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Tuesday, 02 December, 2008, 15:40 GMT | more >>

Flaherty may hitch trust tax to budget



By Upstream staff 

Photo by CP


Canada's upcoming budget is likely to include legislation to tax income trusts, Finance Minister Jim Flaherty said today, forcing opponents of the tax to either support it or defeat the entire budget and trigger an election.

"Right now I'm inclined to put it in the budget bill just because I will have a budget implementation bill to introduce concomitantly with the budget, so that would probably be my first legislative opportunity," Flaherty told reporters, Reuters reported.

Flaherty announced on 31 October that existing income trusts, vehicles that have been used to avoid paying most corporate taxes, would be taxed in line with other corporations as of 2011. New trusts would pay corporate taxes immediately.

Including the measure in the 19 March budget instead of introducing a separate bill, as he had previously suggested, angered the Liberal Party, the chief opposition party, which is against the tax proposal.

"The MPs (members of Parliament) deserve a clear vote on this so they can effectively represent those who have lost so much money," said Liberal legislator Diane Marleau in a House of Commons debate. "Will the minister at least have the courage to table this as stand-alone legislation?"

The trust sector lost an estimated C$25 billion ($21.4 billion) in market value following October's surprise tax announcement.

The Liberals have not said whether they're inclined to otherwise support the budget, which has been billed as being full of tax cuts.

The Bloc Quebecois and the New Democrats, the two other opposition parties, back the income trust tax.

On 21 December, Flaherty released draft legislation that would implement the new rules, and invited comment until the end of January. It is these rules that will most likely be included in the budget bill.


Wednesday, 28 February, 2007, 22:44 GMT  | last updated: Wednesday, 28 February, 2007, 23:54 GMT

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