Canaccord Capital Corp.’s income trust analysts have launched a blistering attack on the federal government’s plans to reform trust taxation, urging investors to lobby the government to leave the market alone.

In a research report sent to clients, they argue “The intentional or unintentional destruction of the existing trust market is a morally indefensible attack on millions of Canadian investors and employees that acted in good faith under rules that the government previously endorsed.”

“We question whether the consultation process with the Department of Finance will be balanced, or is it just a sham? Politicians have told us that Bay Street has limited sway in Ottawa, and special interest groups like the Canadian Association of Retired Persons have had trouble getting meetings in Ottawa,” they say.

The analysts warn against a prolonged consultation, as has hampered bank mergers for years. “The last thing we want to see here is a drawn out ‘process’ that takes eight years or more (like bank mergers) before the government takes definitive action one way or another.”

The report suggests that voters can influence the viability of income trusts by contacting their MPs and letting them know that income trust tax policy does matter. “Bay Street cannot protect your investments on this issue, as it alone does not carry political weight,” it says, calling on investors to, “Contact your MP and share your concerns before it’s too late.”

The report argues that all Canadians have a vested interest in the continued survival of the trust market. It notes that trusts offer, “one of the highest sources of sustainable recurring cash yield in equity and fixed income markets and are, therefore, the preferred structure for many retirees”.

Also, it warns that government may miss out on billions of capital gains tax revenues in its effort to contain $300 million in purported tax leakage.