Thursday, July 5, 2007

Jim Flaherty's logic-free zone

It’s clear that the sale of BCE was the direct result of Flaherty standing in the way of BCE converting to an income trust. Just ask Jim Leech of Teachers. Further it is clear that the income trust market cratered in value because the Tax Fairness Plan introduced a tax of 31.5% on distributions paid on the 38% of income trusts residing in RRSPs and held by foreigners. This double taxation of income trust in RRSPs was made necessary because when Finance concocted their analysis of tax leakage they ignored the taxes paid on RRSP withdrawals. So their solution was to double tax RRSPs and thereby create a policy that was regressive to the 70% of Canadian without pensions. Flaherty thought he could ameliorate this impact by allowing pension splitting for the 30% of Canadians with pensions. Enter the logic free zone of Jim Flaherty. Flaherty also made a big ballyhoo at the Public Hearings complete with multiple visual aids and charts about the enormous loss of tax revenue resulting from the foreign ownership of royalty trusts by primarily US investors, since they only pay 15% withholding tax. Flaherty then saw fit to eliminate the 15% withholding tax that foreigners pay on leveraged buyout loans to acquire Canadian businesses. You are now deep in the logic free zone of Finance Minister Jim Flaherty. For his final act of illogic, Jim Flaherty then applauds the acquisition of BCE by those very self same groups of investors, namely what he called tax exempt pension plans at the hearings and the evil foreign investors who only paid 15% withholding tax and now will pay 0% withholding tax by structuring their investments as leverage buyout loans, For his crowning glory, here is what Jim Flaherty had to say about this outcome:

Re: What was formerly referred to as tax exempt pension plans and RRSPs:

"The purpose of the pension funds, ultimately, is to ensure they can honour their pension obligations. And there is taxation, of course, when pensions are paid out," the Minister said.”

Re: The limitations he is willing to place on foreign investors sheltering pre tax earnings with tax free interest on leverage buyout debt:

"At the end of the day these are business decisions to be made by business people - that is, assessing risk, because leveraging is the creation of risk. And we are not going to substitute our opinion for their opinion in terms of the amount of risk they are prepared to take in these transactions."

The good news is that we are probably reaching the end of that day, as illogic can not be sustained indefinitely, since at the end of the day only logic and fiscal sanity can prevail, whether it be at the polling booth or some other juncture nearer at hand.


Dr Michael Popovich said...

What disturbs me the most is that Mr Flaherty seems to have two distinct sets of rules when it comes to the government taxation of income trusts within RRSPs & the way in which it deals with the likes of the BCE impending transaction & eventual inclusion into the Ontario Teachers Pension Fund.

On one hand , he wants to do away with the small investors ability to defer tax within his RRSP from income trust distributions yet he allows the largest of investors , the pension funds , to accumulate similar wealth within itself tax free over an extended period of time--he loathes the small investor but applauds the pension fund.

He has also found it within his heart to allow these same pension fund members the ability to split their pensions with their spouses resulting in a lower tax rate--whereas I , as a small investor who has no organized pension plan other than my RRSP , has to pay top rate & twice to compound the problem.

This is so illogical it almost defies the realm of a good fiction story--with income trust investors it is one way , yet with large pension funds it is the complete opposite--what gives here--since when does Canada have two sets of rules--the little guy investor who has no organized pension plan is double taxed--the powerful pension fund remains taxed only in a deferred situation & at a less than marginal tax rate when income splitting is factored in.

You have got to love this guys thinking--I may love it too if I could only figure it out!!

Is this guy incapable of doing the simple math here or does he have something else on his plate that we are yet to see--nothing would surprise me when it comes to this government!!

As a faithful PC supporter for many years, I truly believe that these guys are not capable of a progressive or conservative thought--certainly not one that takes into consideration the well-being of the small investor who is only trying to keep out of the public trough once he retires.

I firmly believe that our support of organizations like CAITI are our only hope to make this government see the light--if they do not open their eyes , then they must go so that we can look elsewhere for a solution.

Dr Michael Popovich--Rodney Ontario.

Randy Meyer said...

There's nothing to add to Dr. Popovich's excellent analysis of of the facts.

What also needs to be said though is that the main stream media; the so called financial writers in this country, have completely ignored the story. Why is one of the most egregious attacks on Canadians wealth being ingored and even supported by the media at large?

I had written several times to Jonathan Chevreau on this subject. He actually took a swipe at me in one of his newspaper columns for questioning the media's analysis and support of an obviously incompetent and dishonest government. I just couldn't believe that he felt it is was OK for the Prime Minister to lie but not OK for me to question the lie.

