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OTTAWA — The federal Liberal government is rejecting a call from the Opposition Conservatives to grant a tax reprieve on severance packages for laid-off General Motors workers in Ingersoll, Ont.
Conservative Leader Pierre Poilievre sent a letter Sunday to Finance Minister François-Philippe Champagne calling for an exemption to the withholding taxes applied to severance pay.
Champagne’s office flatly rejected the call Monday, saying such a policy would hobble the government’s ability to respond when problems arise and accusing the Conservatives of playing partisan political games.
In his letter, Poilievre argued taxes on GM’s lump-sum severance payments could deprive out-of-work employees of “tens of thousands of dollars,” adding “insult to injury.”
He wrote that waiting until after tax season to recover funds is not a reasonable solution for workers who recently lost their regular paycheques and still need money for their mortgages and grocery bills.
“These men and women worked hard, played by the rules and built things this country depends on. The least your government can do is stop taking their money at the worst possible moment,” his letter said.
But the finance minister’s press secretary John Fragos said it is long-standing government policy that taxes are paid on all earned income — including severance pay.
“The government cannot unilaterally carve out certain taxes on earned income without adopting and applying that across the board,” Fragos wrote in a lengthy email response to The Canadian Press.
“What the Conservatives are proposing we do would effectively strip the government of a vital fiscal tool, limit our ability to respond to crises like the one we are living through and undermine our industrial advantage. That’s not only bad policy, it’s political malpractice.”
Fragos later said the government is only rejecting this “very niche” proposal from Poilievre, but that tax relief and other support measures for workers laid off or hurt by U.S. tariffs remain on the table for consideration. Though, he would not disclose any of those.
GM announced last fall it was shuttering the CAMI assembly plant, putting 1,200 people out of work. Employees were offered a one-time payout worth about six months of earnings.
Poilievre’s letter was co-signed by Conservative labour critic Kyle Seeback and Arpan Khanna, the local MP for Oxford where the CAMI plant is located.
Khanna said in an interview his office has received a flood of calls from anxious autoworkers reporting that taxes would be consuming more than half of their severance payouts.
“Many of them reached out to my office showing a massive withholding tax to their cheques. We saw pay stubs of folks that were supposed to be getting $60,000 gross, but are now only getting $24,000 after the withholding tax,” Khanna said.
“In a time when Canadians are struggling to put food on the table, to pay their mortgages, provide support for their kids, that’s a huge shot to their monthly income.”
When Khanna brought the issue up during Monday’s question period in the House of Commons, Jobs Minister Patty Hajdu shot back that the Conservatives voted against the 2025 budget “wherein we outline the work we’ve been doing to protect workers for exactly this situation.”
“Thanks to the proactive vision of the government to protect workers in these situations, workers who have been separated from their employment now can keep their last pay, they don’t have to wait for EI, and indeed long-tenured workers like many of these will receive an additional 20 weeks on top of supports for readjustment,” Hajdu said.
Liberal MP Peter Fragiskatos — who reports he lives about half an hour from the CAMI plant and knows many in the community who are affected — said the Canada Revenue Agency is only following the law.
Unifor Local 88 GM plant chairperson Mark Gee declined to comment on Monday, saying the branch is still working through the issue.
GM announced last year it would end its BrightDrop electric vehicle production at the CAMI Assembly plant in Ingersoll, citing weaker-than-expected market demand and a challenging regulatory environment in the U.S.
More than a thousand employees have been laid off.
GM’s Oshawa Assembly factory is meanwhile shuttering one of three shifts and laying off some 500 employees — a move expected to affect upward of a thousand workers across the supply chain.
Unifor president Lana Payne has accused U.S. President Donald Trump of upending Ontario’s auto sector and hitting the Ingersoll GM plant on multiple fronts. Trump introduced 25 per cent tariffs on non-U.S. auto content and policies that upended the U.S. EV industry.
Prime Minister Mark Carney announced a new automotive industrial strategy last Thursday, which he vowed would “drive investment” in the sector and set a “sovereign path” to reduce auto emissions.
The Conservatives dismissed Carney’s new auto strategy in their letter, claiming it won’t help laid-off auto sector workers.
“Canadians are still waiting for your government to deliver the trade deal with the United States you promised by July 21 (2025) and a clear plan to protect Canadian jobs,” the letter said.
“Instead of presenting a serious plan to defend our autoworkers, you’ve just announced a rebate that will subsidize American-made EVs.”
Fragos accused the Conservatives of “undermining the automotive industrial strategy and the myriad measures attached to it that protect workers and enable employment and re-skilling assistance.”
This report by The Canadian Press was first published Feb. 9, 2026.
Kyle Duggan, The Canadian Press
