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Dan Bradley's Submission in Response to Finance Canada's Tax and Other Issues Related to Publicly Listed Flow-Through Entities (Income Trusts and Limited Partnerships) consultation:
October 27, 2005.
In reply to Mr. Goodale's letter to me:
I am responding to Mr. Goodales email back to me on Income trusts. The Government has done a huge disservice to holders of income trusts and Canadians in general. In Reply to questions he has asked me to forward back to you see below
Name: Dan Bradley
As per your question paper on this issue:
1) * Does the tax advantage of income trusts relative to public corporations have a significant impact on how businesses are organized in Canada? Yes – most these companies are public cooperations
2) * Do income trusts have a significant impact on government tax revenues? Yes- the revenue on the tax collected on the sale ( capital gains ) of income trusts would be huge – Significantly more then the $300 million the government has said it has lost
3) Do income trusts have an impact on business investment decisions and the allocation of capital in Canada? Is this impact on the economy positive or negative? Yes, they allow Canadian Business to expand and keep Canadian Business in Canadian hands – the impact on the economy is extremely positive – more Canadian investment. More tax revenue, more Canadian jobs, better pensions (CPP and private)
4) What impact do tax-exempt investors, such as pension plans, have on government revenues and economic efficiency in relation to income trusts? The revenue will in affect increase as the investment into income trusts has been huge and this money will be taxed upon redemptions. The money that has gone into income trusts if not invested in income trusts could have been spent on other non taxed items. Also the Finance dept in its September ruling de-valued income trusts by over 21 billion dollars alone – this in itself has resulted in hundreds of millions of dollars in lost tax revenue. If this had not of happened the tax revenue generated would of more then off-set any perceived tax revenue loss the Finance dept has said it will loose. Pension plans do a lot of research on the efficiency of any company they invest in and this ensures that only viable companies will be invested in. Unfortunately the actions of this Government was not something these Pension plans could of foreseen and thus have lost hundreds millions of dollars of regular Canadians pension dollars.