I have to admit, the media's incompetence and dishonesty is far more than Flaherty or the CONservative government. I can understand that Flaherty has to cover his rear but what's it in for the media to support this theft?

Boggles the mind.

Proud_to_be_Canadian said...

"What also needs to be said though is that the main stream media; the so called financial writers in this country, have completely ignored the story."

That's absolutely right. The last time $30 billion dollars disappeared overnight was the stock market crash of 1929. The media was all over that story,

Why not this one?

Dr Michael Popovich said...

Without the involvement of MSM , Canadians in general remain totally in the dark when it comes to subjects like income trusts & income splitting--the few that have heard about these subjects believe since it does not affect them , then "who cares".

Somehow this type of attitude needs to change & the public has to become informed with all issues dealt with by the government--without the help of MSM it is very difficult--it must be done one person at a time if you are someone like myself.

Thank goodness for guys like Garth Turner & Brent Fullard who have taken up the cause--without them we would be totally screwed.

One thing that is for certain, we must persevere--the government counts on people just letting these things slide & forgetting with time.

It appears that removing this government is our only hope--this must be our ultimate goal.

Fogducker said...

Flaherty believes he can lie his way through this injustice. It is a war between the classes. The wealthy with help from the bureaucrats verses the middle class, lower classes and senior citizens.

Flaherty is sure many are complacent and too ill read to see through his lies. Each one of us who know the truth need to convince others that the war is on.

Boycott all BCE services. Write the media constantly. Most hate me already exception Diane Francis. She has it correct. Chevereau, Carrigan, Leatherdale, and many others are lap dogs and media mouth pieces for Harper and the wealthy.

This travesty against the senior citizens of this once proud country is a disgrace.

There are two sets of laws, one for us the other tax free for Flaherty's pension and family Trust.

Truly revolting.

Anonymous said...

Just another strategy to pursue and by all means I am first to admit that my knowledge of the COMMON LAW is very limited. Can CATI sue in Harper & Flaherty for breech of contract and/or market manipulation? Since they are there on YOUTUBE declaring that they won’t touch CanRoys. I understand that a sitting a PM can’t be touched but he wasn’t sitting anywhere while he “manipulated the markets” by making these false promises.
I don’t know if there are any lawyers associated with CAITI out there that could shed some light in to this idea. May be it is just worth it to bring the issue on the front pages again ???
Carl RoooVe JR

Dr Mike P. said...

Just checked with Brent & he says that MPs & bureaucrats are immune to any legal proceedings--can check that avenue off of the list.

Will just have to keep on plugging--one citizen at a time if need be--when the cause is just , it is easy to spend the time!!

Robert said...

I have written a few hundred letters and emails to politicians and media people, and have kept writing till a few days ago. The few replies I got back side with the government. Or in cases like Johnathan Chevreau and certain MP's, the blame is laid on me for being so stupid and gullible to invest in 'Ponzi schemes' like income trusts in the first place.

I have been a strong lifetime supporter of the Conservative Party, even in their darkest hours. Now I cannot support the Conservatives anymore, but cannot vote for the slimy Liberals or the wing-nuts in the NDP or Green Party either.

As a 55 year old small business owner, my plans for having a decent retirement in the future depended on my investments in quality income trusts. That plan has been destroyed by the Conservatives and Dept of Finance.

So since I will not be able to afford a decent retirement in Canada 10 or 12 years from now, I've started the process of moving to a country where I can afford it. My business, my taxes, my specialized and highly valued knowledge (and my dog) will be moving with me.

The country I'm moving to does not tax any income derived from outside the country (which mine will be) and their constitution gaurantees that any changes in tax laws will not affect your existing investments for at least 10 years.

As for health care, I'll buy insurance for about US$200.00/month and get first class first world health care. And there will be no wait times for any treatment I might need whatsoever.

Canada is the best country in the world....on paper only. But where the rubber hits the road, it's lucky to make it to the middle of the pack.

Bruce said...

Robert said ....

I have been a strong lifetime supporter of the Conservative Party, even in their darkest hours. Now I cannot support the Conservatives anymore, but cannot vote for the slimy Liberals or the wing-nuts in the NDP or Green Party either.

Robert I believe you must make a one time choice and that is to hold your nose and vote Liberal. They are the only hope we have of reversing and keeping our Income Trusts.

Anonymous said...

Robert, allow me to suggest that you give the Liberals a chance, and at the same time inflict more than one lost vote on those contemptible Tories.

I recently joined the Liberals, and I am actively working putting some things together for their next election campaign. Let me tell you that the mighty Liberal Party is not the behemoth it appears. At the riding level, it is folks—just ordinary folks like you and me.

