Harper treats us like unequals

Treats us like unequals? That’s the title of an article in today’s Leader-Post.

Let’s examine that claim as it relates to Stephen Harper’s decision to tax income trusts after he promised he would never raid senior’s nest eggs by making such a move.

As a starting point, Harper has allowed pension funds to own income trusts in their private equity portfolios free of the 31.5% tax and the 75% of Canadians without pensions can not? That sounds decidedly unequal to me.

Meanwhile as "compensation" for his draconian income trust tax, Harper has granted those 25% with pensions the right to split their pension income with their spouses or common law partners, whereas the 75% of Canadians without pensions can not. That sounds decidedly unequal to me.

Interest on corporate debt can be serviced with pretax cash flows, but distributions on income trusts can not. That sounds decidedly unequal to me.

Interest on corporate debt can flow to foreign investors free of any taxation, but distributions on income trusts can not. That sounds decidedly unequal to me.

Harper’s mini budget called for corporate tax rates to be reduced by 34% by the year 2012, and yet no such corresponding reduction on the income trust tax . That sounds decidedly unequal to me

John Manley and his 700 fellow lawyers at law firm McCarthy Tétrault LLP can participate and own a tax flow through partnership, but average Canadians seeking retirement income can not. That sounds decidedly unequal to me.

The pension plan of newly minted Bank of Canada Governor and architect of the Income Trust tax, Mark Carney’s own pension plan, the Public Sector Pension Plan can own Thunder Energy Trust, free of any 31.5% tax and growth restrictions, but average Canadians can not. That sounds decidedly unequal to me.

The resultant undervaluation in the trust sector, allowed the Public Sector Pension Plan to act in a predatory manner, working hand in hand with the civil servants who provided this legislative “carve out” and who are its beneficiaries. That sounds decidedly unequal to me.

And yet before being caught with their hands in the cookie jar, the Public Sector Pension Plan felt compelled to make this statement of self admission:

“Our exceptional level of liquidity provides us with a competitive advantage vis-à-vis others (Read: the average Canadian) in capturing the return premiums offered on less liquid (Read: private equity) investments.

Of course, as investors we are not called upon to formulate government policy...but we do have to make assessments of the potential impact of these various forces and factor those assessments into our investment decisions.”

Sure, we believe you. Just like we believe that our illustrious leader treats us like equals, or not, as the case may be:

Harper treats us like unequals
Murray Mandryk, Special to The Leader-Post
Published: Friday, January 18, 2008