Preaching to the unconverted

It may not be quite as exciting as the Cons' decision to expel their own internal whistleblower. But there is more substantive news happening today as well, as a seniors' group and the NDP are calling for a moratorium on income trust conversions until the effects of income trusts are better understood:

Income trusts are costing billions in lost government revenue and are “misleading” senior citizens, said a pensioners' group that is calling for all future conversions to be halted.

The National Pensioners and Senior Citizens Federation, which says it represents about one million people, is upset because so-called tax leakages mean less federal money will be available for health care and social security. They also believe a federal regulator should be established to monitor trusts more closely.

“A lot of seniors are being taken in on this because they are not getting the yields that they thought they were going to get,” Art Field, the organization's president, said in an interview from Ottawa. “We want regulations to police the income trust area, to police it if people are losing their money. There are regulators for all kind of things, but there don't seem to be any for income trusts.”...

The federation wants a national investor protection agency and an independent accounting standards board established to monitor trusts more closely. Trusts are currently worth $200-billion on the Toronto Stock Exchange.

NDP finance critic Judy Wasylycia-Leis, an MP from Winnipeg, is calling for a moratorium on any further income trust conversions, saying there needs to be a serious study on their impact before any more companies are allowed to proceed...

“The concern is that many income trusts are being overvalued, that there is a gap between what they actually hold and what they are committed to paying out,” she said. “If we tighten the rules up a bit, we could play a role in protecting people.”

Unfortunately, the Cons seem perfectly happy to let the problem spiral even further out of control. And it seems far too unlikely that the Libs will want anything to do with the constructive side of the income trust issue given the phrase's link to their last electoral defeat.

But the reality is that income trusts may currently pose threats to Canada's investors and citizens alike. And if neither the Cons nor the Libs are willing to pay attention to the dangers, at least Canadians will know where to turn for leadership on issues which may affect their retirement plans on many levels.