OTTAWA -- A Conservative government would stay well away from the hornet's nest known as income trusts by leaving in place recent Liberal policy changes related to the popular investment vehicle.
The Liberal plan to reduce taxes on dividend-paying stocks, to try to make them competitive with income trust units, is similar to what Conservative policy has been, so no real changes would be made if the Tories are elected, the party's Finance critic Monte Solberg said yesterday.
"When the Liberals made their announcement, that's what we had been proposing," Mr. Solberg said in an interview.
"So we're very supportive of that approach and we'll be explicit about it when we release our platform" later this week, he added.
Many investors have been on pins and needles since the minority Liberal government fell only a few days after its Nov. 23 announcement that the tax treatment for income trusts would be left in place while taxes on dividends would be lowered to bring them more in line.
Adding fuel to their fears was a statement last weekend by Conservative Leader Stephen Harper who said he intended to roll back several Liberal tax cuts announced in early November.
Mr. Harper has said he had his own tax plan and didn't feel compelled to implement the Liberal promises.
However, that doesn't seem to apply to tax changes related to income trusts and dividend-paying stocks.
Instead, the Conservative rollback seems to be limited to the Liberal's personal income tax plans. Those involve a cut in the tax level for low-income earners and an increase of $500 in the basic personal amount that all taxpayers can claim before taxes kick in.
"We are supporters of income trusts and we oppose tax measures that would raise taxes on income trusts," Mr. Solberg said.
Federal officials have estimated the top personal tax rate on dividends will drop from about 32 per cent to 21 per cent.
That announcement came after Finance Minister Ralph Goodale ignited a firestorm of controversy last September by announcing a review of income trusts, which avoid federal taxes by instead paying out profits to their unitholders.
Although Mr. Goodale's final policy statement on income trusts was welcome on Bay Street, it triggered an RCMP investigation after opposition politicians complained that market activity shortly before the minister's announcement suggested some insiders were tipped to his plan.
Those allegations have also caught the interest of the Ontario Securities Commission and its American counterpart the U.S. Securities and Exchange Commission, although neither confirms nor denies any investigation.
Mr. Goodale has vigorously denied there were any leaks of inside information from his office.
© The Globe and Mail
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