NEWS WATCH
Letter to John McCallum, MP and Liberal Finance Critic
Good morning Mr. McCallum
Congratulations on making a specific tax proposal (10%) to address the income trust requirements and consider the real impact on Canadians. As a Canadian, I thank you for that initiative.
We would also observe that the potential strength of your proposal might be lost on Canadians, particularly in the realm of pre-election rhetoric and political campaign advertising.
On the other end of the spectrum, the Liberal proposal can be seen as a moderate approach to “grandfathering” of trusts. And therefore, the proposal may be misunderstood or considered weak due to inherent inconsistencies. If further issues of income trusts are prohibited, then the policy promises to dampen the potential benefits of the income trust market as described by the Bank of Canada in terms of market efficiencies gained through diversification possible with (and so in principle within) the asset class.
As a non-partisan organization that was not given voice in the public hearings hosted by the Finance Committee, we see there as being potential merit in hosting a public discussion of our own, specifically to consider your new proposal as it appears to be the only one arising in a certain way from the Finance Committee hearings.
If we hosted an event, then would you care to present your proposal directly to analysts and the public during the forum? Would you be open to moderated public questions in regard to it? If so, then what timing would be most appropriate or workable for you?
Knowing that you have, no doubt, been approached with feedback on your proposal by financial analysts and others, could you suggest other potential participants to provide thoughtful analysis of your proposal? We welcome suggestions in that regard. The Institute would like to arrange for an unbiased and experienced moderator for the session and involve other panelists or speakers.
We envision the forum as a web based discussion that can involve people from across Canada and can be easily recorded so that it can be offered as a recorded a/v resource from our web site to those unable to attend. We would undertake such an initiative on a cost recovery basis, perhaps charging a nominal fee to participants who attend via the Web. In our work in 2005 to put together a Roundtable to discuss income trusts in line with Ralph Goodales’ public consultation, we found that a web-based event might be more manageable, affordable, welcoming and democratic as a forum for presentation and dialogue than a local event requiring physical facilities.
Please let me know your thoughts and whether such an opportunity to attend would be of interest to you. If, on the other hand, you feel that the Finance Committee hearings and report process will provide further clarity that minimizes the utility of a public forum about your proposal, then I’d appreciate your guidance in that regard.
Thank you for your consideration. I would look forward to hearing from you again at your convenience.
Sincerely,
Leslie Hayman
President, iTrustInstitute
After the third day of public hearings by the Standing Committee on Finance, the Liberal Opposition announced a plan that involves a repeal of the 31.5 per cent tax on income tax distributions in 2011. The Finance Critic for the Liberals, John McCallum proposed that it be immediately replaced by a 10% that will be paid by the companies and would be refundable to Canadian residents. Furthermore, the Liberals are proposing that the tax revenue be shared equitably with provincial governments.
The schedule has been set with an interesting set of presenters offering a potentially diverse range of ideas to the committee including people with some wonderful information along with opening witnesses including those with questionable data.
The quality of committee members’ questions makes or breaks the value of the hearings.
2 Hours on Tuesday January 30th - (changed) Witness List 1
2 Hours on Thursday February 1 - (changed and possibly further changing) Witness List 2
Where will the allocated additional 2 hours come into play? Who will have a say at that point? We will watch the Finance Committee Web site and schedule.
The meetings will be “televised”. If so then, it would be useful to watch the hearings and compile here, any and all key questions that need to asked, but aren’t within the hearings.
A note sent this week to call for “factual hearings” was rather tame, but provided as an example, questions related to the first witness - Diane Urquhart. The iTrust Institute’s initial comments and questions triggered positive response from government officials and others.
How best to engage in the process if not on the witness list?
The Institute is consolidating a Brief and a list of questions with pertinent factual background to provide Committee Members on an iterative basis. Tuesday questions gathered for Monday. Questions from the first session set out for use Thursday. Tuesday and Thursday questions and background gathered for the 3’rd leg in the Committee process.
Thoughtful member, guest and advisor input is .
ADDENDUM
In its wisdom and with leadership from Liberal members of the Finance Comittee, it has decided in a brief third day of closed-door discussion, to assemble a third day of public hearings for February 13.
CONTRIBUTIONS BY THE INSTITUTE
iTrust Institute Follow-up Brief with Facts for Hearings 2007-02-01.pdf
The non-partisan research and education organization, iTrust Institute has warned that the pending hearings about income trust tax are of significant importance to all Canadians.
ABBREVIATED COPY OF NOTE:
TO: Clerk of the Finance Committee
This note follows up on my phone call earlier today in which you welcomed an email note to the Finance Committee address.
This is a request to appear before the Finance Committee as an expert witness to address considerations of income trusts, their taxation and implications for Canadians and the Canadian economy.
iTrust Institute is studying the key features, perceived potential & benefits of income trusts starting from the premise that:
Equities managed and structured like income trusts to flow net gains through to owners by way of frequent and regular distributions of cash can offer superior rates of overall return, support market growth, enhance economic productivity and contribute to growth of the tax base with less risk than other equities given honest managers and a fully competitive market supported by open communications.
We will test this notion and explore related questions.