Know anybody who has holdings income trusts? They are in a tailspin thanks to Goodale's confiscatory pursuit.
Politics, Powder and Profit (George Koch) on energy trusts:
And therein lies my point: under a traditional corporate business model, many of these assets would have no future. For exploration companies, whose market performance depends on growth, such fields’ high operating costs and lack of new exploration prospects make them a waste of capital and a diversion of scarce human talent. Over time, they just wouldn’t be worth operating. They’d be wound down, shut-in and abandoned, leaving hundreds of millions of barrels of oil and natural gas equivalent in the ground – along with billions of dollars in lost value. Now that would cause “tax leakage.”
The energy trusts still want these assets. They’re drilling, developing, re-engineering, optimizing and otherwise eking every last barrel out of these old fields. One energy trust C.E.O. I know jokingly calls himself the “slum landlord of the Western Canada Sedimentary Basin.” He doesn’t run dirty, ill-managed plants — he’s just making the point that he’s taking assets nobody else wants and transforming them into something useful. More like an orphanage than a ghetto tenement. His story illustrates the benefits of energy trusts: getting the most out of an aging supply basin, producing volumes that would otherwise generate no revenues, in an era of global supply scarcity.
As for the tax-man, the energy trusts’ production generates major provincial royalties (portions of which find their way to Ottawa as equalization payments). The operated field facilities generate local property tax. Head offices pay city taxes. Purchases to sustain operations trigger federal GST (and provincial sales tax in B.C. and Saskatchewan). The trusts’ thousands of employees pay hundreds of millions in personal income tax yearly. And the energy trusts’ cash distributions (estimated at $4 billion this year) are subject to income tax, even if at a reduced rate or deferred in RRSPs. Sounds more like a tax gusher than leakage.