COMPAS Poll/Survey
November 6, 2006

Flaherty’s Fairness: The Minister Surpasses for Seniors, Is Mistrusted on Trusts

  A Weekly BDO Dunwoody CEO Business Leader Poll by COMPAS in the Financial Post
Policy and Opinion
Business and Finance

The COMPAS/Financial Post panel of CEOs and business leaders appears to have been roiled by Finance Minister Jim Flaherty’s announcement in mid-week of tax changes affecting income trusts, corporations, and the elderly.

Flaherty’s two provisions for the elderly earn outstanding performance scores - higher than virtually all scores achieved throughout the Chretien and Martin period in COMPAS’ large database of performance scores given to governments by CEOs and the general public. Indeed, these scores (73% and 80%) are among the highest in the entire COMPAS database.

By contrast, Flaherty’s income trust tax increases and corporate tax reductions earn among the lowest scores achieved by the Harper government.

The panel’s moderate dismay over the income trust change appears to be driven by three factors. First, panelists are far from embracing the conventional wisdom of economists and editorialists on the issue. Only 38% of CEOs and business leaders on the COMPAS panel believe strongly that the income trust phenomenon threatened to weaken the Canadian economy by discouraging firms from reinvesting in technology, capacity, and innovation. Meanwhile 19% strongly repudiate this view.

Secondly, while some panelists are delighted by the secrecy with which the policy was developed, others are livid at the absence of warning. Some in the latter group perceive the Flaherty announcement as breaking a campaign promise. Even some panelists who embraced both Flaherty’s income trust policy and the reasoning behind it volunteered that poor communication on the government’s initiatives on the issue could harm the Harper government’s prospects.

Thirdly, some panelists expressed concern that the income trust and corporate tax provisions were piece-meal and inadequate—inadequate because the corporate tax reduction was too small or because the government had missed an opportunity to clean up and simplify the vast array of taxation provisions.

These are the principal findings from the weekly business web-survey conducted by COMPAS for the Financial Post under sponsorship of BDO Dunwoody LLP.

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