Monday, March 31, 2008

RCMP Commissioner Zaccardelli’s income trust election manipulation ranks with Stephen Harper’s income trust election lie.

"Fair to assume" naming ex-finance minister influenced election: Complaints commissioner

March 31, 2008
Richard Brennan

OTTAWA ˜ It is fair to assume the RCMP's decision to name former Liberal finance minister Ralph Goodale in criminal investigation influenced the outcome of the 2006 federal election, the chair of the RCMP public complaints commission says.

While Goodale was cleared in the income trust investigation, Paul Kennedy said the damage was already done when the RCMP, at the direction of former commissioner Giuliano Zaccardelli, breached the police force's past practice and released Goodale's name to the media.

The Liberals were defeated in the Jan. 23 election, making way for a Conservative minority government.

Goodale was accused by the New Democratic Party of leaking sensitive financial information about income trusts and many believe that the controversy contributed to the Liberals' election loss.

Kennedy said it was "credible to assume" that Zacardelli's decision to write a letter on Dec. 23, 2005 to the complainant New Democrat MP Judy Wasylycia-Leis (Winnipeg North) confirming that a criminal investigation had been launched and then a Dec. 28 press release naming him negatively influenced the election.

"It is credible to assume that it may have been (a factor)," he told reporters.

Kennedy has recommended the RCMP adopt strict guideline, with few exceptions, that information of this nature not be released during an election.

"In this particular case providing information to someone in the midst of an election, who is the finance critic, you know it is going to be used for a particular purpose ... and the RCMP knew that," he said.

The market value for many income trusts soared after Goodale, then Liberal finance minister, announced late on Nov. 23, 2005, that he would not impose a tax on the popular investment vehicles. Instead he proposed tax changes for corporate dividends that would create a more level playing field with the trust units.

In February, 50-year-old Serge Nadeau, director general for tax policy analysis at the finance department, was charged with breach of trust. It is alleged Nadeau made about $7,000 on deals, according to court record.

Kennedy noted that Zacardelli, who took a hands-on approach to the Goodale information release, and other senior officers, refused to co-operate with the public complaints commissioner's investigation into the RCMP's handling of the income trust matter.

Sunday, March 30, 2008

Evidently Jim Flaherty would "love to go a couple of rounds with CAITI".

Proud words in this week's Hill Times:

"I’m sure Flaherty would love to go a couple of rounds with these guys in a debate situation.” An Ontario Conservative told The Hill Times

If so, please name the time and place.

POLITICS with Don Newman?

BNN’s Squeeze Play?


Mike Duffy Live?

Just name the time and place Jim, we’ll be there.

Will you bring the blacked out documents or should we?

To confirm, just send an e-mail to us at

Income trust lobby not giving up, looking to next election
Simon Doyle
Hill Times
March 31, 2008

The Canadian Association of Income Trusts isn’t slowing down its attacks on Finance Minister Jim Flaherty, renting out 25 large billboards in his riding of Whitby-Oshawa, Ont., and viewing the next federal election with some sense of opportunity. The billboards focus on Mr. Flaherty’s Halloween 2006 decision to tax income trusts after Prime Minister Stephen Harper (Calgary Southwest, Alta.) promised that he wouldn’t do so in the 2005-06 election campaign.

They show Mr. Flaherty accompanied by captions such as “C’mon up to Jim Flaherty’s great Canadian giveaway sale” (a reference to the so-called hollowing out of corporate Canada); quotes such as “I don’t fix potholes” and “Too cute by half”; or the statement, “Jim Flaherty’s income splitting only benefits 14% of seniors ... himself included.” The billboards also direct viewers to the website, which attacks Mr. Flaherty for having “not one but two chances to destroy the economy.”

The campaign is led by Brent Fullard, head of CAITI, which formed after the income trust decision, and it’s one of the most aggressive and well-financed lobby efforts in recent memory. The association, representing heavy-hitting trusts such as Acuity Funds Ltd., CI Investments, and Dynamic Funds, as well as the Coalition of Canadian Energy Trusts, a group of major oil and gas trusts, spent about $1-million last year between January and May, mostly on advertising and billboards. It’s now spending $30,000 per month on about 35 billboards that come in anticipation of a federal election.

