Elizabeth May, Income Trusts and Foreign Ownership
A rather strange – not to say bizzarre – hypothesis on the Conservative decision to restrict income trusts was put forward today (March 31) by Green Party Leader and ostensible progressive, Elizabeth May. Speaking to the Council of Canadians Integrate this! conference on the “deep integration” Security and Prosperity Partnership with the US, May said she found allegations of revenue loss from income trusts unconvincing.
Instead, she speculated that this “may” really be a covert and under-handed Conservative move to boost foreign ownership of corporate Canada – Â precisely the argument being advanced on the oil patch and Bay Street by wannabe organizers of trusts.
This strikes me as rather unconvincing on a number of fronts.
First, there are few evident obstacles to foreign take-overs of Canadian companies under this government, and much more plausible means than income trusts are at hand if we want to stop them. Nafta still gives us the right to review large take-overs and deny them if there is no net benefit to Canada, and there areÂ barriers to foreign ownership in the communications, finance and cultural sectors (thoughÂ Industry Minister Berner seems keen on dismantling them.)
If May is really keen on boosting Canadian ownership of corporate Canada, why tout the case for income trusts? Far better policy instruments are available, andÂ there are, to my knowledge, no major barriers to foreign holdings in “Canadian” income trusts.
Second, the main case against trusts has been less the tax revenue loss argument than the argument that this ownership form bleeds companiesÂ of internally generated cash to finance new investments. Does May really support an ownership form which undermines the real economy?
Â Third, the evidence for significant tax revenue loss from income trusts which May disputes strikes me as pretty convincing, unless we think Don Drummond of TD Bank, Jack Mintz and the Department of Finance are all parties to a conspiracy to boost foreign take-overs by a Â circuitous back-door. (Actually, they are all happy to see foreign take-overs through the front door.)
Perhaps May is just courtingÂ the outraged income trust lobby? Session chair Avi Lewis seemed to think so. That speaks volumesÂ about her claims to be on the progressive side of the political spectrum.Â