OTTAWA – The Green Party of Canada is calling on Prime Minister Stephen Harper to launch a public inquiry into Finance Minister Jim Flaherty’s unproven allegation that income trusts result in a loss of tax revenue to Ottawa.
To date, no evidence has been provided by the Department of Finance to support the pivotal policy assumption that income trusts result in a loss of tax revenue. The only evidence provided by the government has been 18 pages of blacked out documents obtained by Access to Information. In a highly unusual move, the Department of Finance subsequently asked that these documents be returned
“The Harper government’s actions do not demonstrate the accountability or transparency necessary for the proper functioning of a modern democracy,” said Green Party leader Elizabeth May. “As the Auditor General has said, ‘Parliamentarians need objective fact based information on how well the Government raises its funds’.”
A report issued today by accounting firm Deloitte indicates that the flurry of income trust buyouts that have occurred since the decision to tax income trusts, many by foreigners such as Abu Dhabi Energy and Cheung Kong Infrastructure Holdings, has actually resulted in a loss of taxes.
According to Deloitte, “Buyers in the 40 announced deals were equally split between strategic and private equity, as well as between domestic and foreign. But in terms of tax revenue for the Canadian government, the news was not so balanced: 70% of purchasers are tax exempt pension/private equity funds or foreign buyers who pay little if any tax in this country.”
Green Party Finance critic Peter Graham said that the income trust tax announced on Halloween of 2006 has resulted in a loss to the value of the hard-earned savings of Canadians of $35 billion.
“These Canadians have also lost significant retirement income,” said Mr. Graham. “As Mr. Harper stated himself in an op-ed in National Post on October 26, 2005, ‘Seniors are actually enraged, frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living.’.
For more information, see the Deloitte report: Income trust buyouts: Lots of activity, little tax revenue