Ralph Goodale had floated this idea back in the fall of 2005, but the process was so full of apparent leaks that it ended up dead in the water.
Last night Jim Flaherty announced that the government will impose a tax on income trust distributions. The move took the investment community completely by surprise and underlines the advantage of running a tight ship (don't you love the nautical metaphor?). Otherwise we would have seen the same chaos that happened under the Liberal government.
The Income Trust gravy train had to end (o.k. changing metaphors here):
In an unexpected news conference, Finance Minister Jim Flaherty said he was forced to act due to the "growing trend of corporate tax avoidance" -- an estimated $70-billion in new trusts coming to market this year alone.
"We were faced with a situation where Canada was moving to an income trust economy. Is that a good thing for Canada? No," he said.
"If corporations don't pay their share of taxes, this tax burden will shift on to the shoulders of hard-working individuals and families. This is simply not fair."
In order to mitigate the effect on retired investors, a number of provisions have been included; notably Garth Turner's suggestion of income-splitting for seniors.
Garth has been championing this cause for some time now, but was seemingly not taken seriously until he was thrown off the caucus-train and into an Indie seat.
My guess is that Finance Minister Flaherty has been ruminating on this corporate tax hemorrhage for some time, and Garth's idea seemed like a serendipitous answer to the problem of how to placate seniors.
But whatever happened, I am very pleased.
And if I asked Garth how he is feeling this morning, my guess is that he'd reply (to borrow a phrase from Scotty's bank buddy):
"I can't express my joy properly."
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More at Choice for Childcare - "Government to allow split pension income".
Musings of the Technical Bard - "Taxing Trusts"
Kitchener Conservative - "Question for CP - Can we blame income trust on the BT's?".
Political Staples - "Income splitting".
Update: CTV - Liberals lambaste Tories over income trusts. Well, that was predictable.
Very interesting read here by Linda Leatherdale - "Tories targeting trusts". The fundamental flaw with income trusts is exposed.