Flaherty repeats call for national securities regulator

Federal Finance Minister Jim Flaherty has reiterated his commitment to create a national securities regulator and says he is considering a national review of the tax system.

Flaherty’s comments came in response to questions following a speech delivered to the Toronto Board of Trade on Monday morning, which largely focused on the simmering issue of transfer payments to the provinces.

In his statement on securities regulation, Flaherty chose his words carefully, suggesting that the feds have no intention of taking over.

“This is not a federal power play,” he said, adding that the regulator could continue to be run by the provinces and territories. “It is not in our best interest when we are trying to attract private equity investment in this country to put up artificial barriers of multiple jurisdictions regulating the same sector.”

In response to another question about the work being done to harmonize the federal and provincial tax systems the minister says he’s also open to conducting a general review of Canada’s tax system in the next few years.

Flaherty has made some significant changes to the budget process in his first 100 days in office. One of the most noticeable reforms is a commitment to provide quarterly fiscal forecasts. At the same time, fiscal and economic forecasts will be presented over a two-year timeline. Seniors will want to take note because this could impact how much money the government will direct towards its pension plans.

“Budget projections will be based on the average forecasts of private sector economists and if there are extra surpluses in excess of $3 billion to pay down debt,” he says. “We are proposing to discuss with the provinces and territories the possibility of allocating a portion of surpluses to the Canadian Pension Plan and the Quebec Pension Plan going forward.”

While many of the proposals in the federal budget won’t take effect for some time, the impact of a promise to eliminate the capital gains tax on donations of publicly traded securities to charities has been immediate. About $50 million was pledged to charity after the budget was tabled, mostly by a single donor. That figure continues to grow. According to Flaherty, more than $70 million has already been committed to various charities.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(05/29/06)