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Sectors that earned most corporate capital gains created no jobs over 5 years: report

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OTTAWA – Two sectors were responsible for the majority of corporate capital gains earned in Canada over five years but added no new jobs over that time span, a new study found.

The Centre for Future Work and l’Institut de recherche et d’informations socioéconomiques, two progressive policy thinktanks, published a report that delves into the companies and individuals that earn capital gains in Canada.

The analysis comes after a heated debate in the country over the Liberals’ decision to increase the inclusion rate on capital gains, which are profits made on the sale of assets.

Business groups staunchly opposed the increase, arguing that it would be a tax hike on all Canadians, directly or indirectly, because it would hurt innovation and business investment.

But the report’s author, economist Jim Stanford, says his analysis suggests that favourable tax treatment of capital gains disproportionately benefits the wealthy and does not help the economy.

According to his findings, the miscellaneous intermediation sector, which includes venture capital companies and investment banks, as well as the real estate sector, together made 52.6 per cent of all corporate capital gains reported in Canada between 2018 and 2022.

Meanwhile, these sectors shed nearly 5,000 jobs during that time period.

“These two sectors have been irrelevant to job creation in Canada, and they capture over half of all corporate capital gains,” Stanford said in an interview.

The analysis is based on tax filing data from the Canada Revenue Agency as well as data from Statistics Canada.

The report also finds there’s no historical correlation between capital gains taxes and business investment in machinery, equipment and intellectual property.

On June 25, the Liberals made two-thirds of capital gains taxable, up from one-half.

For individuals’ capital gains of $250,000 or less, the inclusion rate would remain the same, at 50 per cent.

Prime Minister Justin Trudeau has defended the increase, arguing it makes the tax system fairer by taking away some of the tax advantage richer individuals with significant investment portfolios have enjoyed.

The Liberals say the tax increase will help the government pay for priorities that matter to young people, such as housing.

Conservative Leader Pierre Poilievre has blasted the changes as a job-killing tax increase. He argues that higher taxes on capital gains will hurt businesses, and in turn, lead to fewer jobs.

Stanford’s analysis doesn’t look at the government’s changes in particular, but he says the data clearly shows that to date, it’s wealthy Canadians have benefited the most from preferential tax treatment of capital gains.

The report says Canadians with an annual income of more than $250,000, representing 1.5 per cent of tax filers, earned 61 per cent of individual capital gains in 2021.

Stanford says high-income earners are not only more likely to report capital gains, but they stand to benefit more than low-income earners from the favourable tax treatment because they have a higher marginal tax rate.

“A rich person is saving over 50 cents on every dollar of capital gains, whereas a person at the bottom of the distribution might be saving 15 cents for each dollar of capital gains. So it’s kind of a double-barreled impact on inequality there,” he said.

This report by The Canadian Press was first published Aug. 19, 2024.

The Canadian Press. All rights reserved.

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Legault ‘shocked’ by Montreal teacher scandal, pledges to toughen secularism measures

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MONTREAL – Quebec Premier François Legault promised on Tuesday to toughen secularism measures in schools, saying he was “shocked” by revelations about a Montreal public school where a group of teachers had tried to introduce what the premier described as “Islamist” beliefs.

Legault appointed Education Minister Bernard Drainville and Jean-François Roberge, the minister responsible for secularism, to come up with solutions to prevent religion from creeping into classrooms following a government report into Montreal’s Bedford school.

“There is something very disturbing in this case. It is this attempt by a group of teachers to introduce Islamist religious concepts into a public school,” Legault wrote on social media. “In Quebec, we decided a long time ago to remove religion from public schools. We will never accept going back.”

The Centre de services scolaire de Montréal — Quebec’s largest school service centre — said Saturday that 11 teachers were suspended with pay after a government investigation found that a “dominant clan” at Bedford school imposed strict, autocratic rule over students.

The investigation revealed that the teachers — many of whom were of North African descent — were allegedly influenced by the local mosque and subjected children to physical and psychological violence. They either refused to teach — or paid little attention to — the science and sex education curriculum.

The evidence gathered suggested some teachers didn’t believe in learning disabilities and neurodevelopmental disorders and refused to let specialists in the classroom, believing instead that discipline — with the idea of “breaking” the student — would put them on the “right path.”

Witnesses told the government investigators that local religious leaders exerted a “strong influence” on several school staff and a mosque representative underscored to school officials the importance of having good relations with the place of worship.

The report mentioned that there were staff members of North African descent who were part of the opposition to the methods of the “dominant clan.”

During a news conference Tuesday in Quebec City, Drainville announced that the 11 teachers — a mix of men and women — have had their teaching licences suspended pending the outcome of disciplinary investigations.

“I’ve raised examples of religious behaviours — whether it is the teacher who starts praying before a student who collapsed in the classroom, whether the classes in science or sexual education are not being taught properly, whether girls were forbidden to play soccer, whether there were interventions by representatives of the mosque nearby to ask the school to behave in a certain way,” Drainville said.

Drainville said preliminary findings show the province’s secularism law — known as Bill 21 — was not being respected at the school.

