After an initial round of releases of information from bank-based analysts, many have since closed off public statements about the Department of Finance Consultation Paper on income trusts.  They do not want to appear self-serving nor offend the government pending bank merger talks.  But while these expert informants have been effectively “muzzled”, Canaccord Capital has released an informative and advocacy document called, “Trust Reform Hurts Canadians”.

Mailed for free to email subscribers, the document appears to be sent from the many income trust analysts at Canaccord, led by Chris Rankin. 

In it they say that, “It�s about funding everyone�s retirement… Demographic trends and an aging baby boomer population are key demand drivers in a growing base of Canadians seeking retirement income. Income trusts offer one of the highest sources of sustainable recurring cash yield in equity and fixed income markets and are, therefore, the preferred structure for many retirees.”

But they add, “Both the federal government and many provincial governments have explicitly approved the structure by endorsing or implementing limited liability legislation. With the Canada Pension Plan now owning trusts (as well as many other pension plans), all Canadians have a vested interest in the survival of the trust market.”

Specifically on tax issues, they suggest that, “The income trust sector lost $23 billion in market capitalization over the past month, largely due to fear and uncertainty caused by the federal government. Recognize this is BILLIONS of dollars of foregone capital gains tax revenues (or the creation of capital losses) that the government has caused in efforts to contain $300 million in purported tax leakage. Moreover, it partially represents billions in foregone retiree income, which is also subject to tax on RSP/RIF withdrawal. A �no-action� decision by the government could reverse this whole mess.”

And asking the way many have asked, but doing so from the brave position with the industry, Canaccord notes that, “Our fear is that politicians do not think voters care about income trusts. We question whether the consultation process with the Department of Finance will be balanced, or is it just a sham? Bay Street cannot protect your investments on this issue, as it alone does not carry political weight.”

They concluded, “The intentional or unintentional destruction of the existing trust market does not need to happen.”

Mr. Rankin was bold enough to say that the Department of Finance has been taken out of the decision-making role by politicians.  And their threat against the sector is morally indefensible. What to do?  Canaccord suggests, “Contact your MP and share your concerns before it�s too late.”

For a copy of the document, you may find links in sponsor ads that appear on the TrustInvestor site or link here (pdf).  And for more information, the company can be found at Canaccord.com.

The paper provides phone numbers and email addresses, as do we. We also note that people can certainly use the government Web site as well for the full list of names and contact information.

Canaccord provides a clear persspective on the evolution of the equities market and the place for income trusts in it. And so their analysts like Mr. Rankin make for potential presenters at the first Roundtable of the iTrustInstitute. Tentative to final scheduling, they have agreed to participate.