TORONTO, March 17 /CNW/ - On October 31, 2006 Finance Minister Jim
Flaherty announced a 31.5% tax on income trusts in a policy known as the Tax
Fairness Plan. The effect of this announcement was the immediate and
unprecedented loss of $35 billion in Canadian and foreign investor's hard
earned retirement savings. The Tax Fairness Plan has yet to be voted into law.
The policy was advanced on five assertions contained in the ways and means
motion, including the belief that it would level the playing field between
corporations and trusts and that it would strengthen Canada's social security
system for pensioners and seniors.
The Canadian Association of Income Trust Investors (www.caiti.info)
commissioned a poll to test Canadian's level of support for this new tax and
the foundations on which it is based. From March 13 to March 15, 2007, Angus
Reid Strategies conducted a survey of 1138 randomly selected and
representative adult Canadians. The margin of error for the survey was +/-
2.9%, 19 times out of 20. The following were the findings:
- Nearly nine out of 10 Canadians say it is difficult to provide for
themselves with sufficient income when they retire, given today's low
interest rate environment.
- Only one in five Canadians believe Finance Minister Jim Flaherty's
proposal for changing the tax rate on income trusts would level the
- The resounding majority of Canadians say Finance Minister Flaherty's
proposed tax legislation is unfair to Canadians who hold income trusts
in their RRSPs.
- Finance Minister Flaherty calls his proposed legislation "tax
fairness," but two-thirds of Canadians disagree.
- Only one out of 20 Canadians feel that Finance Minister Flaherty's
proposed legislation will strengthen Canada's social security system
for seniors and pensioners.
- Four out of five Canadians say the federal government should publicly
release the data and methodology it used to estimate the amount of tax
loss caused by income trusts.
- A majority of Canadians say it was wrong for Prime Minister Stephen
Harper to break his election promise not to introduce new taxes on
Most Canadians say the Prime Minister should stop the proposed income
trust tax until a public, large-scale independent study into the issue has
The Canadian Association of Income Trust Investors advocates that to the
extent that governments' tax base is unaffected, Canadians should be free to
invest their hard earned savings in a manner that they determine best suits
their own individual investment needs. No credible evidence has been provided
by the Finance Minister to indicate that income trusts result in an overall
loss of tax revenue.
Income trusts emerged over the last ten years as an important "Made in
Canada" investment alternative that proved well suited to providing retirement
income to the 70% of Canadians who do not belong to defined benefit pension
plans and who must provide for their own retirement income. The Conservatives'
proposal is designed to eliminate this important investment choice for reasons
that do not serve the average Canadian's interests, namely the narrow
interests of Corporate Canada who are resistant to this change in Canadian's
investment preferences. The following account appeared on the Globe and Mail,
two days after Flaherty's sudden Halloween announcement:
"High-profile directors and CEOs had approached Mr. Flaherty personally
to express their concerns: Many felt they were being pressed into trusts
because of their duty to maximize shareholder value, despite their misgivings
about the structure. Paul Desmarais Jr., the well-connected chairman of Power
Corp. of Canada, even railed against trusts in a conversation with Prime
Minister Stephen Harper during a trip to Mexico, and told him he should act
quickly to stop the raft of conversions, according to sources."
The cornerstone argument that the government has advanced, namely that
income trusts, including the announced conversions of Telus and BCE, would
cause tax leakage, is based on an analysis that many credible parties believe
is fundamentally flawed and an analysis that the Finance Minister has refused
to make public, citing dubious reasons for not releasing this key piece of
information. Mr. Flaherty's decision to withhold this key information is not
supported by 81% of Canadians.
For further information:
For further information: For a complete copy of the polling results,
please contact: Brent Fullard (email@example.com), President & CEO
Canadian Association of Income Trust Investors, (647) 505-2224