Madam Speaker, the member made some interesting comments about our tax system and the incentives to encourage businesses in our country to reinvest in their communities and themselves to create greater profitability and productivity.
The member mentioned income trusts and the incursion by the government into them. This is a system that is seen as bad public policy and it is not allowed in the U.S.
I would be curious to know the reasons why the member says this. I look at the case of northwestern British Columbia where, despite this government's lack of will when dealing with softwood lumber and despite sound government policy when it comes to our forestry sector, the major companies in the last four fiscal quarters have made record profits. These companies have never made as much profit before as in this past year. This is wonderful for my constituents in these communities.
If those companies were to then set up an income trust, which some of them are considering, they would no longer have to pay taxes on the profits they make. The profits would be immediately passed along to their shareholders as dividends, which they may or may not pay taxes on depending on their tax status.
Why does the member feel this is sound government policy, to continue to allow companies that achieve profitability to evade taxes? These companies are not reinvesting that profit into taxes which we all believe is important to keep the institutions of government running.
It seems to me at a surface level to be one of the largest tax evasion schemes the country has ever faced. I would appreciate it if the member would explain his party's position on income trusts.
This scheme also incurs a disincentive for those companies to reinvest in themselves. In their reinvestment phase, they would then have to declare that money as profit and they would be taxed on it. This is a scheme that is being used by some companies. Perhaps it will be prevented if the government has any foresight at all.
These companies are being given the opportunity to avoid those taxes by becoming an income trust. Therefore, they are providing a disincentive for that investment in productivity which we require if we are to compete on the global stage. Would the member clarify why he is in support of such a scheme?