For years I didn’t like the Liberals because of too much government, the hateful and evil (and it was) National Energy Program, their opposition to free trade, etc. Well, then we got the Mulroney Tories. What a disaster they were, and still are. In many ways, we are still recovering from the excesses of Mulroney and deficiencies of Mike Wilson.

So I was fearful when it looked like Chretien would become PM. I still remember his victory speech in 1993. In his speech, each time he made a point, he’d stick the air with his finger and say “We have a lot of work to do.” And you know what? He did unbelievably good work. It took me too long to realized that. He cleaned up the terrible situation left behind by the rotten Tories. Canada is in strong financial shape because of his work. Interestingly, he listened closely to Preston Manning. (By the way, I can’t believe that Manning could for one minute tolerate the ethics of broken promises, misrepresentations, anti-democratic behaviour, or the pro-American and phony-Canadian Harper and his gang of backbench pumpkins. You had to be a good person to get on Preston’s bus in the early 1990s. I can’t believe that Ablonczy has turned herself in to a Party hag.) Harper and his Finance Minister are a disaster. The trust issue alone is going to cost every Canadian taxpayer $200 per year in extra taxes—over $3 billion annually. Don’t take my word for it. Just stick around and watch your tax installments go up as your income goes down.

Looking back at over 40 years of watching politics in Canada, I say “The Liberals get things done more or less at a reasonable cost, and the Tories screw things up.”

Bottom-line, Robert: join the Liberals, help them win and punish those awful Tories. After the next election, evaluate things and go from there. By the way, what’s that country you’re thinking of emigrating to? Do they take grumpy old men?

Dr Michael Popovich said...

I have to agree with Bruce--i have never voted any other way other than PC or Conservative--the Conservatives leave us with no option as far as voting for them, the Dippers have some adjenda known only to themselves when it comes to income trusts , the Greens just are not a national alternative (although I have enjoyed my conversations with Ms May--just wish she led a different party) , the Bloc is no reasonable person`s alternative--that leaves us with the Liberals.

The members of the Liberal party with which I have come into contact over the last few months have proven to at least be open & willing to listen to my concerns--they do have a trust strategy although not as yet well-defined--I am hoping that they will turn out to be a viable alternative--but until all of their policies are ramped up , then I will reserve my decision.

I do have high hopes that the Liberal party may yet be our savior--I have personally been contacted by our local Liberal candidate & I have found her to be very tough but at the same time fair & to have a genuine openness to any suggestions I may have--right now that is about all we can ask for.

My beloved PC party is no more --these Conservatives are in no way even a shadow of what I used to know & respect--these guys must become toast the next time we have a vote & I will do whatever I can to make that occur.

Dr Mike P.

Bruce Benson said...

I agree with Dr. Michael Popovitch because I too was a supporter of the PC party. Not any more. I believed that they would be an open, honest and accountable government and much to my dismay, they turned out to be a bunch of power hungry, deceitful liars. I believed Mr. Lyin King Harpo and it not my fault Flaherty. What a mistake. They support big pension and private equity over the average investor trying to scratch out a decent living. Wow, the interests of the foreign private equity players and private Canadian pension plans take priority over the 70% of Canadians that don't have defined pension plans. In fact foreign private equity no longer has to pay the 15% withholding tax on leveraged buy outs. This idiot of a finance minister sure has stacked the deck against the Canadian investor. Just who does this idiot support. I guess he has the ear of his Wall Street buddies and I am sure when he leaves politics he will have a cozy comfy retirement compliments to the Canadian taxpayer. Don't forget he will have his income splitting assisting himself in his retirement but remember that 70% of Canadians will be unable to participate. Way to go Harpo and Flaherty. You truly take the cake. What an absolute disgrace.

Dr Mike P. said...

Well said!!!!

It appears Flaherty may be heading to some cushy job at the IMF--still only a rumor but his close association with the SPP will net him something juicy.

It is just too bad we had to suffer him for so long!!--I firmy believe he will be replaced this fall with who I am not sure--if it is Diane A. I may have to leave the country with Robert!!!!!!!!!!--I think she is the only one less suited than Flaherty for the job--of course, maybe we could give it to that great economist Harper .


Bruce Benson said...

Randy Meyer:
I agree that there is something fishy regarding the media's non-involvement because they are strangely silent regarding the income trusts issue. Could it be the media is controlled by the same forces that want income trusts destroyed? Maybe the CBC is so scared that Flahery will cut it's funding. I have written every media organization trying to get them to do a documentary special on the trust issue. All my letters have been ignored. Seems they don't want the truth to get out. Perhaps the media needs to be blasted by thousands of letters to get their attention. Anyway, just my thoughts.