“According to the members of the committee, there is an issue with the respect of the law on secularism and therefore we have a responsibility to look into what could be done to strengthen this law in relation to Bedford and possibly in relation to other schools in Quebec,” Drainville said.

Legault said it was unthinkable in Quebec in 2024 that teachers were avoiding subjects like science and sex education. “As a government, our first responsibility is to clean up this school to protect the children,” he wrote. “We must also think more broadly to avoid other situations that are just as shocking and, above all, so devastating for children.”

Bill 21 was passed in 2019 and declares the province is a secular state and includes a provision prohibiting public sector workers in positions of authority — including teachers, judges, and police officers — from wearing religious symbols on the job.

Neither Drainville nor Roberge was prepared to say Tuesday what specific steps they would take to address the issue.

“Sometimes you don’t have to change the law,” Roberge said. “You have to apply it, and it’s the job of the principal, it’s the job of the management team of the school centre.”

The government’s investigation was triggered by reports by Montreal’s 98.5 FM beginning in May 2023 about a toxic climate at the school. Education department employees conducted more than 102 hours of interviews with 73 people, and attended a school governing board meeting. The testimonies provided a portrait of a problem stretching back to 2016, as school principals came and went in quick succession.

Drainville has ordered audits at three other Montreal schools — two elementary schools and a high school — that allegedly had similar problems related to the school environment and governance.

This report by The Canadian Press was first published Oct. 22, 2024.

The Canadian Press. All rights reserved.



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Nova Scotia Liberal Fred Tilley quits to join governing Progressive Conservatives

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HALIFAX – A member of Nova Scotia’s Opposition Liberals is crossing the floor to join the governing Progressive Conservatives.

Premier Tim Houston announced today that Fred Tilley has joined his party’s caucus.

Tilley, who represents the Cape Breton riding of Northside-Westmount, was first elected to the legislature in 2021.

While on the Liberal benches, Tilley had been critical of the government in areas such as health care and economic development.

Tilley is the second member of the Liberal caucus to join the government this year.

In February, Brendan Maguire joined the Tories and was immediately named as community services minister.

This report by The Canadian Press was first published Oct. 22, 2024.

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N.B. premier-designate Susan Holt knows she has to deliver on promises quickly

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FREDERICTON – Susan Holt says it hasn’t sunk in yet that she is New Brunswick’s premier-designate.

The day after her Liberal Party won a convincing majority in Monday’s provincial election, Holt says she feels grateful for the opportunity to serve, and that she recognizes the seriousness of the responsibility — and the amount of work ahead.

“There is a lot of big challenges that need to be tackled, and now it’s on me and my team to deliver and to help make lives better for New Brunswickers,” Holt said in an interview.

Winning 31 of 49 seats, the Liberals denied a third term in office for Blaine Higgs’s Progressive Conservatives, who won 16 seats. The Green Party finished with two.

Now comes the hard part.

One of the party’s central election promises is to open 30 health-care clinics across the province over the next four years. It’ll be sometime next year before the first clinic opens, she said, under the Liberal model of “collaborative care” that puts nurses, doctors, pharmacists and other health-care workers under one roof, operating from at least 7 a.m. to 7 p.m.

“It’s going to be in 2025 because there are some that are on the verge of happening, or are close to happening under the old model that the previous government was using,” Holt said.

“We believe we can take some of that work and transform the model within …. Vitalité and Horizon (health networks) are really keen to advance this.”

Other promises that New Brunswickers can expect to see realized next year include cheaper electricity bills — Holt’s party pledged to remove the provincial sales tax on power, which she said will reduce bills by 10 per cent. That should happen by April, she said.

One of her first tasks will be to send a letter to the Canada Revenue Agency to remove the provincial sales tax on electricity. It takes about 120 days for the agency to make the change, which can be implemented the following quarter, in time for April 1, she said.

She said she would “like to challenge” that waiting period, however, to ensure people have lower bills during the coldest time of the year in December, January and February. “We’re going to find out whether there’s any wiggle room with Canada Revenue Agency and the 120 days and the quarterly adjustment.”

Another election promise is to implement a three per cent cap on rent increases. Holt said she is aiming for the cap to be in place by Feb. 1 but will consult with the civil service to see whether that can be done sooner. “We give landlords time to adjust to changes like this … but we want to be able to put it in place quickly.”

Jamie Gillies, a political science professor at St. Thomas University, called Holt the “change premier,” adding she can expect a honeymoon period, but not a long one.

“I think on a number of files, particularly health care, that is going to be something that is going to take some time. And so the honeymoon period will last, but then it will end quite quickly.”

One of the ways to make sure she delivers on her promise to improve health care would be to collaborate with researchers, physicians and nurses, especially in rural areas, he said.

But expectation on health care will have to be tempered because that kind of change doesn’t happen overnight, Gillies said. “Trying to diminish expectations a little bit is, I think, going to be part of that.”

This report by The Canadian Press was first published Oct. 22, 2024.

The Canadian Press. All rights reserved.



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