John McCallum challenges Flaherty with Deloitte report and Government Cover-up

Auditor General: “Parliamentarians need objective fact based information on how well the government raises its funds (taxes)”

Stephen Harper and Jim Flaherty may not believe that, but John McCallum and the Liberal Party clearly do, as witnessed by this question in Parliament on December, 13, 2007:



Deloitte's report reveals the following failures of the Conservative policy on Income Trusts:

Takeover Buyers are largely tax-exempt

Buyers in the 40 announced deals were equally split between strategic and private equity, as well as between domestic and foreign. But in terms of tax revenue for the Canadian government, the news was not so balanced: 70% of the purchasers are tax exempt pension/private equity funds or foreign buyers who pay little if any tax in this country.

What structures were buyers using to acquire trusts? In 22 of the 40 transactions, trust units were acquired; in the other 18, the purchaser acquired shares of subsidiary corporations, trusts or partnerships. The method of acquisition has significant implications for the buyer, trustees and unitholders. The entity left “holding the bag” has to bear the cost and risk associated with the wind-up of the engineered trust. A caveat for future purchasers: all parties should consider the implications of a proposed structure when assessing the value and risk of an offer for a trust.

Based on our involvement with over 20 income trust buyout transactions in the past year we believe that the buyout momentum will continue. The current M&A slowdown is primarily driven by “mega” transactions exceeding $1 billion in size. The income trust market, particularly the business trust segment, is comprised of medium-sized companies that are ideal for financial and strategic buyers. Clearly, volatility in the income trust sector is far from over.

Read the complete report here. Income trust buyouts: Lots of activity, little tax revenue

And contrary to the fantasy and misdirection of Jim Flaherty, the Liberals have been consistent in their position for some time as recently explained by John McCallum on October 31st, 2006:



See also: The Liberal Plan - Feb 16, 2007

Meanwhile the Green Party has called for a public inquiry into the government’s unproven allegation of income trusts. Likewise the Liberals:

Green Party calls for inquiry into the alleged tax leakage of income trusts