Angry in the Great White North

Garth Turner provides some insight into the circumstances of his break with the Conservative Party:

[The] working relationship [between Stephen Harper and Garth Turner] fell apart over the government's decision to impose a 31 per cent tax on income trusts. Transforming a company into an income trust allowed the company to lessen its taxes, and many companies were exploiting the loophole.

The day after the decision, income trusts melted down on the stock exchange, knocking almost 300 points off the TSX index. Individual investors lost an estimated $25 billion in equity.

Turner called the decision "the mother of all broken promises," since he stood next to Harper on the campaign trail last year when he promised to not impose a tax on income trusts.

This clears up some confusion. At the time, back on October 18, 2006, Garth Turner told us he was ousted from the Conservative caucus for a number of reasons, but income trusts was not one of them:

Ontario MP Garth Turner suggested Wednesday he was suspended from the federal Conservative caucus over some of his political views and not because he broke caucus confidentiality.

Turner, who represents Halton riding, said that at the meeting of the Ontario caucus Wednesday, the issue of caucus confidentiality was not discussed.

"The issue [was] my beliefs and policies," he said.

Turner has been at odds with the party on a number of issues, including the Tories' position on the Kyoto accord and a possible Defence of Religions Act, which would protect public officials who refuse to perform same-sex marriages.

Weird that today he is absolutely certain that income trust decision was the trigger, but it seemed completely off his radar on October 18.

Here's one possible reason -- the income trust announcement to tax income trusts happened two weeks after Turner's ejection, on October 31.

The decision of BCE to turn into the country's largest income trust forced that decision. But that decision was announced October 11, less than a week before Garth Turner was thrown out of caucus.

The BCE move did immediately put income trusts on the radar:

Still, as long as the tax advantage for income trusts remains, [Richard Powers, assistant dean at the Joseph L. Rotman School of Management at the University of Toronto] predicts more Canadian companies will rush to restructure in anticipation that Ottawa will eventually close the tax loophole.

"Many companies are trying to get in under the deadline. If they convert before the federal government changes the rules, they'll be safeguarded. It would be very difficult for Ottawa to impose a retroactive tax on those companies."

Given Powers prediction, Finance Minister Jim Flaherty moved fast. Two weeks after Turner was thrown out, for reasons that didn't include the internal debate on income trusts that was being reported in the news, the decision was announced, and the plan included features like income splitting for seniors to help cushion the impact.

Now an independent, Garth Turner had an opportunity to vote against the motion, but he did not. Garth Turner supported the taxation of income trusts, both because it was responsible taxation policy and because of the income splitting:

As stated, reforming the trust business and stemming the tide of conversions is necessary for the long term health of the economy and to ensure the feds keep raking in corporate taxes.

[W]rapped up in this vote is a nice little tax cut for all seniors, and the ability of all pensioners to split income for tax purposes. This is something I've been fighting for over the course of months, and which is a major change in the country's tax policy.

To be clear, Turner still wasn't happy. He continued to insult the PMO over the "necessary" decision. But he doesn't say that this was the reason he was thrown out of caucus. Indeed, he doesn't even say he had inside knowledge of Flaherty's plans. As far as we can tell, he learned of the decision to tax trusts on October 31 along with the rest of us. Even as he rails against the decision to tax trusts, a decision he explains he will support in Parliament, he still suggests it was his propensity to disgree publicly with the government that led to his ejection:

You see, I try not to lie. At it turns out, political life would have been less of a bitch for me if I'd just lied in a February media scrum and said I supported the appointment to cabinet of a floor-crossing Liberal. Piece of cake. But I didn't, and look at my sorry state now.

You can't disagree publicly with a decision that wasn't public yet (and might indeed not have been taken yet).

Back in the fall of 2006, Garth Turner said he was thrown out of caucus over issues like Kyoto and gay marriage and, in particular, for being public with his disagreements. It was Garth Turner's propensity to openly disagree that the Conservatives also quoted in their decision, so in that, they agreed. Today, however, Garth Turner says it was a decision to tax income trusts, a decision which he ultimately supported as an Indepedendent, a decision that might not have been finalized for a fulll two weeks after he was thrown out of caucus, a decision that was precipitated by events that occurred only days before he was told to get out and could not have been a long-standing irritant, was the issue that led to his ejection.

Nah, it doesn't wash.

Check out what Canadian bloggers have written about income trusts
Results will open in a new window.

Check out what Canadian bloggers have written about Garth Turner
Results will open in a new window.