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Canadian Police To Investigate Tax Cut Leak To Markets

by Mike Godfrey, Tax-News.com, Washington

30 December 2005


Royal Canadian Mounted Police Commissioner Giuliano Zaccardelli has confirmed that the RCMP has launched a criminal investigation into the Liberal government, relating to an alleged leak to the financial markets of planned tax changes to income trusts.

On November 23, shortly after the markets had closed for the day, Minister of Finance Ralph Goodale made the surprise announcement that the government would cut personal income taxes on dividends in an effort to level the playing field between corporations and income trusts.

However, a sharp rise in unit trust prices shortly before the official announcement has convinced the RCMP that there are sufficient grounds to investigate whether the information was illegally leaked.

In a letter to the New Democratic Party's finance spokesperson, Judy Wasylycia-Leis, Mr. Zaccardelli confirmed that the RCMP has reviewed the matter and will be commencing a criminal investigation "regarding a possible breach of security or illegal transfer of information in advance of the federal government's announcement of changes to the taxation of Canadian corporate dividends and income trusts November 23, 2005."

The letter did not stipulate where the RCMP would be focusing its investigation, but it would appear that Goodale himself is being made the scapegoat for the latest scandal to hit the Liberal government, leading to calls from both the NDP and the Conservative Party for the Finance Minister's resignation.

"Mr. Goodale is personally responsible to ensure his office and his department protect average Canadians from the consequences of improper disclosures," commented Wasylycia-Leis.

"Mr. Goodale has stonewalled this issue for a month now, insisting without any qualification that there is nothing to this issue. There is now a criminal investigation underway. Since the conduct of Mr. Goodale's office and officials are likely to be directly involved, Mr. Goodale should step aside from his duties as Finance Minister," she added.

The allegations have come at a bad time for the Liberal government, which is seeking re-election with the promise of corporate and personal income tax cuts, as the party attempts to recover from fallout from a corruption scandal over kickbacks to party members in Quebec.


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