Our politicized Auditor General, prefers fishing expeditions to tax leakage investigations

Auditor general wants to inspect MPs' expenses
Tim Naumetz
THE CANADIAN PRESS
May 20, 2009

What’s with Canada’s Auditor General? Clearly she is a political animal. Here she is jumping on the MP expense bandwagon, in the after math of the Speaker of the British Parliament resigning over irregular and unjustified expense reimbursement. So what becomes Sheila Fraser’s top priority of the day? MPs expenses.

And yet when asked A YEAR AGO by our paid elected members of Parliament, that sit on the Finance Committee to investigate the Government’s allegations that income trusts cause tax leakage, the sole premise for a policy that caused CANADIANS to lose $35 billion of their life savings, she gives these MPs the finger, in effect. Who needs and Auditor General that is so blatantly political. Meanwhile the premise of tax leakage turns on the fasle argument that deferred taxes paid on the 38% of trusts held in deferred savings accounts are worth ZERO. This treatment is YOTAL DEFIANCE of the Auditor Generals own directive, that was implemented in BUDGET 2004 to this very day, that all budgeting be done on an accrual accounting basis, which menas these deferred taxes MUST be included.

Why did Sheila Fraser defy the will of Parliament and the people’s representatives on this request? Who is she trying to protect? What is her excuse? What is her motive? What became of her mantra of “Parliamentarians need objective fact based information on how well the government raises it funds (taxes)”, as if to suggest she was the one to provide such information?

For Immediate Release
February 29, 2008
Liberal Finance Committee Members call on Auditor General to
Examine Government’s Claims of Income Trust Tax Leakage

OTTAWA – Liberal Members of the Standing Committee on Finance today called
on the Auditor General to investigate the tax leakage claims that the government
used as the basis for its October 31, 2006, decision to tax income trusts.

“I think that this government’s stonewalling has gone on long enough and it’s
time that Canadians got to see that the Government simply made up its story that
income trusts cause federal tax leakage,” said Liberal Finance Critic John
McCallum.

“Prime Minister Stephen Harper promised to Canadians that he would never tax
income trusts. Then he went back on his word, costing Canadians billions
overnight and in the wake of his silence on the issue we feel that only the Auditor
General can shine some light into this matter.”

All four Liberal Members of the Finance Committee signed a letter to Auditor
General Sheila Fraser asking her to investigate the matter, particularly the
government’s unproven allegations about income trusts causing tax leakage.

“This has clearly become much more than just another instance of the
government not doing its homework before acting. It has become a full-blown
scandal and cover-up,” said John McKay, Member of Parliament for
Scarborough-Guildwood. “We have tried virtually every tool at our disposal to get
the government to show us how they came to their conclusions about tax
leakage and the Auditor General may be Canadians’ last resort.”

An Access to Information request asking for the Department of Finance’s
assumptions, data and methodology resulted in the release of only 23 pages of
documents that are almost entirely blacked out.

A direct request from the Finance Committee to see the data was met with two
thick binders of superfluous information that did not contain the data or
methodology originally requested.

A written question was placed on the Order Paper asking the government to
recalculate its estimate of tax leakage using the 15 per cent federal corporate tax
rate that will actually be in effect in 2012, the year after the income trust tax
begins, as opposed to the 21 per cent tax rate that was in effect at the time of the
announcement. The government’s response to the question indicated that that
this would be a hypothetical calculation and therefore impossible to do.
“That’s not a hypothetical, that’s what the federal tax rate will be,” said Garth
Turner, Member of Parliament for Halton. “If the government can’t manage to
run the new 2012 corporate tax rate through their calculators then I have no
reason to believe they ran the old one through their calculators in October of
2006.”

In 2006, Stephen Harper ran on a campaign commitment to never tax income
trusts. The Conservative election platform characterized any attempt to impose
such a tax as, “An attack on retirement savings.”

“That election commitment was obviously a falsehood. Unfortunately the voters
who believed it and invested even more money in income trusts lost a significant
portion of their nest eggs,” said Massimo Pacetti, Member of Parliament for MP
for Saint-Léonard—Saint-Michel.

“Even today, 15 months after they broke their election promise, Members of
Parliament still hear from the thousands of Canadians whose retirement plans
were shattered by this deception. Liberal Members of Parliament continue to
stand up for them.”

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The full text of the letter sent to the Auditor General is attached.
To see the government response to written question 149 on the Order Paper
please visit: www.liberal.ca/pdf/docs/080229_Q-149_en.pdf

Contact:
Office of Hon. John McCallum
(613) 996-3375