ANGRY BILLIONAIRE TEARS INTO FLAHERTY & TRUST TAX

SCHULICH TAKES AIM AT INCOME TRUST TAX

-- Rich philanthropist backs Liberal move to repeal levy he likens to `hangnail'

by Sharda Prashad, Business Reporter
Toronto Star
Apr 21, 2007

TORONTO -- When the Conservative government dropped its Halloween income trust tax surprise, one of Canada's wealthiest philanthropists saw red – Liberal red.

"I was mad as hell," Seymour Schulich said about the income trust tax. "I've never seen capital destruction on this grand a scale in the whole 42 years I've been around this industry."

Yesterday, Schulich joined Liberal finance critic John McCallum to speak out against the tax and support a Liberal motion to repeal it and replace it with a 10 per cent tax that would be refundable to Canadian residents. The motion was tabled earlier this week in Parliament.

"I basically couldn't believe it," Schulich said of hearing about the tax last October. "These guys (the Conservatives) had come out and categorically stated they wouldn't (tax trusts)."

Most of his own trust holdings are in the Canadian Oil Sands Trust.

Schulich, who used to be a Conservative, says he is not a member of the Liberal Party, but does now sit under the Liberals' tent.

Politicians who make promises should put up 5 per cent of their net worth as a bond, he proposed. If the promise is broken, the money should go to charity.

"If you can't keep a promise, don't make a promise," he said.

Schulich was in feisty form yesterday. He bet this reporter that the income trust tax would be repealed, and bet McCallum the Liberals would win seats in Calgary during the next federal election.

In November, with the encouragement of Marcel Coutu, president and CEO of Canadian Oil Sands Trust, Schulich joined the Canadian Association of Income Trust Advisors to fight the tax.

The government should have stopped new trusts from forming and studied the issue before making its decision, he said.

"Killing the old trusts hurt a significant, substantial part of our capital markets," Schulich said, pointing to seniors who had invested heavily in trusts.

Schulich wants income trusts to be grandfathered and not immediately subject to a tax of 31.5 per cent.

"This (tax) is like a hangnail,” he insisted. "Instead of taking scissors and taking the hangnail out, you take off the finger."