By Paul Vieira
OTTAWA--Focus groups conducted in the winter on behalf of Canada's finance department indicated there was "widespread support" for compelling the country's top income earners to pay more in taxes.
The focus-group results, which the government recently published online, indicated most participants believed the Canadian economy was in bad shape, using words such as "declining" and "terrible" to describe activity.
"The overall economy received negative assessments largely due to perceptions of the rising prices of food, housing, and gas," said the report prepared for finance-department officials, which they would use to develop measures for the Liberal government's 2024 budget plan.
The budget plan was released in April, and its centerpiece measure was an increase in the capital-gains tax. Finance Minister Chrystia Freeland has argued the tax increase would only affect a fraction of the country's wealthiest individuals, and the revenue raised would help finance measures aimed at alleviating housing affordability, among other things.
"When showed specific possible budget measures, there was a lot of enthusiasm for making the top 1% and wealthy corporations pay their fair share," said the report, prepared by polling firm Environics Research. Taxing the wealthy, the report added, "resonated well with most participants and was consistent with concerns expressed earlier about the growing gap between the rich and everyone else and corporate price gouging."
The higher capital-gains tax took effect this week, and has attracted sharp criticism from business groups and economists over concern this could thwart investment and entrepreneurship in the Canadian economy. The change raises the share of profit from an asset sale that is subject to tax.
Despite the enthusiasm from focus-group members, the budget measure has failed to improve Liberal government electoral fortunes, as the Liberals trail their rival Conservatives by as much as 20 percentage points in most polls, or a similar gap in public opinion prior to the budget plan's presentation.
The focus-group report said other measures that participants wanted the government to consider included price controls on goods like food; crackdown on grocery-store chains for their pricing behavior; and lower interest rates.
The Bank of Canada has responsibility over rate policy. Focus-group participants expressed "widespread skepticism" that elevated interest rates would slow inflation, "or that reducing rates will make prices rise." Further, participants said rising prices for food and other items posed a sharper strain on their finances than higher rates.
The Bank of Canada cut its main interest rate this month, or the first cut since early 2020, on slowing inflation and lackluster economic activity.
Write to Paul Vieira at Paul.vieira@wsj.com
(END) Dow Jones Newswires
06-28-24 1424ET
