry to Canada to 907 Jewish refugees aboard the MS St. Louis.

Props to MICHAH SIENNA, NATI PRESSMAN, MALCOLM MCKAY, TRISTAN DENNISTON, GORDON RANDALL, ROBERT MCDOUGALL, DARREN MAJOR, JOANNA PLATER, KEVIN BOSCH, PATRICK ST-JACQUES, LAURA JARVIS, HELEN DARBY, CHRIS RANDS, NANCI WAUGH, MARCEL MARCOTTE and ALEX STEINHOUSE.

Today’s question: A “blatherskite” is among the words ruled by past speakers as unparliamentary language. Without looking in a dictionary, what does it mean?

Send your answer to ottawaplaybook@politico.com

Writing tomorrow's Playbook: NICK TAYLOR-VAISEY

Playbook wouldn’t happen without: POLITICO Canada editor Sue Allan, editor Willa Plank and Luiza Ch. Savage.

Want to grab the attention of movers and shakers on Parliament Hill? Want your brand in front of a key audience of Ottawa influencers? Playbook can help. Contact Jesse Shapiro to find out how: jshapiro@politico.com

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