November 8, 2005.
Dear Mr. Laxton
Thank you for expressing your concerns about the confusion the Minister of Finance has caused on income trusts.
Income trusts have helped numerous Canadian companies grow and flourish and enabled ordinary Canadians to generate more income for their retirement years. The federal Liberal government's reckless decision last September to cancel advance tax rulings on income trusts caused Canadian businesses to lose billions of dollars in market capitalization and Canadians to lose thousands of dollars of personal savings.
Canadians investing in good faith to save for their retirement deserve certainty, not a government review of how the Liberals can grab more taxes from them.
We know that Canadians draw regularly form their investments to supplement their retirement savings. When the value of their investments drops as a result of government indecisiveness, so does their retirement income. It is time the government stopped penalizing our citizens.
My colleagues and I in the Conservative Party are committed to maintaining income trusts as a valuable savings and investment tool for Canadians.
Thank you again for contacting me,
[signed Stockwell Day]
Stockwell Day, M.P.
Official Opposition Foreign Affairs Critic
'Marshall Plan' for trusts
Diane Francis, Financial Post
Tuesday, January 19, 2010
The income trust flip flop in fall 2006 still haunts Stephen Harper, the Prime Minister. It has cost him in polls and will likely do so in 2010 again as Ottawa's punitive 31.5% tax on the remaining 169 income trusts will force them to privatize or be taken out by big corporations or pensions.
His policy boondoggle caused damage:
-A broken promise by the Prime Minister made, unequivocally, to leave trusts intact because of their importance to small investors and retirees.
-The soiling of the country's reputation because the flip-flop was retroactive and confiscated $35-billion in value.
-The disappearance of 51 income trusts (out of 220) bought by foreigners and others who do not pay taxes.
-Evidence that the Finance Department did not understand nor do the necessary homework.
The Liberals say the 31.5% income trust tax should be 10% this year to prevent huge disruption. But a more elegant solution has been put forward by a truck driver from Cornwall, Ont., David Marshall, and his wife, Lorraine. Dubbed the "Marshall Plan," it has been formally submitted in response to requests by the government for ideas before the March budget.
In a nutshell, the "Marshall Plan" calls for creation of a unique tax shelter where income trust units held in RRSPs could be placed and the 31.5% tax avoided. In return, any capital gains tax would be deferred until monies were withdrawn but the distributions to unitholders would be taxable every year.
This could be an instant windfall to Ottawa. The 169 trusts that are left pay out about $16-billion annually in distributions to their unitholders and this income, if taxed annually at an average dividend rate of 38%, would generate $6-billion a year in taxes to Ottawa.
If this is not done, the damage already caused will multiply. Since 2006, the policy led to the buyout of 51 income trusts by purchasers who don't pay taxes (pensions) or who will write off profits against interest payments on debts used to acquire the trusts. This phenomenon is the most damning indictment of the 2006 nonsense and will be compounded this year.
Some may argue that the Marshall Plan constitutes another bailout. But that's nonsense. How can a tax shelter that yields $6-billion a year in taxes be a bailout? How can a tax shelter that allows the feds to eventually tax capital gains when it collapses or funds are withdrawn be characterized as a bailout?
The Caisse de Depot et placements du Quebec, National Bank and others were rescued after they didn't do their homework and peddled or bought asset-backed commercial paper. So what's the justification for not rescuing innocent investor-victims who did their homework and were promised protection, then double-crossed?
The income trust policy is a blunder but can, thanks to a truck driver and his wife, be somewhat corrected. Only if Harper and Jim Flaherty, the Minister of Finance, heed and adopt the Marshall Plan in the budget this March.
Full details on the Marshall Plan here: http://caiti-online.blogspot.com/2010/01/2010-budget-consultations-marshall.html
Saturday, January 23, 2010
Posted by Fillibluster at 3:23 PM