I think that the underline reasons are quite different. The lost of tax revenue is not an issue here. The document I prepared, “or how to generate loss of tax revenue ”, gives you an idea of how tax rates will change under such legislation.
Why is the government doing this? Perhaps we can ask the gentleman who represents the interests of business which feel threatened by the presence of trusts. Business does not like that sort of competition. How do you expect to sell an annuity at 4% when people can get 8 to 10% on trusts under their RRIFs?
There is competition, and investors opt for the highest return as Mr. Tait pointed out. Don't kid yourself by thinking that people buy units in a trust because it is cheaper or more beneficial tax wise. That is not why they invest in them. They do so because income trusts give them the kind of return they need for their retirement. Most people out there buying income trusts don't give a dam about all this tax stuff we are being told.