I don't want to be a burden on my children

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Mr Layton: Which part of the TFP don't you understand yet?

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Stephen Harper's Insidious attack on demoncracy

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Judy Wasylycia-Leis crosses the floor without even moving! Hail Judy!

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Why does Judy Wasylycia-Leis want to sell out our energy sector to US Oil?

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Lies, damned lies and statistics

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The Liberal Plan

Date: February 13, 2007

For Release: Immediate

Liberals Propose New Income Trust Policy to Counter Conservative Mismanagement

Ottawa – The Liberal Opposition has a plan that could return as much as two thirds of the losses suffered by investors in the wake of the Conservatives’ broken promise on income trusts, Liberal Opposition Leader Stéphane Dion and Finance Critic John McCallum said today.

“When this minority Conservative government undertook what it knew would be a harmful action to Canadians, it should have taken the utmost care to minimize the damage it would cause its citizens,” said Mr. Dion. “The government broke a promise and imposed a radically higher tax that resulted in a $25-billion blow to the savings of hard-working Canadians.”

After hearing from numerous witnesses at the Standing Committee on Finance, the Liberal Opposition has a plan. It is proposing that the government repeal its planned 31.5 per cent tax regime and replace it with a modest 10 per cent tax, to be paid by the companies, that would be refundable to Canadian residents. The tax would be imposed immediately with the revenue shared equitably with provincial governments.

“Rather than considering what is best for Canadians, the Prime Minister simply decided that he was going to put an end to the income trust sector,” said Mr. McCallum. “After hearing from dozens of expert witnesses we have developed a proposal that is fair to Canadian investors, to corporations and the income trust sector as well as federal and provincial governments.”

Underpinning the Liberal proposals are four main policy objectives that should have been considered by the government:

• minimizing the loss of savings for Canadians who invested in income trusts;
• preserving the strengths of the income trust sector, notably a high-yield instrument for savers and for the energy sector;
• creating tax fairness by eliminating any tax leakage caused by the income trust sector; and,
• creating tax neutrality by eliminating any incentive to convert from a corporation to an income trust purely for tax purposes.
  

The Liberal Opposition also proposes that the ban on new trust formations be continued, but that the government should commit to considering representations from sectors which can conform to the policy objectives listed above.

The proposal has already received support from Gordon Tait, an analyst with BMO Capital Markets, who had previously told members of the Finance Committee that extending the phase out period to ten years would likely return one-third of the investors lost savings.

“This new proposal would likely return at least of two-thirds of the losses experienced by the holders of income trusts after the October 31 announcement,” said Mr. Tait. “It would also ensure that Canadian investors continue to have a high-yield investment vehicle available to them.”

Dirk Lever, Managing Director for RBC Capital Markets, agreed with that assessment.

“I would concur with Gordon Tait’s view that at least two thirds of the lost value will be recovered,” said Mr. Lever. “It could be more.”

Yves Fortin, a noted economist who formerly worked for the Department of Finance, indicated that the proposal would put an end to any tax leakage alleged by the government.

“While I am not convinced that there is tax leakage, and expert opinions differ as to the existence or the extent of the tax leakage, this proposed 10 per cent tax would more than cover the problem,” said Mr. Fortin.

-30-
Contact:

Press Office
Office of the Leader of the Opposition
(613) 995-5904

David Hurl
Office of the Hon. John McCallum
(613) 996-3374

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