I think it is very clear that the original stated intent, the reason they moved as quickly and suddenly as they did...the official intent at the time was given as tax leakage. The tax leakage that was estimated at the time was $500 million at the federal level and a potential $300 million at the provincial level. We contested those numbers, and in actual fact we were able to prove those numbers were significantly lower than that.
Even if one took that to be the case, very shortly after that, as the income trusts started to fall one after the other, it became very clear that there would be no tax payment because the income trusts were being repatriated either into private equity or, more importantly, into foreign—and “foreign” as in “non-national”—equity.
It was very clear that the whole argument towards tax leakage was dropped in favour of one towards tax fairness. Now, the tax fairness argument was one that was based on the premise that corporations and income trusts basically should be taxed at the same level.
Even at that level we have a severe problem, because the effective corporate tax rate on corporations runs roughly between 6%, 5%, and maybe up to 10% maximum. The 31.5% tax rate, potentially reduced to 29.5%, is still absolutely crippling and effectively guarantees that the instrument cannot survive.
We understand that the government had a concern, but the severity and I think the lack of consultation in finding the solution will in fact damage the economy far more than was expected. We were here on numerous occasions talking about the unintended negative consequences.
So now, within the context of the law as it is passed, we are still prepared to sit down to see if we can find ways to mitigate and ameliorate the damage that has been done and see if we can find a way through this.