Income Trusts - What's Next ?   Friday, November 10, 2006. Toronto. Finance minister Jim Flaherty's announcement to phase out the income trusts tax advantages made on Oct 31st will divide the history of investment industry into two time periods. Pre Oct 31st 2006 and Post Oct 31 2006. This announcement was expected due to the following: 1. There are about 250 income trusts trading on TSX and annual governmental tax losses have reached $500 million already. 2. Only 70 trusts were listed on TSX in 2000 and by 2006 this numbed had climbed to 250. 3. If Bell Canada and Telus were to complete their trust conversions, it would have marked as the largest in Canada and government would have lost $1.1 billion annually in tax revenue. 4. Every major company would follow the trend because of their obligation to maximize shareholder value. Such as companies like banks, insurance companies, oil and gas companies... basically everyone. 5. Countries like America and Australia have already got rid of income trusts already. The tax burden of average Canadians has sky rocketed over the last 25 years and on the other hand, the tax burden of corporations has gone down significantly. Ordinary Canadians have been asked to carry more and more tax burden every year. The principal benefactors of trusts were not ordinary Canadians but high net worth individuals and non-resident investors and institutional investors. Ordinary investors who only invest in mutual funds and stocks will not notice any significant change in their portfolios due to this new tax ruling. Investors who have a few hundred thousands and more sitting in income trusts will be affected most. Government should take steps to stop inequality in taxations. Taxes on capital gains and dividends should be eliminated or reduced. Double taxations hurt ordinary investors and it discourages people to invest. Hopefully tax savings from this announcement will be used on social programs and also government will look at the prospect of reducing the tax burden of average Canadians and average investors who are being taxed on dividends and capital gains. Ordinary investors, like myself, can't help but ask why the trusts have not yet been phased out of the Canadian markets like they have been in the US, and why took so long to put an end to this unfair advantage if it has never been a good thing for our country?