The Canadian parliamentary finance committee announced that it will sponsor a series of public hearings and provide a platform for interest groups and financial experts to comment on a decision by federal Finance Minister Jim Flaherty to impose taxes on income trusts in 2011.

The federal Liberal party and the Bloc Quebecois demanded an investigation into Flaherty’s tax rules. The opposition parties have asked how much of a tax loss can really be measured in relation to income trusts or flow-through entities. They have also suggested that there should be an extension to the transition period for the addition of taxes, from four to ten years.

The Tory chairman of the finance committee, Brian Pallister, objected to the hearings on the premise that they will duplicate the normal work of a parliamentary committee. Furthermore, if there was an election then the income trust bill would collapse on the order paper.

Such lobby groups as the fund managers’ Canadian Association of Income Trust Investors just recently joined the ranks of other industry associations like the Canadian Association of Income Funds to call for a hearing or for a reversal in the tax rules.

For years, however, members of iTrustInvestor, the iTrust Institute and many individual tax payers who see the merit of income trusts, have been vocal and active in their pursuit of the kind of investigation announced today.

Many Canadians, including members of the Finance Committee and Parliament, must feel proud of their decision to follow-through on the considerations first made possible by the Department of Finance Public Consultation in 2005. That process was never fully completed due to political and other reasons. Yet the Liberal government at the time felt that enough information had been provided to reduce taxes on dividends and avoid adding tax to flow-through entities like income trusts. The Conservative Party used the promise of “no taxes on income trusts” as one basis for its eventual election in early 2007.

It was a shock to many and confusing to many more investors and others, when the Conservative government broke its election promise.

With the move today by the Finance Committee, however, important public hearings can begin afresh in February.

With much turmoil in the markets, the Canadian government has effectively created much-needed opportunity for thoughtful consideration of important policies that affect millions of investors and, in fact, all Canadians. Income trusts, taxes and return on investment considerations effect business, the economy and social security for Canadians in general.