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Background > NAFTA challenge over Trusts reinforces investor anger with Feds
NAFTA challenge over Trusts reinforces investor anger with Feds
Calgary, AB – October 30, 2007: The Harper government is facing a NAFTA (North American Free Trade Agreement) challenge by two American trust investors. Their Notice of Intent to Submit a Claim to Arbitration under NAFTA is based on Finance Minister Jim Flaherty’s surprise Halloween 2006 decision to eliminate income trusts on the heels of the Conservative government’s election pledge to leave the trust structure alone. The unexpected change caused investor losses of $35 billion, and it is estimated that American investors represent over $5 billion of that loss.
“This Halloween surprise to government is just one more example on how the Harper government did not do their homework when deciding to tax trusts,” said Gord Kerr, Vice Chairman of the Coalition of Canadian Energy Trusts and CEO and President of Enerplus Resources Fund. “It has been a full year since the so called Tax Fairness Plan announcement and, one year later, repercussions and unintended consequences continue to be felt throughout Canada, not to mention the devastation being felt by energy trusts and investors.”
“Furthermore, the federal government’s lack of consultation with energy trusts compounds the growing uncertainty investors face when doing business in Canada,” said Kerr.
In December 2006, the Coalition issued a comprehensive report on the impacts to trusts. The detailed report included facts to illustrate that:
The report also highlighted unintended consequences of the broken promise which have now become fact. These include:
“Our report holds true today as it did nearly a year ago, and it is supported by a wide range of experts,” said Kerr. “Yet the government has still not responded to our report nor presented any evidence that supports their position.”
The government has ignored the pleas of thousands of Canadians to revisit its position while steadfastly refusing to admit mistakes were made. The NAFTA challenge presents the government with a very serious problem—one that could cost Canadians untold dollars, potentially in the billions.
“It is unfortunate this same NAFTA opportunity to challenge the government is not available to Canadians,” said Kerr.
Likely hundreds of thousands of hard earned taxpayer dollars will be used to defend this NAFTA challenge. And if the Harper government is not successful, Canadians will be gravely impacted.
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