Sunday, January 27, 2008

Taxation without Misrepresentation


Historical events no less significant than the American Revolution had at their roots the unfair taxation of the masses. In that case the British colonies of America objected to being taxed by the King and be without representation in the British Parliament. The rallying cry of the Boston Tea Party was "No taxation without representation". Out of that skirmish over the taxation of tea, arouse the American Revolution and the founding of the United States. The earliest flag of the United States was that of a coiled snake and the words: “Don’t tread on me.”

The income trust issue that is still very much alive today and which festers in the minds of those aggrieved by it, is not a case of taxation without representation, but rather a case of taxation by misrepresentation. The saga of the income trust matter is a saga of misrepresentation by our elected representatives.

First there was the misrepresentation by Stephen Harper and every Conservative MP that, if elected, they would never raid seniors’ nest eggs by taxing income trusts. That misrepresentation was offered up on a platform of other misrepresentations such as promising a government of transparency and accountability and the misrepresentation that a Conservative government would compensate Canadians on a timely basis for any losses they may sustain as a result of government legislation.

Upon electing sufficient Conservative Misrepresentatives of Parliament, Stephen Harper had a change of heart. He was now the target of the affections of those in the business community such as Gwyn Morgan and Paul Desmarais Jr. , who for their own selfish reasons were well served by eliminating the competition known as income trusts.

After misrepresenting to the marketplace that a Conservative government would never tax income trusts, it was reasonable to expect that certain businesses would use this climate of certainty as a welcomed opportunity to convert to the income trust model.

The announcement by Telus proved pivotal, since it forced BCE’s hand to make a copy cat announcement of its own.

This provided the “perfect storm” for those who were waiting in the wings to bring about a reversal of the income trust policy.

Key to this exercise was the role played by the bureaucrats in Finance. Mark Carney was the epicenter of the misrepresentations that then ensued. Here is the apologetic account of his role that appeared in yesterdays Globe and Mail:

“Mr. Flaherty, whose political experience was at the Ontario level, was more of an Ottawa neophyte than Mr. Carney. The senior official's advice soon became indispensable as the Finance Minister set about dealing with income trusts, getting to know and understand financial market players, and gauging the effect of a soaring currency and hurting manufacturing sector.

Mr. Carney was a hawk on income trusts, and felt strongly that they were a counterproductive blight in Canada's economy, holding Canada back in an increasingly competitive global economy. His arguments were crucial in convincing Mr. Flaherty and Prime Minister Stephen Harper that trusts should be taxed before some of the country's biggest companies opted to convert to tax-free income trusts.

The decision provoked a bitter and ugly backlash that continues to this day.”

Let’s examine these misrepresentations for what they were and for what the Globe and Mail still promulgated them as being:

- Income trusts were a counterproductive blight in Canada's economy.

-Income trusts held Canada back in an increasingly competitive global economy.

-Income trusts should be taxed before some of the country's biggest companies opted to convert to tax free income trusts.

One thing that I won’t take issue with is the statement that: “The decision provoked a bitter and ugly backlash that continues to this day."

What do you expect to occur when the government lies to the people and steals their life savings and renders their future’s less secure, all the while allowing Pension Funds to own income trusts tax free, allowing law firms and accounting firms to operate as income trust and to allow corporations to be tax free entities when it comes to paying interest on debt?

And if that isn’t enough, this mindless policy has induced real tax leakage in its attempts to stem phantom tax leakage. This is costing the Government of Canada and every tax paying Canadian $1.4 billion a year.

It’s a good thing there are Canadians with a greater interest in uncovering the truth than those who occupy the Main Stream Media, since it will only be because of our actions and our dedication that we will live in a society where we can achieve Taxation Without Misrepresentation.

There are still those who righteously live by the credo of “Don’t tread on me”, especially when it come to one’s own elected misrepresentatives.

8 comments:

Dr Mike said...

It sure is interesting that the promises which centered around income trusts & capital gains were the ones that went by the boards!!

If we look at this , we can see the obvious connection.

