The Canadian government announced plans to make businesses pay taxes on their income trusts. The move, which reneges on an election promise by the Conservatives, has seen both the main Toronto share index and the Canadian dollar fall heavily.
Canada’s income trusts are investment entities whose shares are publicly traded, just like standard stocks. Canadian firms currently pay little or no tax on their income trust schemes. Finance Minister Jim Flaherty said the change was vital, despite a December 2005 election pledge not to touch income trusts.
“We have seen a growing trend toward corporate tax avoidance, top Canadian corporations operating within the current rules have announced their intention to convert to income trusts. This trend has now moved into the core of our industrial and knowledge-based economy.”
Liberal leader Bill Graham accused the Conservative government of a “deception of monumental and costly proportions”. He said the government’s move would cost investors about C$25billion.
“Innocent communities suffered an economic bloodbath because they believed the prime minister that income trusts were here forever,” said Graham, not like the liberals have delivered on any big promises in their 15 years of power.
More discussion in the economic financial forum.
TELUS announced they have re-evaluated the Company’s proposal announced on September 11, 2006 to reorganize in its entirety into an income trust.
TELUS management and Board of Directors believe that it is no longer in the best interests of the Company and its shareholders to proceed with the reorganization. The Board has unanimously decided to not proceed with the conversion.