Mr. Speaker, it is my pleasure to join others in this debate on the private member's motion introduced by the member for Scarborough Centre. However, I regret that we are using more time in the House to have yet another debate on an issue that the Liberals will not let go. This is another attempt by Liberals to save face on a matter that has been thoroughly debated by the House and has reached a conclusion that the Liberals will not accept.
We all acknowledge the fact that the Conservatives made an election promise and broke it. As was acknowledged in all the hearings on this issue from beginning to end, that was a stupid election promise. It was a promise made out of political expediency in the same way that the Liberals are now tied up with this issue from which they cannot break loose.
This issue is about political expediency that goes back to the fall of 2005 when in fact Liberals decided that this issue of income trusts had to be studied. It was seen as a problem in terms of an investment vehicle in Canada that had to be addressed and they proceeded to put in place a task force to study the issue. They learned from that study that income trusts have no place in our investment field today. Yet, they refuse to let go because the political mileage they think they can gain from this still runs supreme.
Let us be clear about this motion. It is from the member for Scarborough Centre who wants very clearly to turn back the clock, just as the Liberals proposed on numerous occasions at the finance committee and in the House. It is a wrong headed initiative. It does not make sense and it is time for the member for Scarborough Centre and all of his Liberal colleagues to let go and say yes, it is time for us to clear the deck on this issue to allow for a level playing field in terms of income trusts and to ensure that taxpayers are protected from future tax leakage.
The members on that side of the House want to dismiss the notion of tax leakage. They refused to accept the fact that there was every possibility of more and more corporations joining the bandwagon in order to be able to use the income trust vehicle as a tax avoidance measure.
Some in the House may think it is okay to have tax avoidance measures and like to differentiate time and time again between tax avoidance and tax evasion. We in the New Democratic Party in this corner of the House believe that we should be doing everything possible to close tax loopholes, end tax havens, eliminate tax avoidance schemes and certainly to make illegal any tax evasion initiatives.
It is time to end this debate. We have already spent numerous days, hours, money and resources revisiting this issue time and time again. The problem is that back in the fall of 2005 the Liberals were headed on this path to try to phase out income trusts. They were inclined to look very seriously at the use of an income trust tax. In fact, when this issue first emerged on the front page of every media outlet across this country, because of the potential for a breach in security and the huge spike in the income trust investment field, the member for Scarborough—Guildwood actually suggested in a press conference that the announcement made by the then finance minister was about introducing a tax on income trusts. The Liberals were on that course.
In the last election the Conservatives foolishly promised not to move any such motion. They recognized the error of their ways and have returned to the House determined to actually level the playing field, which is the right thing to do. They made a mistake in making the promise, but it is the right thing to do in terms of Canadian public policy.
The motion of the member for Scarborough Centre is an attempt to turn back the clock. It is just not possible and it does not make any sense. Time and time again we have heard from witnesses at our committee. They have clearly indicated to us the problems with trying to turn back the clock on the income trust file.
On of our most respected and credible witnesses before our committee has been Dianne Urquhart, who is an independent consulting analyst. She reminds us time and time again that such a motion, if implemented, would revitalize the income trust market by fully restoring the tax advantage for income trusts over corporations. Maybe the Liberals have had a change of heart and they want that. She said it would provide an irresponsible combined federal and provincial tax incentive for seniors and other unsophisticated retail investors to purchase more income trusts.
It would provide a particularly irresponsible significant combined federal and provincial tax incentive within the tax deferred plan, and that is a point that is shared by many Canadians, except for Liberals, who are prepared to condone or allow for continued tax leakage.
The Liberals in this debate and the Bloc as well today have tried to suggest that we have to do this because the sky is falling. It is true that some investors lost considerable money by investing much more than they ought to have in the income trust deals, probably because of very bad advice from investors who had a lot of money to make by convincing seniors to go in this direction.
Some people lost money. For that, all of us in the House are deeply sorry. We regret that had to happen. We wish the Conservatives had not played this game of political expediency and during the election period of 2005-06 had actually said, “Look, we will review this area, and if we need to introduce a tax on income trusts, we will”. Unfortunately, they chose to go the other way, and as a result, some people were hurt very badly.
However, it is not correct to say that the sky is falling when in fact we have numerous reports showing how the value of income trusts has returned almost to where it was at the beginning.
I want to return to the report from Dianne Urquhart who told us at the finance committee that the income trust tax damage was relatively small. Upon announcement, the average capital loss in the 14 day post-announcement was 14%, or $24 billion. The capital loss as of last night, and the date she was using was just a week or two ago, the average capital loss as at that time was a negative 3% or $5 billion. She said that while income trusts have rallied from their worst prices they have, as she indicated earlier that morning, underperformed the common stock market, which has rallied 15% since October 31.
Those are the facts. Also, we have headlines from numerous newspapers saying “Trusts back from the Halloween Scare” and another, “Fury Over Tax Leakage Clouds Real Trust Issue”. The editorial in the Toronto Star condemns the position by the leader of the Liberals and the Liberal Party. An editorial in the Toronto Sun said that the Conservatives had clearly embarked upon a dangerous course of promising one thing during an election and doing something else, however, they were right to do what they did, in the end.
Finally, I want to say on behalf of seniors everywhere, there is a mandate on our part to ensure that we stand up for those millions of seniors who do not stand to benefit from income trusts and who have actually been taken advantage of by players in this field.
I want to refer to the National Pensioners and Senior Citizens Federation, which has 450 clubs and chapters with a million members, who has stood from the very beginning saying that the government was right, even though some people took losses, to bring in the income trust tax. The Small Investors Protection Association has joined with that federation in referencing this whole area and also calling for a national inquiry on the malfunctioning of Canada's securities and accounting regulations and white collar crime enforcement team.
As well, the United Senior Citizens of Ontario organization has joined in calling for an investigation into what it considers the largest alleged fraud in Canadian history, based on the deceptive yields in income trusts. This alleged fraud is anticipated to reach $40 billion, according to our volunteer consultants. This is an issue that must be dealt with. Income trusts must be phased out. The income trust tax issue must not be revisited.