Angry in the Great White North
The Income Trust Scandal: The Mounties should start by asking Paul Martin some questions
Friday, December 30, 2005 at 08:14 AM

Read other posts by Steve Janke published by the National Post
Leader

In the case of the Income Trust Scandal, the focus has been on Ralph Goodale and his office.

Senior Ottawa Liberals are telling me the focus is misplaced.

First, check out these quotes captured from the CTV newscast tonight at M K Braaten:

Note that the source is ill-defined. Just well-connected Liberals.

Not well-connected finance ministry officials.

Just well-connected Liberals.

Recall that Ralph Goodale's original plan was to announce the decision in January. Suddenly the timeline was moved up. By Ralph Goodale?

Mr. Goodale said in September that the government would consult with a variety of industry and stock market players before announcing any policy change. Industry observers immediately began speculating that the government might consider reducing taxes on corporate dividends as a way of levelling the playing field with income trusts.

On Tuesday, Nov. 22, Mr. Goodale indicated that he would provide direction on the income trust issue because of the impending collapse of the government, effectively ending the consultation process. That night, department officials began discussing the possibility of taxing income trust, sources have said.

The next day, Mr. Goodale's office confirmed that he would be making an announcement and just moments before his scheduled news conference, his parliamentary secretary, Toronto MP John McKay, gave a television interview suggesting the government planned to levy a modest tax on income trusts. Shortly after 5 p.m., Mr. Goodale said there would be no tax on income trusts and that dividend tax credits would be increased starting in 2006.

Pat Breton, a spokesman for Mr. Goodale, said yesterday that Finance officials met on the night of Nov. 22 for two or three hours and came up with the plan that became the next day's announcement on income trusts. He also said that the Prime Minister's Office was told after that Nov. 22 meeting — either later that night, or the next day — about the decision. The policy development was “entirely an internal Finance” effort, he added.

However the media is reporting today that the focus is starting to shift (via Bourque):

Aides to the Prime Minister were told about a taxation change for income trusts "some time immediately before" Mr. Goodale made the announcement after markets had closed on Nov. 23, Pat Breton, a spokesman for Mr. Goodale, said yesterday.

While it is not unusual for the PMO to be informed of high-profile policy announcements, this indicates that the list of officials who had advance knowledge of the pending change went beyond the Finance Department and Mr. Goodale's office.

Well, I know some well-connected Liberals as well, and they've let me know what really happened. As reported in the Globe and Mail, Paul Martin's aides are insisting that Paul Martin was told "some time immediately before" November 23.

It's getting closer to the truth, but still not quite there. It has the date wrong. It also has the direction of the decision-making reversed.

The decision to close of the consultations and deliver the good news not to tax income trusts, probably in response to an election campaign that imminent, was made not by Ralph Goodale, who by all accounts is too honest to be making decisions like this based on election calculations, and who intended to stick to his timetable of accepting submissions on tax policy until December 31. It was not an entirely internal effort, as spokesperson Pat Breton insists. The major decisions were being taken outside of the finance department.

The decision was made by Paul Martin himself.

Paul Martin told Ralph Goodale on Friday, November 18 to bring the consultations to a close and to make an announcement on income tax trusts.

Paul Martin and his immediate PMO staff would have known for five days prior to the announcement how the decision was shaping up.

Paul Martin and his staff were dictating the pace of the work, and possibly the decision itself.

Paul Martin and his immediate PMO staff are as likely suspects as the source for the leak as Ralph Goodale and his office.

When Ralph Goodale stresses that Paul Martin knew nothing, you know he's trying a bit too hard to deflect attention from where the attention should be.

When I read about John McKay's flub on November 23, I wonder whether the finance department was really in the loop. It helps explain McKay's confusion if the PMO was more deeply involved in the decision making.

Where you see Paul Martin standing by Ralph Goodale, I see Paul Martin standing behind Ralph Goodale, keeping him up front and centre not out of a commitment to his minister and a firm belief in his basic honesty and his innocence, but in order to have a shield to hide behind.

Paul Martin made the call on Friday, November 18, not Ralph Goodale on November 22...that's the way it happened, or so well-connected Liberals are telling me.

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