Wednesday, February 20, 2008

Sheila Fraser's pipe dream

Canada's Auditor General Sheila Fraser must be smoking something, with her wild and crazy idea that:

"Parliamentarians need objective fact-based information on how well the government raises its funds"
, which is her mantra from the Auditor General's website.

Meanwhile, in the real world of Federal Fraud Minister Flaherty:

Ottawa won't show details of income trust figures
January 24, 2007 News Staff

The federal Conservatives are refusing to show key details justifying how they concluded that income trusts were costing the government hundreds of millions of dollars in taxes.

Thirteen pages of calculations, released to a Calgary analyst, are so heavily censored with black marker that only row and column labels remain visible.

BMO Nesbitt Burns analyst Gordon Tait received the documents under Canada's Access to Information Act. He also received another 12 pages which include details of trust distributions but those documents have already been made publicly available.

"Do they feel they can't substantiate the tax loss claims that have been made? I can't find another reason why you wouldn't make it available," Tait, a critic of the trust tax introduced last Oct. 31, told The Globe and Mail.

Income trusts are businesses that pay little or no corporate tax. Instead, corporations that convert to trusts pay most of their cash flows to investors in monthly distributions, who in turn pay taxes on this income.

Under the changes, Ottawa will apply a tax on the money distributed to shareholders by newly formed income trusts, shifting the tax burden to investors.

The blacked-out figures are important since Finance Minister Jim Flaherty used them to justify the new levy. But Flaherty's office blocked the details citing a section of the Access to Information Act which permits the withholding of data that could be dangerous to Canada's economic interests.

The law allows officials to keep secret information "which could reasonably be expected to be materially injurious to the financial interests" of the federal government. Information can also be censored if it can negatively influence Ottawa's ability "to manage the economy of Canada" or if it will be of "undue benefit" to anyone.

A second reason given for the censorship was that Finance was allowed to keep secret advice given to ministers.

Tait said he doesn't think the withheld figures contain huge surprises but he says they'd allow Canadians to judge if the estimates are accurate.

"What we want to know is how they took information and processed it to come up with these losses so we know if it's valid or not," he said.

"If you want your data to be accepted, it has to be scrutinized. It's got to be subject to peer review. You can't just come up with your own little theory and not show anybody how you came to it."

Liberal finance critic John McCallum said the censorship shows the need for the parliamentary hearings that will begin next week on the trust tax.

The hearings, prompted by opposition parties, will challenge the government on its tax leakage estimates, McCallum told The Globe.

1 comment:

Dr Mike said...

I think it is time to make Sheila Fraser`s dream come true.

It is time to hold this government accountable

The Liberal Party of Canada has professed to support the repealing of the Tax Fairness Plan-I think that the best plan of attack is to have Ms Fraser do an independent audit of the calculations behind so-called tax leakage from income trusts & see if the numbers do add up the way the gov`t & Mr Flaherty have said.

If their calculations are correct then no further action is required.

If their calculations do prove no tax leakage , then the TFP should be immediately revamped to better reflect the actual numbers.