Dr Michael Popovich said...

Bruce & Randy:

You guys have hit the nail on the head--if this was any other country but Canada where the media is controlled by so few , this story & it`s resultant bad smell would have been exposed long ago.

Unfortunatley , we live here & now what is our recourse--the media appears to be a lost cause other than Diane Francis who has been a real trooper.

We must continue to support CAITI since the government seems to be really becoming pissed off at the efforts made by them--the more we can get under their skin, the more they expose themselves for what they are.

I have written so many letters to the media , MPs , senators , etc , that I must be on a nut case list somewhere.

If anyone out there has any better suggestions for a new plan of attack , let me know for I am ready to go anywhere , anytime , & do almost anything to remove this law from the books.


Bruce Benson said...


You are too funny because I too must be on a nut case list some where. In fact I am sure they have enabled an auto delete on any mail coming from Bruce Benson. I don't know what more we can do to get apethetic Canadian's attention. Unfortunately, Canadians who didn't own income trusts don't realize they too are being hurt by this PC government. There will come a time when they will realize what they have lost. Unfortunately, it will be too late by then. Any good Canadian high yielding companies will be gone. Looks like our only hope is an election and god help us if Lyin King Harpo and his cronies makes it back in.

Marshall said...

This is a government that is out to destroy the great country that we all love.

We have a lot of work ahead of us.

1. Work to have this government defeated in the next election.

2. Work to expose the lies that this government is using to steal our vote, with our friends and neighbours.

3. Taking the petition with us where ever we go and getting it signed.

4. Working with the Liberals both financialy and physically.

5. Encouraging our BB friends so that we do not give up hope.

The comments on this board are very helpful and encouraging.

Truth will prevail.

Thank you Brent, Mr. McCallum and Mr. Garth Turner.

Last but not least, thanks to all the posters on this Blog.


Rolland Jolley said...

A class action suit should be brought against the Fed. Gov.for the pre-election promises made by Mr Harper not to tax trust units. This was a blatant lie to the canadian people and should be dealt accordingly for reversing his decision.As I see it no governments can be trusted and if that is the case we should look for something different. Thank you

Dr Michael Popovich said...

This is the first topic on which I have posted on the CAITI blog--it appears that we must keep the lines of communication open amonst us so I will try to visit more often.

I try to post regularly on Garth`s site to keep the pot stirred--like to freak the Tory trolls with all my theories--they all go away whenever I make a request for evidence to support their tax leakage scenario--problem is , without any evidence to present , they are soon gone--this very fact makes me very confident we are in the right.

I will leave you with my last post on Garth`s blog--still waiting for any response--nothing so far--may have been too far out there for anyone to comment upon:

Just a quick question about the BCE deal–does anyone besides me believe that the deal to sell BCE could have been in the works well prior to the trust decision of Oct 31??

If we look at who benefits the most from this sale , it sure is not the shareholder–he is forced to sell his assets & as a result is required to fork over bags of capital gains tax & his quarterly dividend income is gone– the government certainly comes out on top with a one time tax haul–the teachers pension plan who holds large number of shares benefit since they do not pay tax on their capital gains & they will own the bulk of the new shares within itself where monies can be generated tax free for some time–the execs at BCE were maybe the biggest winners of all with their premium dollars soon to arrive once the deal is completed.

All it took was the announcement that BCE was about to become a trust to set this into motion–the government took swift action saying they had a need to protect the public from corporate tax greed & the rest is history.

It appears that the biggest losers were the holders of trust units–all we did was invest in Canada & hope to generate a nice return to sustain us in our old age.

We can certainly see that the government has no desire to make public their evidence of tax leakage–any revelation would lead to the collapse of their house of cards.

I know I may sound like a conspiracy theorist–all that the government has to do to get rid of guys like me , is to release their so-called evidence for tax leakage , & we will all go away if it is found to have any basis in truth.

Dr Mike P.

By Mike from Rodney on 07.07.07 12:43 pm

Dr Michael Popovich said...

A class action suit should be brought against the Fed. Gov.for the pre-election promises made by Mr Harper not to tax trust units. This was a blatant lie to the canadian people and should be dealt accordingly for reversing his decision.As I see it no governments can be trusted and if that is the case we should look for something different. Thank you

According to Brent, these guys are immune to any sort of legal action (MPs & Bureaucrats)--maybe you know a way around this with a class action--let us know--I am sure everyone would pile on-board.

