Thursday, November 02, 2006

Income trusts – What a Difference a Year Makes:

Steve Harper has broken a written campaign promise on Income Trusts. In response, the Toronto stock market was immediately down 2%. Income Trusts stocks dropped 13% for a record one day loss of $24 billion. Hundreds of thousands of pensioners will be directly hurt by this weeks change to Trust laws.

Pension investment in Trusts increased based on the repeated assurances of the Conservative Party that they would not change Income Trust tax laws. There are about a million Canadians directly involved in Income Trusts. Because of the Prime Minister’s broken promise, the one day lose is now an average of $24,000 per invested person (or $48,000 per invested family). Worse still, the sell off will likely continue for the next four years until the full affect of the new taxation rules is internalized by the marketplace.

Conservative Finance Minster Flaherty claims that the Federal government is losing revenues, which he interprets to mean that Income Trusts must be stopped and corporate taxes must be reduced. However, the Federal government is experiencing record surpluses. There is no shortage of government revenues.

So what is the New Government thinking: direct revenues away from pensioners to corporations? The conservative government’s actions have significantly hurt pensioners, lowered corporate taxes, and addressed a government-revenue non-issue.

(c) 2006 Victoria BC


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