Thank you, Mr. Chairman.
First, I would like to congratulate the committee for finally inviting some real investors to tell their stories. By the end of today's session, you will have heard four such people. That's four over three full days of hearings. It's high time you encountered some real people. I only wish Mr. Flaherty had given us some thought.
Seven years ago, my wife died as the result of a traffic accident. Our car was demolished by a reckless speeder who ignored a red light. The insurance settlement formed a large part of a portfolio that I invested to make a better life for our children and for the grandchildren she hadn't lived to see. Three and a half months ago, a large portion of that portfolio was erased, this time by the rash and reckless action of our finance minister. That's two major assaults on my family, both with reckless indifference. The first took my wife, and the second stole part of her legacy to her children and her grandchildren. You can't know the depths of my anger.
I had invested a large part of my portfolio in income trusts because Mr. Harper gave such solid assurances that one couldn't possibly doubt him. After all, Mr. Harper had gone to great lengths to differentiate his and his party's integrity from the perfidious Liberals. That should have tipped me off: beware the man who parades his own virtue.
My family and I have suffered gravely at Mr. Flaherty's hands, but others have suffered more, even though the actual dollar amounts may have been smaller. A loss of $25,000 or $50,000 might be more devastating than a numerically larger sum. If, like so many middle-class Canadians, one had retirement savings that provided an income barely adequate to meet expenses, then a few thousand less in capital would make a tremendous difference in monthly cashflow. And make no mistake; it's regular cashflow that is of primary importance to retirees. That's why seniors loaded their RRSPs and RRIFs with income trusts in the first place.
The Halloween massacre not only caused the evaporation of billions of dollars of our capital, but thanks to the impending death sentence hanging over income trusts, there isn't likely to be much of a rebound in valuations. That means our capital isn't coming back.
So what's an income trust investor to do?
Well, he can sell all of his trusts at fire-sale prices and use his reduced pile of capital to buy more expensive securities that pay far less in income. That's not very satisfactory for those who were just getting by before the bombshell attack.
Or, of course, he could just sell everything up and buy GICs and stick his hand out for every government program available, and I think then you'll see some tax leakage.
Or perhaps he could hang on and hope that his trusts would be among those to survive and that they would be able to continue paying their normal monthly distributions. That would require both faith and a deal of luck—far more luck than we had last Halloween.
Either way, the retiree would be facing a much reduced stream of income. Under the Flaherty scheme, taxable accounts would eventually see some relief through the dividend tax credit, but there is no such relief in registered accounts from the rapacious 31.5% proposed tax.
In sad fact, the brunt of the Flaherty tax plan, whether planned or accidental, is borne by foreign investors and Canadians with registered accounts. We're either collateral damage or the victims of a brutal mugging. Is it reckless indifference or a vicious attack on retirement plans? I must say, neither is a very comforting conclusion.
In my brief, which I assume was distributed to you, I have suggested a range of options that would go some way to ameliorate this ghastly situation. Naturally, grandfathering would be ideal, but at the very least I implore you to adopt a 10-year tax phase-in, as did the Americans at a time when trusts were a minuscule part of their economy—nothing like the over 20% they composed of our index—and to put in place the plan described to you previously by Mr. Dirk Lever for a refundable tax credit, so that seniors with registered accounts wouldn't bear the entire brunt of what Mr. Flaherty, in his best Orwellian doublespeak, calls a “tax fairness plan”. War is peace, freedom is slavery, ignorance is strength, double taxation is tax fairness—George Orwell would have been proud.
Mr. Chairman, two days ago I received a telephone call from another person on the witness list for today's hearings. I had never before had communication with this person, who proceeded to preach an hour-long sermon on the evils of trusts and then attempted to get contact information for the other individual investors. While at no time did this witness directly counsel me to change my testimony, what I heard was a diatribe that through its content, tone, and timing—two days before our appearance here—was clearly an attempt to influence my testimony before this committee. That fits my definition of witness tampering, Mr. Chairman, and I hope it fits yours.
Thank you.