CAITI TO LAYTON: WAKE UP, JACK!

CAITI LETTER TO JACK LAYTON, NDP LEADER, FEB 15/07

Conversation: Follow Up Call Requested
Subject: Follow Up Call Requested

Hon. Jack Layton Leader of the NDP Party

Mr. Layton

I have copied this e-mail to Don Francis, a retired scientist with a PhD in Chemistry. Don's family helped found the CCF and have supported the NDP for 67 years. Don and I have met with Judy Wasylycia-Leis and each of us have given expert testimony at the Public Hearings on Income Trusts.

I am also copying the members of your Caucus, as these are matters that should be of great interest to them in the upcoming election that is close at hand.

Thank you for taking the time to speak with me last Friday. I sensed some of the points I raised with you did resonate, in particular the inevitable "hollowing out" effects of the Conservative's income trust taxation on the Canadian economy. This "hollowing out" has already begun. Attached is a file of the announced takeovers that have been occurred as a sole result of this policy. 250,000 Canadians are employed by income trusts. 20% of Canada's oil and gas production is controlled by Income Trusts. Virtually all of Canada's oil and gas infrastructure assets are held in Income Trusts. Income Trusts are the only businesses engaged in the injection of greenhouse gases into mature oil fields to stimulate energy recovery. This is a rare win-win for business and the environment.

I could go on forever about the benefits of trusts, but I won't. I hope you had the opportunity to read the materials I provided to you, in particular the piece entitled; The Inconvenient Truth about Trusts.

One thing is abundantly clear from the hearings is that income trusts do not cause tax leakage. If they did, why are the conservatives hiding their analysis? See attached blacked out documents received under the Access to Information Act. This is a sad day for democracy, transparency and accountability in Canada. By supporting the Conservatives you are explicitly condoning this shameless behaviour and these wreckless outcomes.

When we spoke on Friday, I predicted that an inflection point was close at hand and would occur on Tuesday, when for the first time average Canadians would give testimony at the public hearings. Their testimony was powerful, compelling and well informed. I respectfully submit to you that these average Canadians are better informed on this matter than your party's Finance Critic.

As to my prediction about an inflection point, I could not have been more accurate, as the Liberals came out with their own policy position on Tuesday, which has four stated policy objectives:

-minimizing the loss of savings for Canadians who invested in income trusts;

-preserving the strengths of the income trust sector, notably a high yield instrument for savers and for the energy sector;

-creating tax fairness by eliminating any tax leakage caused by the income trust sector,

and

-creating tax neutrality by eliminating any incentive to convert from a corporation to an income trust purely for tax purposes.

Who could possibly not agree with these policy goals?

Keep in mind, Canadians have lost $35 billion in their hard earned savings with no supporting evidence provided by Flaherty and/or the Department of Finance.

The Liberals will achieve these policy objectives by imposing an immediate 10% tax on income trust distributions that is refundable to Canadians. Therefore the net effect of this is to raise the withholding tax paid on distributions to foreign investors from the current 15% to an effective 23.5% and to leave Canadians whole. This effective increase in the tax foreigners pay is a simple way of doing so without the need for Canada to renegotiate its withholding tax treaty with the US and others.

I would like to arrange a follow up call with you to discuss these and any other issues you may have about the reasons behind why your party thinks supporting the Conservatives on this policy is the correct thing for Canada and Canadians or the reasons why I feel this policy is not the right thing for our country.

Thank you,
Brent Fullard
President and CEO, Canadian Association of Income Trust Investors
www.caiti.info
416 486-2224