OTTAWA, Aug. 16 /CNW/ - Ordinary consumers and investors alike were
ill-served by the financial rollercoaster ride of the income trust, says the
Public Interest Advocacy Centre (PIAC) in a report released today. While
supporting, in principle, the Conservative government's introduction of a tax
intended to place income trusts units and corporate shareholdings on an even
tax footing, the report notes several shortcomings in the tax policy process
and the governance of trusts that should be addressed to avoid future
John Lawford, PIAC legal counsel and co-author of the report, notes:
"Income trusts were a tax accident waiting to happen. Tax policy reform is
needed before the next major taxation controversy erupts. Investor protection
and the taxpayer voice are sorely lacking - but obviously are needed - well
before immense corporate investments make changing tax policy expensive to
individuals and companies alike."
The report takes a comprehensive overview not only of the history and
function of the income trust, but also chronicles the tax policy questions,
including the ongoing dispute about the size of the "tax leakage" caused by
income trusts question. The report describes some of the major corporate
reorganizations that occurred or were about to occur under an income trust
structure, noting the unanticipated effect on corporate governance in major
regulated industries such as energy and telecommunications. The report calls
for changes to equalize the position of shareholders and trust unitholders in
terms of rights. Finally, the report criticizes the general lack of
transparency in tax policy-making and the seeming reluctance on the part of
the federal government to release information on tax policy-making under the
Access to Information Act.
The report's recommendations include the creation of a regulatory
oversight framework for income trusts comparable to that for securities
offerings (shares) as well as increased efforts by the federal government in
investor education through the Financial Consumer Agency. Finally, the report
recommends the federal government no longer attempt to prevent disclosure of
source documents involving tax policy on the grounds of "national security".
PIAC is a non-profit organization that provides legal and research
services on behalf of consumer interests, and, in particular, vulnerable
consumer interests, concerning the provision of important public services.
PIAC was established in 1976.
PIAC received funding for this report from Industry Canada's
Contributions Program for Non-Profit Consumer and Voluntary Organizations. The
views expressed in the report are not necessarily those of Industry Canada or
the Government of Canada.
A copy of the report is available on the PIAC website at:
For further information:
For further information: John Lawford, Counsel, Public Interest Advocacy
Centre, ONE Nicholas Street, Suite 1204, Ottawa, Ontario, K1N 7B7, (613)
562-4002x25, (613) 447-8125 (Mobile), (613) 562-0007 (Fax), firstname.lastname@example.org