Finance minister Jim Flaherty said today it’s unfortunate that some investors lost money because the government changed the rules on income trusts, but he won’t back down.

Flaherty was the first witness to appear before a parliamentary committee that began hearings on the politically charged issue of income trusts this morning.

The minister said it was absolutely necessary to impose a new tax on the trusts.

Flaherty told the House of Commons Standing Committee on Finance that income trusts were effectively shifting their tax burden onto ordinary taxpayers.

“Make no mistake, the decision that was taken on October 31 is all about fairness,” Flaherty told the committee.

He said Ottawa alone lost $500 million in taxes because of the break for income trusts and the provinces lost a similar amount.

Without the new tax, many more companies would have converted to income trusts, reducing the government’s take even more.

“I want to say from the outset that it is regrettable that some investors suffered financial losses. Although it was a very difficult decision, it was an absolutely necessary decision for the country and for future generations of Canadians, our children and grandchildren,” Flaherty said.

Also scheduled as witnesses on the first day of hearings are a half-dozen senior finance officials and some outspoken opponents from the income trust and investor communities.