Monday, October 26, 2009

Follow Up Question For the Auditor General

Auditor General of Canada
Attention: Margot Booth
Manager, External Communications
Office of the Auditor General of Canada

Dear Ms. Booth:

I have been copied on the correspondence below that you had with Mr. L. on the matter of the pending taxation of income trusts, commencing January 2011.

Our concerns have been renewed and heightened as a consequence of the ongoing takeover of income trusts by foreign entities using structures that are designed to evade the payment of taxes in Canada.

For example, the $4 billion takeover of Harvest Energy Trust by state owned Korea National Oil Company announced last week by way of debt leveraged buyout will mean that Canadian taxpayers will forfeit the $908 million in taxes that were collected by the Government of Canada and used to fund needed social programs from the distributions paid by Harvest Energy trust to its unitholders in the last five year period. Harvest is but one example of what is going on here and which will lead to the inevitable loss of $7.5 billion in annual taxes, not to mention the permanent loss of $35 billion in Canadians hard earned life savings. Caused by the income trust tax, whose allegations of tax leakage have only taken the form of 18 pages of blacked out documents as the basis for the Minister of Finances’ “proof”.

However we understand and are somewhat astonished to learn from your letter below that the Auditor General is unwilling to comment on policy or to audit the veracity of the Minister of Finance’s claims of alleged tax leakage from income trusts. We also understand that the Auditor General refused to answer a a similar question posed to her in the attached letter dated February 28, 2008 from Liberal Members of Parliament, this despite the fact that the Auditor Generals defines her role on her website as “"Parliamentarians need objective and fact-based information about how well the government raises and spends funds. The Office of the Auditor General is an independent and reliable source of such information."

Evidently not, since the Liberal MPs’ information request went unanswered by the Auditor General for what appears to only be political reasons?

As such. Mr. Lewicki and I would like to pose a much simpler question to you that avoids asking the Auditor General to comment on policy concerning income trusts or to even provide any transparency or accountability on the matter of alleged tax leakage

Our question, which is two fold in nature is a generic question that pertains to methodology in general, and is a very simple and straight forward question for you to answer without much effort or time required on your part. As such we look forward to a prompt reply.

First, please confirm for us whether or not the Auditor General requires that tax matters and budgeting for the Government of Canada be conducted on an accrual basis or not. Yes or no.

And second, given that we understand that the Auditor General does require the Government of Canada conduct its budgeting on an accrual basis, that it would logically follow that any analysis for any new tax measure be conducted on an accrual basis as well, and as such the taxes that are collected from income trust distributions paid to income trusts held in tax deferred savings accounts, such as RRSPs and pension funds, would under an accrual accounting basis, be fully included, as if they were received in the accounting period in question. Please confirm whether this is true, yes and no and please provide the rationale.

Again, we are not asking the Auditor General to comment on policy or even to provide numbers. We are simply asking a broad based question that is completely generic in nature and fully within our rights as Canadian taxpayers to know the Auditor General’s position on.

Thank you in advance.

Yours truly,

Brent Fullard
Canadian Association of Income Trusts Investors/Taxpayers
647 505-2224

Subject: RE: 18 pages of Blacked Out documents as "proof" of tax leakage?
Date: Fri, 24 Apr 2009 16:11:56 -0400
To: johnl

Dear Mr. L.

Thank you for your email of 7 April 2009 requesting an audit of the estimates of tax leakage that the government used in arriving at its decision to tax income trusts. Please accept my apologies for the delay in responding.

The government’s decision to tax income trusts is a policy decision and therefore something we cannot comment on. Our role is to examine whether the government’s management practices, controls, and reporting systems are in accordance with the policies that it has established.

I must further point out that we cannot report information that the government itself has classified as confidential. The information and advice that led to the decision to tax income trusts are considered advice to Cabinet and fall into the category of information that cannot be made public. Even if we audited this, we would not be able to report the kind of information (e.g. analysis) that you are seeking.

Because this is a matter of government policy, you may wish to pursue any income trust issues with your Member of Parliament, who would be in a better position to provide assistance.

Your sincerely,

Margot Booth

Manager, External Communications / Gestionnaire, Communications externes
Communications / Communications
Office of the Auditor General of Canada / Bureau du vérificateur général du Canada

C.D. Howe Building, 240 Sparks Street, West Tower / Édifice C.D. Howe, 240, rue Sparks, tour Ouest
Ottawa, Ontario K1A 0G6
Telephone / Téléphone 613-995-3708
Facsimile / Télécopieur 613-957-0454
Teletypewriter / Téléimprimeur 613-954-8042


CanadianSense said...

Try Kevin Page next time.

Dr Mike said...

What I would like to know is who do we really turn to if we feel we have been wronged.

The gov`t in this case can cover-up anything it wants by declaring privilege or making it an economic security issue--in this way the Privy Council can even recall material gained under the Access to Info Act.

We cannot sue the gov`t in such cases to have files opened in court.

When the Auditor General has her hands effectively tied , then what.

Ask the PM maybe--well we all know how far that got us as all he would say was that he never made such a promise & we were too stupid to understand what he really meant.

When you have our gov`t acting in this way without any compassion for those injured & when alternatives were available , democracy has not been served.

All accountability has been lost & with it the democratic process.

Would any other party be any better--who knows as past track records do not look encouraging at all.

Dr Mike Popovich
Rodey Ont

Anonymous said...

they are all in the Conservative Crap Party....sheila and all her buddies...we let them get a hold of the reins and now we are will take a BIG storm to wipe them out....and we have idiots like Warren Kinsella speaking for us as a liberal it any wonder we are down for the count.

Anonymous said...

After watching the first instalment of Amanduh 2.0, otherwise known as the Lang, O'Leary exchange and their facile interview of Jim Flaherty I think the show will be referred to in the future by its acronym of LOL Exchange

Dr Mike said...

OMG , not Flaherty.

I thought we got rid of that guy.

Is he still the Pseudo-Finance Minister??

Dr Mike

Anonymous said...

I started to doubt it was their first show since they never said anything. I should have caught on by her classy dress and the makeup/hair job. I found the screen action very very annoying with the bottom of the screen constantly taken up with ever changing blocks and the background behind them flashing and rolling the show name. Hard to concentrate, too many distractions. As far as her not tackling Flaherty, it's my opinion they are good friends, what with her family political background she's not going to give him a hard time. Kevin would but she's got a tight reign on him.