On April 19, the Liberal Party tabled a private members Bill to the Canadian House of Parliament: an income trust Motion #19. On Taxation of Income Trusts:

That, in the opinion of the House, in relation to the proposed tax on distributions from publicly traded income trusts or publicly traded partnerships, other than those that only hold passive real estate investments, the government should repeal its planned 31.5 per cent tax regime and replace it with an immediate 10 per cent tax to be paid by such entities with the revenue to be shared equitably with provincial governments provided that the tax would be refundable to investors who are Canadian residents in order to:

(a) minimize the loss of savings to Canadians who invested in income trusts;
(b) preserve the strengths of the income trust sector;
(c) create tax fairness by eliminating any tax leakage caused by the income trust sector; and
(d) create neutrality by eliminating any incentive to convert from a corporation to an income trust purely for tax purposes.

The Motion was made during a Status of Business Report, opening the door to one hour of debate in mid-May. Another hour of debate will then occur within the next 30 days of House activities. It may be brought forward on the House agenda so that it might occur before the end of June when Members break for their summer.

The initiative in the House was followed by a “Town Hall” meeting held by Liberal Finance Critic John McCallum on April 20’th in downtown Toronto.  Approximately 150 people attended as discussion focused on the need to remedy the Conservative Government’s income trust tax policies.  Trusts were priced down a median value of 13% in November after a surprise announcement by Finance Minister Jim Flaherty that income trust distributions will be taxed 31.5% starting in 2011. 

It appears that the tax will not come into place as proposed, if the Liberal Party can help it.  They have taken findings of the income trust Hearings held by the Finance Committee earlier this year.  And they have proposed that the tax be reduced to 10%, but that it also be paired with a rebate for Canadian tax payers.