Business Leaders Welcome Quick Action on Income Trusts

November 24, 2005

Comments by David Stewart-Patterson, Executive Vice President, Canadian Council of Chief Executives, in reaction to the federal government’s decision to improve the tax treatment of corporate dividends:

“The intense national discussion of the income trust issue over the past two months has shown a strong consensus within the business community and among investors on three issues: the need for quick action to resolve uncertainty in financial markets; the principle that the tax system should be neutral in its impact on choices about how to structure a business; and the importance of reducing the imbalance in the tax system between trust and corporate structures by cutting the tax burden on corporate dividends.

“The increase in the dividend tax credit is a significant personal tax cut, and for taxable Canadian investors, puts dividends paid by companies paying the general corporate income tax rate on an equal footing with income trust distributions.

“This is good tax policy, and the Canadian Council of Chief Executives welcomes the decision by Finance Minister Ralph Goodale to move quickly. His decision provides the certainty that investors have been seeking and levels the tax playing field in a way that improves the incentives for Canadians to save and invest and will contribute to stronger and more sustainable economic growth.”