An article of faith, a tenet for the Liberal Party of Canada.
It went from a relatively obscure tax gimmick to $200 billion in capital holdings, an untold lost revenue for Canada in terms of taxation. As that money flows through the shell to the unit holders, the unit holders get taxed as individuals with earnings, but they may be taxed at an entirely different rate. Depending on their personal tax status, they may not pay any.
In actual fact, the lost opportunity has been staggering. It is corporate greed gone wild. The lost opportunity has been devastating. It has been irresponsible. It has been nothing short of stupid to allow it to continue to this point.
We should have spoken out louder. My colleague from Timmins—James Bay and I feel a bit sheepish for not speaking out more loudly the day we learned about this atrocious system. We should have stood up to Bay Street, when the Liberals would not, and said no, that in no uncertain terms would we be the only stupid country in the world allowing this ridiculous situation.
At the shareholders meeting where they voted on whether or not they should convert, one CEO, of an oil and gas company in Alberta that converted, told the shareholders that this would not be allowed forever. He said that he could not believe they were being allowed to do it now but that seeing that it is legal, he advised the shareholders to vote yea on it and convert to an income trust because it was too good to be true. Sure enough, they went ahead and did it and they succeeded.
For many companies it started to snowball. A domino effect took place until it was out of control. Now it is not a popular move. The Liberals have ganged up with the Bloc in trying to find a way to condemn the government for doing what it had to do. I am no big fan of the Conservative Party but this is our opinion too, that the income trust debacle had to be stopped. It had to put the breaks on it and it is irresponsible now to try to reverse that.
We have been following this. The Liberals' record on income trusts has been to do what they do best, which is absolutely nothing. They stood by and watched as this debacle grew.
Independent studies show that income trusts have been over-valued by as much as 40%. Therefore, there is a whole campaign of misinformation. They will eventually drop in value. More than 20% of the business trusts that have come on stream since 2001 are down 20% in value.
What people need to know is that two out of three business trusts are paying out more in dividend earnings to their unit holders than they are bringing in. Is that not a recipe for disaster? Does that pretty much sound the death knell for that particular business because it can only do that for so many years before it will be out of business? That is simply the way this is happening.
Corporations have openly admitted that their attraction to income trusts has been tax avoidance. That is not a very noble thing to guide itself by if a business' sole purpose for restructuring its entire company is that it does not pay its fair share of taxes in this country. Even though we have stripped down the tax rate for businesses in Canada, which are lower than in the United States now, businesses are still looking for ways for wholesale tax avoidance. I call them tax fugitives. I have no respect for people or businesses that do not want to pay their fair share of taxes in this country.
The concern over the resulting loss in tax revenue has been noted by both the federal and all provincial governments irrespective of their political stripe and it is irresponsible for somebody today to be arguing that we should reverse this decision. They have not consulted anybody but the wacko little bunch of activists who have put on the most lame and ineffectual lobbying campaign I have ever seen.