Global Daily Tax News, IMF Recommends GST Hike For Canada, (Jun 14, 2024)

The International Monetary Fund has proposed that Canada should raise the goods and services tax rate, in its annual report for the nation.

The report welcomes the increase to the capital gains inclusion rate – the amount of capital gains that are taxable – from one-half to two-thirds on capital gains realized annually above CAD250,000 by individuals and on all capital gains realized by corporations and most types of trusts.

The IMF said the change will improve the tax system's neutrality with respect to different forms of capital income and will likely have no significant impact on investment or productivity growth.

The IMF recommended, "Consideration could be given to other changes – such as an increase in the GST rate, while raising the GST credit to shield the poor – so as to deliver a tighter fiscal stance."

Finally, the IMF said Canada would be better off replacing controls on non-resident home purchases with a non-discriminatory tax on speculation.