Trust Funds

It seems that the Tory government has finally done something I agree with. Lately big companies have been switching from being corporations to being trusts. This has some meaning for investments that I don’t understand, but it also meant that the companies didn’t have to pay taxes. Tim Horton’s, Bell Canada, and Tellus are examples of big corporations that became trusts so that they didn’t have to pay taxes. I learned about this trend earlier this summer, and had found it disheartening. Now that big companies were becoming trusts, the situation was getting even worse. The government was losing billions from these trusts. Canada need tax dollars. We complain all the time about the sorry state of health care, military, foreign aid and other programs. We cannot expect these programs to improve if we allow big business to have huge tax breaks. Long ago, individuals paid about 50% of Canada’s income revenue, while corporations paid the other 50%. Over the years corporations have paid a smaller and smaller percentage of the income revenue. Recently they have been paying about 25% of tax revenue, leaving individuals to pay 75%. The trust fund trend was bringing the percentage of business tax revenue even lower. It’s great news that this loop hole has been plugged. I am stunned that the Harper government has done something that I would have done if I was in office.

Unfortunately, the new rules were announced on Halloween, which was a Tuesday. Investors didn’t have a chance to process the information that night and they lost money the next day. There seems to be a great amount of anger in the country about that. Harper had also declared before being elected that he would not make such changes. It’s common for politicians to gain new understanding of issues once they assume leadership of the country. I’m more concerned about the decisions that politicians make in power than how consistent they are with their election promises. We should understand that it’s likely that sometimes leaders will need to change their minds when they see the details from the point of view of the seat of power. It’s a shame that so many people lost money on the changes. If the changes were announced on a Friday, the losses could have been prevented. One caller on “Cross Country Checkup” pointed out that they could have halted the stock exchange for a few days while the public learned of the changes. Most people who have investments are those who are pretty well off. The millions of people who use food banks do not have investment portfolios. They are the sort of people who suffer the most from loss of government tax revenue. I feel badly for those who suffered financial losses this week, but I hope that they can take comfort in knowing that this decision was the best thing for Canada in the long run.