Canadians are pretty much used to politicians who break their promises, which may be why we so seldom punish them for their mendacity. Remember Jean Chretien and his Red Book promises in 1993.

He was going to scrap the GST and pull Canada out of the North American Free Trade Agreement.

He did neither, of course, and Canadians rewarded him with three straight majorities.

And remember Paul Martin, who promised a new and harmonious era in relations between Ottawa and the West when he became prime minister in December 2003.

And what did he do during the election campaign of May-June, 2004? He used Alberta as a whipping boy to stir up fears of what a Stephen Harper government would do to the country's health-care system if elected.

Now we have the Tories playing the same old game as the Liberals and reneging on a promise that was buried in their campaign literature. It stated that: "A Conservative government will stop the Liberal attack on retirement savings and preserve income trusts by not imposing any new taxes on them."

Well, that changed abruptly and without warning on the afternoon of Halloween when Finance Minister Jim Flaherty unveiled what he called his Tax Fairness Plan. The measure is aimed squarely at the dozens of Canadian companies that have transformed themselves into income trusts over the past two decades, largely to escape corporate income tax.

These companies have raised billion of dollars by selling income trust units to investors. In return, they have paid out their profits as monthly distributions to unitholders and thereby avoided paying corporate tax. Flaherty's measure will impose a tax on the distributions, but only starting on Jan. 1, 2011 for existing trusts and next year for new trusts.

The announcement, which caught the country by surprise, caused a bloodbath on the markets the next day. The Standard & Poors/TSX composite index plummeted 294.2 points or 2.4 per cent to 12,050.39, although it had recovered to 12,239.04 by the end of the week.

Investors, many of them elderly, lost an astonishing $24.5 billion in a single day and they were outraged. Ronn Cann, a former hospital janitor, told the Toronto Star that he lost $18,000. Vancouver Island resident Noel Chaney put his losses at $65,000. David and Lorraine Marshall of Cornwall were looking at $100,000 in red ink. Sixty-nine-year-old David Marshall saw his holdings in 16 trusts fall $90,000 and fired off an e-mail to the prime minister: "As far as I'm concerned, you can rot in hell."

What would make a minority government do something that was going to cause so much anger and wrath? Fears of tax leakage on a rather grand scale, according to the finance minister.

Over the past few years, corporate Canada has been seized by what might be called income-trust mania. In the early 1990s, there were no more than a few dozen trusts listed on the Toronto Stock Exchange. By 2001, there were 73 and they were worth $21.97 billion. At the end of June this year, that number had surged to 247 and their value stood at $195 billion, or 10 per cent of the exchange's market capitalization.

Martin's Liberals developed a plan last fall to halt the conversions, but got cold feet when it caused a public uproar. The Tories decided they had to do something after two major corporations, Telus Corp. and BCE Inc., announced this fall that they were going to transform themselves into income trusts.

There were also rumours that other large corporate players, perhaps even some of the chartered banks, were going to do the same.

Many people argue, and I am one of them, that Canada is an over-governed, over-taxed nation.

Nevertheless, corporate Canada does have an obligation to pay some taxes. After all, we do have such things as public health care that does confer a real advantage on companies in this country vis-a-vis their U.S. competitors, which must cover a portion of health-insurance premiums for their employees.

But the Tories may pay a price at the polls. Income trusts have been hugely popular with elderly Canadians because they provide a reliable and superior income when compared to other types of investments. Where dividend funds have been paying three to four per cent, and bonds five to seven per cent, the good trusts have been spinning off seven to 15 per cent, paid monthly.

It will be months before the dust settles on this issue. But even the most jaded observer would have to give Harper and Flaherty credit for having the courage to do what they believe is right, especially when they are leading a minority government.

(D'Arcy Jenish can be reached at jenish@businessedge.ca)