Great read...yeah, just like a crime novel

To: Bruce in Calgary:
From: CAITI
Subject: Great read!!!!

I'm glad you enjoyed the blog article entitled "Saturday, February 9, 2008 Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty

Maybe Harper could respond by saying that even though the CPP Lost $300 million, the pension plans were supportive of the trust tax and Flaherty’s fraudulent scheme of alleged "tax leakage" and bogus notion of "leveling the playing field."

Well of course they were, since they were the beneficiaries of a special “carve out” that allowed them to own income trusts and not pay the 31.5% tax and not be subject to growth constraints, but average schmuck Canadians are not so advantaged.

Somehow that constitutes a “tax fairness plan”. One question: How does that solve the alleged problem of tax leakage, assuming it even exists?

Given that Flaherty construct his argument based on the notion that pension funds are “tax exempt” and that he can't fund today’s social programs with tomorrow’s taxes, then such a "carve out" would only serve to make things worse. But that’s Flaherty’ s main claim to fame. Making things worse.

Meanwhile, thses highly opportunistic government sponsored pension plans are exploiting this gross inequitable arrangement and are acting in a predatory manner to buy out these trusts at their depressed values. This is called an arbitrage.

The word arbitarge is derived from the same latin word as arbitrary, arbitrarius, as in the Tax Arbitrary Plan or the Tax Arbitrage Plan:


Definition of arbitrage: Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. The ideal version is riskless arbitrage.

In this particular "arb", which the government has made riskless on behalf of foreign private equity and pension plans, the seller has been placed in an economically disadvantaged position. The buyer meanwhile has not. The buyer exploits the seller. The government set this up. The first out of the gate was the pension plan of the very crooks who thought this would be a fun way to placate the pension plans who were “in the face” of Goodale back when he undertook his public consultation review of the matter of income trusts in fall 2005.

The civil servants who gave this carve out to their own pension fund were engaged in the practice known as self dealing. The fact that the Tax Arbitrary Plan also involved the granting of pension income splitting as some exercise in amelioration, is just more self dealing, since pension income splitting only applies to pension income and not RRSP income.

Every civil servant will benefit from both income splitting AND the tax arb associated with their pensions preying on the assets of others, The Public Sector Pension Plans was the first out of the gate. The PSP is also the pension plan of the RCMP. In the attached you will see that 66% of the $29.4 billion in trust takeout activity is foreign and 34% domestic, with pension funds representing a full third of domestic buyers. If you properly add BCE to the mix, then the trust tax takeout numbers grow to $65 billion with 57% being foreign and 43% domestic of which pension funds are two thirds of domestic buying activity and a third of all buyout activity.

It's no wonder that Teachers was all ready to issue this press release on November 1, 2006. Man, they sure are a quick study. Or did they know in advance?


Teachers' response to new federal income trust policy
November 1, 2006

The Ontario Teachers’ Pension Plan has advocated for a taxation policy on income trusts that does not discriminate against pension funds, and we are pleased to see that this is the case with the government’s announcement yesterday (October 31, 2006).

The reality is that, in a protracted period of low interest rates, it is important to find alternate investments with yields that help make up the difference. Income trusts have allowed us to do that in recent years. The challenge will be to find the investment vehicles that will replace the income and cash flow that income trusts have represented to us, but we are confident that our investment team will find them. The four-year implementation period for this new policy will enable us to gradually make any necessary adjustments to our portfolio.

There is good news for pensioners and other seniors over age 65 in this new policy, which will help take the sting out of the new tax policy on income trusts for them: the age exemption tax credit will be increased by $1,000 and income splitting will be permitted.

Contact:

Deborah Allan
Director, Communications and Media Relations
Ontario Teachers' Pension Plan
(416) 730-5347
deborah_allan@otpp.com