OTTAWA -- Liberal MPs are feeling the heat from constituents because Ottawa is considering reducing the tax advantage of income trusts, and two have written to Finance Minister Ralph Goodale urging him to dispel a cloud of uncertainty now hanging over the investment vehicle.
"To say they are ticked off is, I think, being polite," Roger Gallaway, Liberal MP for Sarnia-Lambton, says of his constituents.
He and Brenda Chamberlain, Liberal MP for Guelph, have sent Mr. Goodale letters calling on him to issue a statement clarifying his intentions for trusts.
Mr. Gallaway warns Mr. Goodale in his letter that a "tempest" over the trust issue "is brewing in many cities, towns and households in Southwestern Ontario" right now.
The federal government has signalled it is seriously considering reducing the tax advantages of income trusts.
One source who has talked with Mr. Goodale in recent weeks said the Finance Minister is "definitely . . . negative" on income trusts. "He wants to do something about them. He's very much against them. It's unmistakable."
But investors are telling MPs they don't want to wait until the 2006 budget to learn what Ottawa plans.
"Many of these investors are beyond annoyed with your musings as they watch the value of trusts spiral down or contemplate a new and uncertain future," Mr. Gallaway wrote Mr. Goodale.
Mr. Gallaway said the trust file could become an election issue that could hurt the Liberals.
"I am not predicting the sky is falling, but I am reminded that, as one caller said to me, in Ontario there are 250,000 members of the Canadian Association of Retired Persons," he said, referring to a lobby group for older Canadians.
Ms. Chamberlain and Mr. Gallaway said they are not the only Liberal MPs who have received calls, e-mails and letters on the matter, but they declined to identify others.
The income trust industry has estimated that about one million Canadians hold units in these vehicles directly and millions more via mutual funds.
Ms. Chamberlain said she's hearing from retired Canadians, and people near retirement, who feel that their financial future is now threatened.
However Liberal caucus chair Andy Savoy said he hasn't heard a lot about the issue. "In the ridings, on the ground? No, there hasn't been a lot of feedback as of yet," he said.
The Ontario MPs said they heard a lot about trusts last week, during a parliamentary break when they were back in their ridings. Ms. Chamberlain said she has received about two calls a day for the past 2½ weeks and half a dozen e-mails. Mr. Gallaway said he had about seven people in his office raising concerns and received about 25 calls.
"Some are just plain saying 'Don't you dare touch those income trusts in any way, shape or form,' " Ms. Chamberlain said.
Mr. Gallaway said it is unfair that Ottawa is considering changing the playing field for retirees.
"We tell people you've got to plan for retirement. How do you plan when the rules keep shifting?"
© The Globe and Mail
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