CANADIAN ASSOCIATION OF RETIRED PEOPLE ENDORSES LIBERAL 10% SOLUTION

THE LIBERAL "TEN PERCENT SOLUTION":
A STEP IN THE RIGHT DIRECTION

CARP Press Release

Toronto, February 27, 2007 - The loss of $25 billion as a result of the Conservative Government’s unexpected action against Income Trusts continues to haunt Canadian investors and keeps CARP’s phones ringing off the hook with calls from seniors whose lives have been turned upside down by this action.

That is why this Association, representing 400,000 members, working on behalf of 11 million older Canadians, strongly supports the federal Liberal Party’s “ten percent solution.” The Liberal proposal to reduce the tax on current Income Trusts from the government's proposed 31.5% to 10% is a step in the right direction -- as is their proposal to grandfather current Income Trusts without adding new ones.

CARP notes that the severe impact of the tremendous losses of retirement income due to the Conservatives’ Income Trust policy can be eased with the Liberal proposal. Losses ranging from $10,000 to $100,000, by retirees, have been reported to CARP.

Regardless of the amount, such losses can create social and health crises, especially with the reduced market value of income trusts, and in some cases, lower monthly distributions -- a problem which is expected to increase as the four-year tax holiday comes to an end. This translates into lower spending power, which, in turn, affects the economy and the country's productivity.

Grandfathering current Income Trusts would, at least, ensure that investors get a better monthly distribution and the opportunity to significantly reverse their losses.