The Globe and Mail reports in its Wednesday edition that the federal government is changing the way capital gains taxes work for small-business owners. The Globe's Andrew Willis and Mark Rendell write that in the federal budget released Tuesday, Finance Minister Chrystia Freeland announced plans to increase the inclusion rate on capital gains for companies and some individuals from one-half to two-thirds. This means businesses will have to pay tax on two-thirds of that income. For individuals, the increase applies only to capital gains in excess of $250,000. The Finance Minister also introduced a new program to lower the amount of tax some small-business owners will have to pay when they sell their companies. Eligible owners who sell small private companies will be taxed on only one-third of their capital gains from the sales, up to a lifetime limit of $2-million. Economists said the decision to hike taxes hurts productivity. "The government continues to take a punitive approach to corporate taxation despite waning momentum in profitability and compressed margins," said Scotiabank economist Rebekah Young. "Today's revenue-raising measures would shift a substantial sum in corporate capital to government balance sheets."