Income distrust

Apparently Goodale's office managed to mess up the income trust issue in message as well as in substance:

The haste of this decision was readily apparent. Mr. Goodale's parliamentary secretary, John McKay, gave a television interview shortly before Ottawa formally announced the dividend tax cut, and mistakenly suggested the government also planned to levy a modest tax on income trusts.

Mr. Goodale denied that Ottawa was seriously considering a tax on trusts and suggested Mr. McKay was mistaken.

Meanwhile, one tax expert who was planning on preparing a submission to the supposedly-going consultation process noted that his submission was never heard - and that the problem underlying income trusts wasn't addressed either:

"It was absolutely rushed. You realize they haven't dealt with the issue," (Jack Mintz) said. He pointed out that pension funds, non-residents, and RRSP holders will continue to "prefer income trusts automatically," and said the government may very well have to revisit the issue if its moves yesterday do not slow down the pace of trust conversions and initial public offerings.

So what we have now is a decision that was made without full consultion, and in such a hurry that Goodale's own parliamentary secretary went public with what proved to be wrong information. And predictably, that rush may lead to a need to revisit the same issue later on.

I've said many times that there was no reason for the income trust issue to be ignored as long as it was - but it's doubly harmful to then make a snap decision after ignoring the issue, rather than at least getting it right once it is dealt with. We'll find out before too long just what surprises await. But it should be clear that the income trust issue is a prime counterexample to any claim that the Liberals deserve credit for good management.