It appears you are correct when you say no government can be trusted--the fact they cannot be sued makes it even more apparent--this law has been made up to protect the liars & thieves among us--the problem is , what alternative do we have other than grasp at straws & vote for those that appear to be able to do us the least amount of harm--makes you want to barf does it not!!!!!!!!!!!!


Randy Meyer said...

Bruce & Mike:

I too have witten numerous letters to my MP - Harper, to the media and to other members of parliament. It's interesting that the media refuse to speak to the facts while memebers of parliament (except Garth Turner) that I have written to remain silent.

I will tell you though I am making some progress talking to one person at a time. I have the opportuntiy to talk to two younger clients during an hour drive to a golf course.

They were absolutely amazed at how much this debacle was going to cost them. One even said that she had a friend who worked for a trust company that was constantly teased by some lawyer friends about how trusts finally got caught abusing the tax system. When I was finished she said she had a lot of ammunition for her friend to take on these lawyers and turn the tables.

I think this small example shows how this tax leakage myth has become an "urban legend". Maybe we could employ "The Myth Busters" to blow this legend up.

I unfortunately voted for the CONservatives last time precisely because they promised not to double tax ITs. I would have no problem voting for the Liberals (or anyone else I thought might win) if they will fix it.

If they do not, I will vote for someone else next time again. I use my vote to reward positive policies or discourage negative policies.

Dr Michael Popovich said...

Mr Flaherty & his ministry did one heck of a public relations snow job when it came to the trust file--whoever called it the tax fairness plan should have been paid double--you put tax , fairness , & coporations all in the same sentence & people right away think it is just a matter of sticking it to big business--"what can that hurt"--"make the suckers pay"-"better them than us".--certainly hid the true picture--this was one of the best con jobs ever perpetrated in Canada.

What bothers me is that I am not sure why this was done--Flaherty may not be the sharpest pencil in the box--my sister worked with him for years in the Harris government & she said he always acted with an intent in mind & would not be swayed even if wrong--I still firmly believe that we have never seen the true reason for his action--I cannot say if it extends only as far as the corporate level here in Canada or it is someting to do with the SPP--I am almost certain it is one or the other--the two are intertwined so much it may be both.

Whatever it is , we sure got the shaft.

As the overall affect filters down the system & we are in a deficit spending situation that is not solvable with asset sell-off , then maybe the MSM & the public will take note.

Right now it is convincing one or two people at a time that what we say is true & that it will affect them at some point if not already.

We also need to keep working on the Conservative MPs --surely there iare a few of them out there with enough backbone to take a closer look at the policies they are implementing & say something if they think they are wrong.


Proud_to_be_Canadian said...

Whoever named it the "Tax Fairness Plan" has obviously read George Orwell's 1984. Unfortunately, that book was meant to be a warning, not a how-to manual.

Robert said...

Anonymous said: "By the way, what’s that country you’re thinking of emigrating to? Do they take grumpy old men?"

My answers:
1. Panama.
2. Yes - they're taking me. (And unlike Canada they encourage and support small business people there.)

I can't support the Conservatives anymore because their mindless anti-income trust policy will be so damaging to Canada that it greatly outweighs the relatively good things they have done and are trying to do.

But I cannot support the Liberals because:
1. Their insistence that the Kyoto plan has to go ahead regardless of the severe economic damage to Canada it will cause, and regardless of the fact we will have no impact on the world's climate even if Canadians shut down all factories, cut off all power supplies to everyone, stopped heating our houses and buildings, and stopped driving all vehicles/planes/and trains in Canada.

2. Their childish and embarassing anti-American antics.

3. Stephan Dionne is the leader.

You know, according to recent studies by Fraser Institute and C.D. Howe, about 60% of Canadians over 40 will not have enough pension income or money saved to support themselves in retirement. Income trusts would have helped a lot of those people avoid that problem while helping Canada's economy and Canadian companies. But instead the government will have to give them social assistance. This is similar madness to what Argentina did to themselves 150 years ago when they were one of the leading countries in the world. They made a couple of big economic mistakes and they haven't recovered yet.

Anonymous said...

