Investorial

First, a correction is in order. In my previous post theorizing a Conservative government conspiracy about the income trust taxation proposal, I erroneously stated that the Conservative party held a slight majority government. In truth, they are trying to make a minority government work. So far this year, I’m looking like a genius with a few recent developments aiming to kill this bill. Let’s get caught up!

Two opposition parties, the Liberals and Bloc Québécois are trying to force special parliamentary hearings to probe the controversial tax — even though Parliament is not sitting — to vote on whether to call witnesses as part of a reconsideration of the tax. Though there is little chance that the numbers in the House of Commons will work in favour of this interference, political pundits are speculating that the Senate may hold its own hearings to aid in the cause.

Who Are The Witnesses?
You might see line-ups spanning many blocks once it’s confirmed that witnesses are able to be called as part of the tax reconsideration. In particular, the founding members of the Canadian Association of Income Trust Investors (CAITI) including CI Investments, PricewaterhouseCoopers, and Gluskin Sheff + Associates should have many choice words against the proposal.

Lobbying for political change is not as strictly an American phenomenon as most Canadians would like to think. Just the other night, I was having dinner with friends and remarked about the interests I have in such a mechanism in the political system. Investors and private sector, fuming that they have not been consulted or heard from, have been trying to cull political favour from anybody who would listen.

Jim Flarhety declared last month that the Income Trust Taxation issue was no longer up for debate. But it’s exactly that staunch stance of refusal to grant exemptions or listen to investors that have engineered the possibility of this bill’s defeat! Hmm… more spices added to my conspiracy theory pot?

What’s At Stake?
We shouldn’t be happy just because other political parties are looking to put up some roadblocks. What are their political motivations? The Bloc Québécois wish to extend the tax-free moratorium to 10 years, hence their presence. The Liberals are more motivated to make life difficult for Jim Flarhety by challenging his cost assertions of not implementing the tax versus its benefits. The income trust industry have been diligently producing experts to repudiate Ottawa’s tax leakage estimates, but the finance minister has so far rebuffed requests to divulge exactly how it derived those figures.

The X-factor may lie with the NDP, who are thus far non-committal with their support. NDP finance critic Judy Wasylycia-Leis indicated that she’s undecided on whether to back the Liberal bid. But if Judy agrees to back the challenge, she’d use that opportunity to throw some mud on the Liberals at the same time by examining the former government’s role in letting trusts grow unchecked for so many years.

Is March 20th The Date For Conservative Defeat?
The events of the next few days may have a rippling effect on the Canadian political landscape. March 20, 2007 is slated to be the day for the government to table its budget. A budget defeat may trigger a non-confidence vote; putting in motion the possibility of a new election. I really don’t wish to go through an election so soon, nor wish for funds to be put to use for such functions. However, that are part-and-parcel the issues of living in a democratic society.

Related Posts:

• Income trusts still going strong?
• Trust The Trusts?
• Income Trust Taxation - Biggest 2006 Canadian Investment Story. But Is It 2007’s Scandal / Conspiracy?
• Income Trusts Avert Bad News … For Now