The Liberals have already promised to repeal the 31.5-per-cent
tax the Conservative Harper government slapped on trusts last
Halloween and replace it with a 10-per-cent levy refundable for
all domestic investors but not foreigners.
The Liberals had
previously pledged to maintain what amounts to a ban on new
trust formations for an indefinite period.
Mr. McCallum said the party thinks the trust structure,
derided by the Harper government as bad for the economy, has
merit and should be allowed to exist — at least for some
sectors.
"The question is under what conditions and in what sectors
would we allow the creation of new income trusts," Mr. McCallum
said.
He said a good argument can be made that energy trusts have
as much right to exist as real estate investment trusts, which
were effectively exempted from the October, 2006, Tory trust
tax.
"They are both passive distributions of income. That … [was]
the traditional trust vehicle before they started spreading
elsewhere in the economy," he said.
Mr. McCallum said the Liberals are also considering banning
certain sectors from forming trusts, such as federally regulated
industries, including banks, telephone companies, railways and
airlines.
"I don't think we want our major chartered banks to become
income trusts," he said.
The Liberals emphasized that they haven't cemented any
position yet and will consult across Canada before rewriting
their trust policy.
The Opposition Liberals are now tied in the polls with the
governing Conservatives. The minority Harper government could
fall if the Bloc Québécois withdraws its backing.
Federal Finance Minister Jim Flaherty's office dismissed the
Liberal announcement, saying the party could not be trusted to
handle the file effectively, in part because income trust
formations ballooned under their watch.
"They were there for a long time and all they did was
mismanage the issue," Flaherty spokesman Chisholm Pothier said
of the Liberals.
Income trust officials applauded the fact the Liberals are
talking about a survival scenario for trusts but registered
concern about Ottawa picking winners and losers among sectors.
John Dielwart, chief executive officer of ARC Energy Trust,
said the industry appreciated the opportunity to have
"constructive dialogue" with the Liberals, saying trust
officials consulted Tuesday indicated "unanimous support for the
10-per-cent [tax] solution as a good first step, provided there
is the avenue for sector-by-sector discretion on what does and
doesn't make sense."
Asked about the Liberal proposals to selectively allow the
formation of new trusts, Mr. Dielwart said, "It's not the
government's job to pick winners and losers, that's for the
capital markets to decide. If the wrong businesses are in the
sector, then the marketplace will resolve that."
George Kesteven, president of the Canadian Association of
Income Funds, said the Liberals are likely embracing trusts
because they're highly favoured by seniors and investors saving
for retirement. "They're probably looking at the same
demographics we have … an aging population looking for an income
stream, looking for an investment vehicle," Mr. Kesteven said.
"Canada doesn't have a junk bond market like they do in the
U.S., so there's no high-yield options" available to seniors who
rely on an income stream, Mr. Kesteven said.
"We like the direction because it allows the industry to
survive."
Source
Our commentary in the Globe and Mail
September 5, 2007
The liberals and the conservatives would have us believe that they are acting in reality but the reality is what they would have us see which means that they avoid shining any light on the dysfunction in Canadian society that requires action of government. Take our dysfunctional family courts. Canada's parliament has failed to legislate a mandatory presumption of equal parenting after separation. As a result, children are seen as prizes or geese that lay golden eggs, rather than young future Canadians with rights, rights to have a father and a mother. –continued in next post- http://www.OttawaMensCentre.com 613-797-3237