I keep coming back to CAITI on line to see, and feel the mood of the people hurt by the CONS big lies. I am just looking for some support venue out of total frustration, dismay, desperation with our political system, and our country leadership or the lack of it.
I have to admit, that I have voted for Harper and crew, having the same feelings about the previous Liberal mafia.
When my wish came thru, I have had some hope, that something good was going to happen in this great country.
Well, whatever took J.C Liberal's 13 years, Harper's CONS screwed us within 10 months. They have politicized so much every decision making, just to stay in power, loosing all their conservative principles of smaller, accountable, fiscally responsible government.
They have polarized every region of the country, cutting side deals with Quebec $2.3 bln give away, and Quebec nation status, Atlantic Canada resource revenue $$$ sharing programs, screwing royally the West all over again.
Who are these guys? I really cannot recognize them anymore. I have gone to Town Hall meetings with Diane Ablonczy, and my MP Jason Kenney, and when I left, I knew it, that I will never vote Conservative again. These 2 were just clowns, political hacks, uneducated idiots, who are there for ONE REASON ONLY - to became a career politician. They were absolutely uninformed about IT tax issues, and all they could always repeat is "Tax Fairness", "Tax Leakage", "Corporations paying their fair share", "taking tax burden off the shoulders of the Joe Average". Just towing the disgraceful CON party line.
After having at the end screaming match with Diane A., I have left with disgust, and I really think, that I will leave this country in the near future. I do not have a patience and can't stomach any longer, LIARS and political hacks governing this country like Malrouney, Chretien, or Harper. They are all the same.
There is noone on the horizon with charisma, that would put Canadian people and this country interest first, not his/her party agenda, or its own political ambitions. Certain business elites like Power Corp, BCE, and many others, created these monsters and pawns.
They keep them on a tight rope as a front man to pursue the BIG BIZZ agenda like SPP, one big government for North American continent accountable to Carlyle Group, KKR or few more billionaires from Saudi and Bush family. Just hold on to your hat.

Dr Michael Popovich said...

This whole thing wants to make me burst a blood vessel!!!!

We cannot afford to abandon our country at a time like this & for guys like these--they cannot be allowed to win.

I firmly believe that Jimmy has opened the can of worms that he cannot close with the BCE matter.

In January, Mr. Flaherty claimed that income trusts cause tax leakage largely because the distributions they pay into tax-deferred vehicles like RRSPs pay no tax. It was one of the big reasons he decided to levy a 31.5% tax on income trusts. In reality, distributions to RRSPs are taxed, but Mr. Flaherty explained that since those taxes aren't collected until the funds are withdrawn, he can't consider them as government revenue. Here's what he had to say six months ago:

"Well, as Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow."

In the Paul Vieira article, however, Mr. Flaherty takes the complete opposite view in order to assuage fears that should the Ontario Teachers Pension Plan acquire Bell Canada, there will in fact still be taxes for the government to collect. Pension plans are of course tax deferred just like RRSPs, and yet here is what the Finance Minister said this week about the possible takeover:

"There is taxation, of course, when pensions are paid out."

I firmly believe this is the point that will cause his demise & the ultimate recversal of the Tax fairness plan.

let me know your thoughts.


Anonymous said...

If Harper and his hatchetman cannot be sued in a Canadian court, how about a US court?

The Halloween announcement seems to me to be a clear breach of an explicit personal promise to investors with no mitigating excuses for the breach. Some of those investors who believed the unamibiguous, specific and repeated assurances by Harper, and invested on the basis of the promises live in the US.

If a class action suit for damages were started in the US, I believe that Canadians injured by the reversal could participate.

Dr Michael Popovich said...

A lawsuit from a US perspective may fly--I have never heard of a ruling in such a case where a lawsuit was filed from another jurisdiction--the Supreme Court of Canada has been very specific in laying no responsibility as a result of an untruthful promise by any of our government officials.

Let me check into this & get back to you guys.


Dr Michael Popovich said...

Checked with Brent about possibility of a class action out of the US--this is his response:

" I doubt it would make a difference, since the same immunity would apply and
the "duty of care" would presumably be less for the Canadian government to
foreigners than it is to Canadians themselves. Keep in mind I am no lawyer
but I did consult with three Canadian class action lawyers back in early
December and they all said there are no grounds under these circumstance to
make claims because of the immunity aspect. "



Anonymous said...

Harper manipulated the MARKETS before he was PM or MP by making such statements about Publicly Trades Companies in Canada and USA and available to the world markets. When he BLUNTLY announced not to touch CanRoys structure, should be considered a MARKET MANIPULATION, forget the breech of contract that has to do with the October 31 2006 when the duo was in power.
1- He was neither an MP nor a PM at the time if I remember correctly,
2- Second he can be sued in other jurisdictions like in USA where 12 of these funds trade to the public.
3- Just by filing a lawsuit it will grab again the head lines. Cheaper that writing hundreds of articles
4- The lawsuit can be put on hold while Harper is in office and serve as a deteriorant.
5- Clinton had a couple of such lawsuits. Keeps people in check doesn’t it ?

Anonymous said...

