The Liberals have proposed key amendments to the Conservatives' income trust tax policy, arguing the changes would save investors billions of dollars.
"I believe that the income trust fiasco will go down in history as one of the most destructive, reckless financial actions ever taken by a Canadian government," said Liberal finance critic John McCallum.
He argued the policy should be amended in two major ways:
- Repeal the planned 31.5 per cent tax on income trusts and replace it with a 10 per cent tax, refundable to all Canadians residents; and,
- Maintain the moratorium on new income trusts, while considering representation from sectors for exception.
"Expert evidence confirms that such a tax would be more than enough to deal with potential losses in federal and provincial losses, and that it would result in the recovery by investors of some two-thirds of their $25 billion loss," said McCallum.
But he conceded that little could be done for investors who have already sold their income trusts.
"The bad news is that for those who have sold, there isn't really anything that we can do, or it would be very difficult," he said.
"I lay the blame for those unfortunate people ... at the feet of (Prime Minister Stephen Harper) and (Finance Minister Jim Flaherty)."
Liberal Leader Stephane Dion, calling the Conservatives' income trust tax "irresponsible," urged MPs of all parties to consider the amendments.
But NDP MP Charlie Angus said changes to the Conservatives' proposal are unlikely, and blamed the Liberals for neglecting to take action on income trusts in the first place.
He said without the tax, federal and provincial governments would continue to bleed huge amounts of tax dollars.
"I think clearly that action had to be taken, because so much of our corporate sector was moving towards income trusts, and so may people were caught up in that bubble," Angus told Mike Duffy Live.
Ralph Goodale, Liberal House Leader and former finance minister, argued the Conservatives only took action because they -- not the Liberals -- had allowed the income trust issue to get out of hand.
He said the Conservatives had made a campaign promise not to touch income trusts, essentially feeding the trend, only to reverse their decision after coming into power.
"The Conservative government at that time basically said the bar is open: there will be no tax ever, ever, ever," said Goodale.
"And the fact of the matter is that people poured money into the vehicle, new trusts sprang up like mushrooms, and the government seemed to be surprised that they had a problem on their hands -- a problem that their promise caused."
