CALGARY, Oct. 30 /CNW/ - The Harper government is facing a NAFTA (North
American Free Trade Agreement) challenge by two American trust investors.
Their Notice of Intent to Submit a Claim to Arbitration under NAFTA is based
on Finance Minister Jim Flaherty's surprise Halloween 2006 decision to
eliminate income trusts on the heels of the Conservative government's election
pledge to leave the trust structure alone. The unexpected change caused
investor losses of $35 billion, and it is estimated that American investors
represent over $5 billion of that loss.
"This Halloween surprise to government is just one more example on how
the Harper government did not do their homework when deciding to tax trusts,"
said Gord Kerr, Vice Chairman of the Coalition of Canadian Energy Trusts and
CEO and President of Enerplus Resources Fund. "It has been a full year since
the so called Tax Fairness Plan announcement and, one year later,
repercussions and unintended consequences continue to be felt throughout
Canada, not to mention the devastation being felt by energy trusts and
"Furthermore, the federal government's lack of consultation with energy
trusts compounds the growing uncertainty investors face when doing business in
Canada," said Kerr.
In December 2006, the Coalition issued a comprehensive report on the
impacts to trusts. The detailed report included facts to illustrate that:
- There is, and remains, no firm evidence that tax leakage occurred
from the status quo tax treatment of trusts;
- There is strong evidence that energy trusts have actually enhanced
government revenue and are a major contributing factor to a strong
federal budget surplus;
- There is irrefutable evidence that energy trusts enhance productivity
from mature assets; and
- The trust model is most suitable for the mid-cap sector of the
rapidly maturing Canadian sedimentary basin.
The report also highlighted unintended consequences of the broken promise
which have now become fact. These include:
- Massive capital losses to millions of Canadians;
- Lost income for millions of Canadians depending on investments for
- A ripple effect of reduced spending and lost investment for millions
of Canadians, including investment in charitable organizations; and
- Exposing Canadian corporations to leveraged buy-out groups, notably
by foreign controlled companies.
"Our report holds true today as it did nearly a year ago, and it is
supported by a wide range of experts," said Kerr. "Yet the government has
still not responded to our report nor presented any evidence that supports
The government has ignored the pleas of thousands of Canadians to revisit
its position while steadfastly refusing to admit mistakes were made. The NAFTA
challenge presents the government with a very serious problem - one that could
cost Canadians untold dollars, potentially in the billions.
"It is unfortunate this same NAFTA opportunity to challenge the
government is not available to Canadians," said Kerr.
Likely hundreds of thousands of hard earned taxpayer dollars will be used
to defend this NAFTA challenge. And if the Harper government is not
successful, Canadians will be gravely impacted.
For further information:
For further information: NATIONAL Public Relations, Daorcey LeBray,
(403) 531-0331, firstname.lastname@example.org