My CanRoy strategy to recoup from October 2007 35 % drop in my CanRoy segment of my portfolio until Dec 2011 dead line to convert to corporations, now that the LAW is in place, after the inexistent opposition on the SENATE.
My strategy on CanRoys goes as follows.
Bonus – Malus evaluation of the NYSE on CanRoys
1- Average 8% on div per year after tax / means 40% compound div upside.
2- Sell all CanRoys on the Canadian account and convert Canadian cash to $ US (1 US $ = 1.05 $ Cnd) bye only CanRoys on NYSE, there are only 12 of them listed in there. Upside potential 35% when the US $ goes back to 1.4 and it will by 2011
3- Some of 12 NYSE CanRoys are an excellent take over target, the medium size ones that have not recouped from the October 2007 with a 25 % premium target.
4- Some of them like AAV / PVX are on the + side of capital gains already .
5- Others are MLP’s in USA or are planning to do just that. Convert to MLP’s that gives the same TAX structure to a corporation in USA as the Trust in Canada. Possibility to extend the high level of distribution beyond 2011
5- May be Canadians will have enough of the “Smartest kid in the room, baby face, not much of testosterone level “ of a PM Harper and his CONservative Party. Just an after thought, where does the CONservative / Progressive party finds all these hermaphrodites for leaders must be something inherently wrong with them.

I expect to do pretty well the Cat is out of the bag no more bad news, even the day they voted the law on the SENAT actually CanRoys went up.

6- Support the liberals ( Money/ Time/ Energy )

I should be fine by 2011 on my CanRoys
Will let you know

ladyp said...

As a relatively new non-Canadian trust investor, I am bewildered by the rhetoric about tax leakage. I had just one modest position in a trust in my retirement account, when it's value dropped like a stone Halloween (Trick or Treat).

It always puzzled me about the 15% that was permanantly deducted from each and every distribution in my US retirement account. I understood the USA was supposed to have a reciprocal treaty where this sort of thing wasn't supposed to happen. I learned otherwise.

However, I have more than my share of experience working with people who can write checks but otherwise have no idea what finances are about. The scary thing is the number of folks in high places who are buying the Harper scheme. They don't seem to know anything is wrong with the evidence right there.

I can't imagine what it must be like for Canadian retirees who thought they were financially set and now see they are not. I am appalled and scared for them.

Dr Michael Popovich said...

" I can't imagine what it must be like for Canadian retirees who thought they were financially set and now see they are not. I am appalled and scared for them."--Ladyp.

Think what this is like for us Canadians in general--we are about to get the greatest shafting of our lives & most do not seem to know or care about it--we have a poor attitude in this country--"if it does not affect me , then who cares".

Most people assume that the trust fiasco did not affect them--it may not have done so directly--the unfortunate thing is that the spreading takeovers as a direct result of the Tax Fairness Plan are removing more & more direct tax money from government coffers & hiding it within pension plans or having it washed away by private equity debt interest deductions.

As a result , not too far down the road the government will have forced itself into the position of deficit financing--this can only result in one of three things--raise taxes , chop programs , or sell government assets--the latter is already in the works.

This whole thing is a mess brought on by several hidden factors within the government--the fact that they refuse to give evidentiary proof only indicates to us that whatever they have done cannot be above board enough to trust the general public with the materials they have to back up their claim of tax leakage.

All investors , not only seniors , have been hurt in this mess--a fine investment vehicle will be gone forever along with our ability to make sufficient income to sustain us in our retirement.

All I can say is " move over MPs , make room at the public trough , we are on our way"!!!!!!!!


Disgusted in Calgary said...

Yes Houston, we have a problem. Unfortunately our message isn't getting the reception it deserves.

People still seem to believe trust taxation hurts the "big cats" - the rich, the arrogant - anyone but the common man.

CAITI is incorrectly viewed as being soley the domain of the IPO groups' sour grapes.

If we ever want to win this battle, we need a plan that is effective in getting the truth out to the average man. So far we've failed - that's why so many are not paying attention.

Personally I believe we are the victims of political expediency and cronyism. I believe a deal was made (and later broken) between the NDP and the Conservatives over the Clean Air Act. The Tories sock it to big busines and the NDP supports their bill. The NDP have always been short sighted on the positives of having a healthy business climate.

The second part - a person with the initials G.M. who used to run Encana has the personal ear of Mr. Harper. Talk about sour grapes over part of Encana possibly going Trust, well I call it the smoking gun.

Mr. Flaherty was probably told to make it happen. Being a politician, he took a sledge hammer to what only needed a slight twang. Now he defends his mistakes until his political end.

As a result, we have our capital markets in upheaval (thanks to the Banana Republic of Flaherty), the "average Joe" thousands of dollars poorer, and some of our finest assets being cherry picked by foreigners.

