The House of Commons Standing Committee on Finance recommends three possible changes to the government’s plan to tax income trusts.

The committee held two days of hearings on the issue earlier this year. It its report, the committee recommends that the government either reduce the proposed tax from 31.5% to 10%, or extend the implementation period from four years to 10; that it release its tax loss data; and, that it allow a vote on this specific measure in parliament.

“Overwhelming evidence indicates that superior and far less damaging alternatives were available to the federal government,” it says, in recommending the two possible changes to the way the tax works. The committee urges the government to consider implementing one of the two alternative strategies, noting that the tax, “should be instituted immediately and should be made refundable to all Canadian investors. Furthermore, the government should continue the moratorium on new income trust conversions while remaining open to representations from sectors that feel they are well suited to the income trust structure.”

It also notes, “It is imperative that a democratic government be as transparent as possible when levying a new tax so that it can be held to account by its citizens. The committee, therefore, recommends that the federal government release the data and methodology it used to estimate the amount of federal tax revenue loss caused by the income trust sector.”

Finally, it recommends, “ The proposal to tax income trusts is of such significance and has had such a devastating effect on Canadian investors that Members of Parliament deserve a clear vote to best represent the interests of their constituents. The federal government should, therefore, separate it from the other sections of the Ways and Means Motion and table it in a stand-alone piece of legislation. The pension income splitting, the 0.5% reduction in the corporate tax rate in 2011 and the increase in the age credit amount should proceed as quickly as possible in their own separate piece of legislation.”