The gov`t could not implement a law stating that if they caused a financial set-back because of one of their policies they would have to supply compensation--imagine forking over 35 billion dollars to trust investors.

It seems certain that this failure to implement was a result of the fact that they had always considered taxing trusts to be a real possibility--even as they made their not so-brave promise not to do just that.

Their promise to deal with a deductibility for capital gains if re-invested within 6 mos went away just as fast because of deals like the privatization of BCE--the huge amount of capital gains which will be developed from this deal with Teachers will produce a one-time bulk up of government coffers.

It appears they were just toying with our affections to get our vote--I believe there are names for people like that!!!!

Mike.

nineofiveland said...

Dr Mike .. does that name you are thinking of belong in that old ditty " ...., ...., pants on fire"?

Robert Gibbs said...

What is the fundamental foundation of ANY good relationship?

Answer: TRUST.

Beyond even the abhorrent treachery surrounding the income trust issue, Stephen Harper and his CONServative government have shown themselves to be extremely wanting of this basic tenet, as evidenced by so many actions, inactions and overall general untrustworthy behavior (the most recent example of which concerns the lies and untruths told to Canadians, Parliament and the media about the Afghan detainee matter).

Stephen Harper speaks out of one side of his mouth, while his contradictory actions "speak" from the other side of his mouth.

It matters not what you say, but what you do.
A man is defined by his actions, by what he does.
Actions speak louder than words, as they say.

Stephen Harper is not a leader. A charlatan, he most certainly is.

Stephen Harper IS politics' Two-Face character.

In time, only the most adherent CONServative partisan will ignore this fact.

sailortwo said...

Brent: If, in the lead-up to the upcomong election, the government should find it politically advantageous to modify its Draconian stance on Income Trusts, the credit should go in great part to you.
Your diligence and tenacity in keeping this issue alive is worthy of at least an Order of Canada medal.

Old Fart William said...

In the upcoming election campaign it will fall to each and every one of us angry about how we have been raped to make sure that this issue isn't shunted to the sidelines by the mainstream media.

We will have only one opportunity to salvage whatever is left of the trust universe. Since the Liberals are the only party to promise a decent treatment of our trusts we have no alternative but to do everything we can to elect Liberals and defeat CONs.

This is not an election we can afford to sit out. Donate to the maximum ($1100 to each of the National Liberal Party and to the local Liberal Riding Association). Volunteer to knock on doors, whack in signs, work the phones, hold coffee parties, whatever can be done. You would be surprized at what is possible when you are angry enough!

Don't think that you aren't capable of making a difference. Once you admit that you are so angry with Harper, Flaherty, and their criminal gang, you will find the nerve to work the phones and knock on doors for your candidate. Let the fire in your belly drive you.

Down with Steve and his sordid cohorts!

Robert Gibbs said...

Old fart william:

Amen to your comments.

The Liberals are the ONLY party that has a reasonable chance of turfing "Stevie and his sordid cohorts!

Anonymous said...

I have asked this question before: What justification did the NDP have for voting in favour of taxing Income Trusts. I am a Lib. but do not own IT's but very interested in their reasoning since they are always talking about working people not getting a fair share, etc. etc. and also about seniors. Please try to answer me as to the NDP and their justification. Thanks

Robert Gibbs said...

Anonymous said:

"I have asked this question before: What justification did the NDP have for voting in favour of taxing Income Trusts?"

Short answer:

NONE.

Jumble Jack, Jabber Judy and the New Dodo Party haven't a clue, especially when it comes to financial, economic and taxation matters.

I believe they simply stated that they "trust" Flim-Flam Jimmy Flaherty's assertions, while also invoking Diane Urquart's comments, who as you may have seen has been discredited by Brent, an Ontario judge (w.r.t. an unrelated matter) and others.

They try to portray themselves as being against big corporations and for the average everyday man/woman, but have blindly ignored this plight of the ordinary average investor, seniors and retirees.

I suggest writing a letter to Jumble Jack and his New Dimwit Party demanding a retrenchment.