I wrote to the politicians and receive "canned" answers of double speak. Everyone except my own MP, Rob Anders, has responded and all have hidden behind the supposed tax loss. And as an aside, isn't it curious that Mr. Harper has been keeping his face as far away from this issue as possible? Prior to this, none of his cabinet spoke - just him. Suddenly he's not to be seen - hmmmm, could it be his conscience?

Anyway, the blind idiots lose sight of the fact that energy trusts for the most part, converted before they were fully taxable. They paid taxes on deemed dispositions of assets when they became trusts. Had that not happened, most of them would have gone several more years before filling the government's coffers. Ottawa outright admitted it had a surplus it couldn't account for - well hello out there - you just shot the goose laying those golden surpluses.

Many of my trust investments have recovered a bit, however I'm still down over 15% overall. I also work for a Trust and have had to pay tax on benefits I never received due to the loss in value - to the tune of about $6K for 2006,

I do not have a pension plan. Those employee benefits accruing the bogus tax were supposed to compensate for the lack of one.

So during the last election I voted Conservative for only the second time in my life. This bunch of lying, two faced, idiots will not ever get my vote again.

I commiserate with those who say there isn't anyone left to vote for and send my prayers for the revival of the Rhino party. We need a group that says "None of the Above", and quite honestly folks, I'd be surprised if they could do a worse job.

I won't leave Canada - I love my country. But most days it's frustrating to see the damage those yahoos currently in parliament inflict on us. May I live to see the day I can be proud of our parliament too.

Kephalos said...

Hello Disgusted in Calgary,
I hope you're having a good Stampede. When Stampede is over, what can we do to fix the mass of logical falsehoods and incoherencies in this Tory government?

One big reason they thought, and continue to believe, that they can get away with the trust tax and the many other broken promises and dictatorial decisions (like the recent RCMP decision) is that Alberta is an automaton when it comes to voting. We have to change that. Especially in Calgary and Edmonton, where many, many people have worked energy exploration, development, protection, environmental protection and regulation, and are energy trust investors. The energy trusts have stopped expanding. Flaherty has basically knocked out their business development, and given a free run to the multi-nationals, most of whom are foreign. How anti-Albertan and anti-Canadian can you get?

If Harper was the MP for a riding in an non-western province, you could almost forgive his lack of understanding. But he’s a Calgary MP, for heavens sakes! Alberta signs his pay cheque, but he cheers for the Leafs, and his policies are putting people out of work in western Canada. So who’s light-bulb is dim? His or ours?

I’m really hoping that some local action groups will be form in Alberta. When Harper has his next election rally in Calgary, I want to be there. I hope a lot of other unhappy campers will pitch their teepees outside the rally.

Robert said...

The Conservatives sat in opposition for a number of years watching in utter disbelief as the Liberals lied, cheated, stold money, broke promise after promise - and kept winning elections. So they finally figured out the way to win elections in Canada is do what the Liberals always did.

That means doing things like promise to keep income trusts then break your promise with the excuse that you are just making corporations and fat cats 'pay their fair share of taxes'. Trudeau used the same tactic against Joe Clark with gasoline taxes then went back on his word, Chretien did the same thing about the cutting the GST to zero then went back on his word.

It's a tried and proven strategy that works every time in Canada: Promise something that western voters like to hear, then break your promise and do what eastern voters like to see happen.
I know there are alot of voters who do not fall for that shell game, but unfortunately the majority does.

Kephalos said...

You're too nasty towards the Liberals. Even so, you're point is well taken.

Trudeau made and broke a promise about price and wage controls. But I don't think he made a promise not to tax gasoline. What I remember is the National Energy Program, which was very anti-Western Canada. Chretien did promise to scrap the GST. Yes, he broke that promise, but did he make you worse off? No, he just got our hopes up. It wasn’t like he made the average Canadian $20,000 worse-off.

By the way. Mulroney campaigned against free trade when he stumped for the Tory leadership. Four years later, he campaigned for the opposite. On the long view, breaking a promise seems to go with the territory. Even so, Harper has broken about 40. That's a bit much.

The problem has been around for a long time, and we're part of it too.

“If you have suffered dreadfully through your own baseness,
Do not ascribe this destiny to the gods;
You have yourselves exalted these men by giving them protection.
And because of this you now have wretched servitude.
Each one of you walks with the steps of a fox,
Everyone of you has an empty mind;
For you look to the tongue and words of a wily man,
But see nothing that takes place in actions.”
(Solon, Athenian lawgiver, circa 600 BCE)

Everyone of us has an empty mind? I hope not.