03:06 PM EDT, 10/09/2024 (MT Newswires) -- Canada's decision to increase the capital gains inclusion rate is unlikely to generate as much cash as Justin Trudeau's government expects, a research group says, Bloomberg News is reporting Wednesday.

The changes will add a net $3.3 billion (US$2.4 billion) to federal government revenues from individuals over five years, according to a paper being released Thursday by the C.D. Howe Institute.

Bloomberg noted that's less than 40% of the $8.8 billion forecast by the government when Finance Minister Chrystia Freeland proposed the tax changes in April.

The paper's authors say the discrepancy in estimates is due to different assumptions about personal income tax revenues and the "cyclical nature of capital gains realizations and the adjustments firms and individuals may make in response to the tax change."

The parliamentary budget officer, the country's fiscal watchdog, has also projected revenue gains will end up lower, saying the increased tax will add just $5.8 billion to personal income tax revenues.

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