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A coalition of small and medium-sized income trusts are still determined to change Ottawa's recent proposal to tax income trusts, saying the legislation will rob them of their ability to access capital and stifle Canadian businesses growth.

Executives from the Canadian Association of Income Funds told The Globe and Mail Thursday they want to meet with Federal Finance Minister Jim Flaherty to discuss options, such as grandfathering existing trusts.

"No, we don't believe this is a done deal," said George Kesteven, an executive at Calgary-based PrimeWest Energy Trust, of the proposed changes. "There are better ways to get this done."

Several of the executives said they were stunned when the Conservative government unveiled a plan on Halloween to implement a new tax on income trusts. Existing trust will be allowed to continue to operate under the current rules until 2011.

Mr. Flaherty has said his decision on income trusts is final, without exceptions. He did, however, agree on Thursday to meet with the coalition on Nov. 28.

Stanley Stewart, chief executive officer of Amtelecom Income Fund in Aylmer, Ont., said every company that chose to convert to the trust structure has been left in limbo. "The mistake we made was taking the Prime Minister at his word."

Amtelecom's Mr. Stewart said the reason the income trust structure became so popular was because it was the structure Canadians wanted to buy — especially aging Canadians. The Conservative government "took away the cookie jar without any notification," Mr. Stewart said, noting that many investors had built their entire retirement plan around income trusts.

The income trust structure provided small and medium-sized companies with a competitive advantage against larger companies, particularly against the larger players in the U.S. market, Mr. Stewart said. "There are some wonderful Canadian companies out there that will probably be taken over now...and likely not by Canadian equity."

Priszm Canadian Income Fund chief executive officer John Bitove said Mr. Flaherty got "spooked" after a couple of large Canadian companies complained that they were being pressured into becoming trusts.

Royal Bank of Canada chief executive officer Gordon Nixon had already indicated the country's largest bank would consider a trust for some parts of its business. Michael Sabia's decision to convert BCE Inc., along with rumours that Suncor Energy Inc. and EnCana Corp. were modelling trust conversions, are believed to have also contributed to the Finance Minister's abrupt announcement.

Mr. Bitove said family-owned companies with multiple-voting share structures wanted Mr. Flaherty to change the rules.

"Now the challenge is for investment bankers to run around and try to figure out how to structure around this," he said.

PrimeWest Energy Trust's president and chief executive officer Don Garner said companies across the energy spectrum are currently meeting with tax lawyers, accountants and investment bankers in an attempt to figure out where to go now.

He questioned how trusts will survive without being able to access to capital the structure had provided. "If you shut off the capital advantage, you have to wonder where this industry will go?"

Mr. Garner also criticized the Conservative government for sparing some of the real estate investment trusts from the proposed federal measures. "If their intention was to level the playing field, then why are we being treated differently?"