Twenty-five of them are in Mr. Flaherty’s riding, and about another 10 are appearing in the ridings of Conservative MPs Rick Dykstra (St. Catharines, Ont.) and Dean Del Mastro (Peterborough, Ont.), both of who sit on the House Standing Committee on Finance. Mr. Dykstra and Mr. Del Mastro both won their seats by slim margins in the 2006 election (four per cent and 3.5 per cent respectively). The association hasn’t targeted Conservative MP Mike Wallace (Burling- ton, Ont.), also a member of the Finance Committee, apparently because it hasn’t got around to it—yet.

Mr. Fullard said he does not know whether the bill-boards are having an impact, but said they are contributing to people’s knowledge about the income trust decision. He pointed to a recent CPAC interview (which he distributed to reporters) with Deborah Meredith, the Conservative candidate for Vancouver Quadra, who said that as she was going door-to-door, she heard complaints about the income trust decision and that it could affect her fortunes in he March 17 byelections (she lost by 150 votes behind the winning Liberal candi- date, Joyce Murray).

Mr. Fullard said the interview is evidence that the issue is a latent one that will resurface in the next campaign. “It’s like an open wound that hasn’t healed,” he said. CAITI is likely to be active in the next federal election campaign, he said, but at that time it will be limited by Elections Canada’s third-party advertising spending limits. “The most that we can spend after the writ is dropped is $150,000 in total and I think it’s $3,000 per riding. That won’t get you very far,” Mr. Fullard said. He wouldn’t say what the association has in store during the election, but added: “We won’t be doing nothing, I can tell you that.”

Dan Miles, Mr. Flaherty’s communications director, told The Hill Times last week that Mr. Flaherty’s constituency office has not received any calls about the issue, and that the government stands strongly behind a tax decision that is now law and that leveled the playing field between trusts and corporations. “It’s regrettable that they can’t move on,” Mr. Miles said. When asked if the campaign is having an impact, he said: “There’s 25 billboards across the riding and we haven’t received one call ... It’s clearly something that is not top of mind for people in the Durham region.”

Another Ontario Conservative told The Hill Times: “I don’t think Jim’s losing any sleep over it, as a matter of fact I’m sure of it. I’m sure he’d love to go a couple of rounds with these guys in a debate situation.”

Mr. Fullard said that he’s not urging people to vote for a party other than the Conservatives. He said he’s “just trying to explain to people who it is who represents them in Ottawa and the many adverse positions he’s taken.” Critics have suggested that the attacks are too personal against Mr. Flaherty, to which Mr. Fullard responded: “Who else am I going to hold to account? His secretary? ... If you don’t hold people to account, what do you hold to account?”

Saturday, March 29, 2008

Letter to the Editor, St. Catharines Standard

Re: Political attack ad is nothing more than graffiti, The Standard, March 26.

This letter by David Lewis, written in response to the seven billboards our association currently has running in St. Catharines in reference to Prime Minister Stephen Harper and Finance Minister Jim Flaherty's handling of the income trust matter, contains a number of gross errors and false assumptions.

For Lewis to suggest that our paid billboard advertising is akin to graffiti is a patently false claim. Paid billboard advertising is not the equivalent of vandalsspray painting on private property. Graffiti is a criminal offence, as is causing property damage.

The only property damage involved in this matter is the $35 billion permanent loss of value that hard-working Canadians, including many retirees in St. Catharines, sustained as a result of Harper's capricious and reckless act of betrayal to double tax income trusts and double-cross Canadians saving for retirement.

As for the baseless claims that the author of these ads, our association, lacks integrity and credibility is another attempt to slander the good work we are doing on behalf of the 2.5 million Canadians who were aggrieved by this policy to double tax income trusts.

The party lacking in integrity and credibility is the Harper government, since it was they who promised to never tax income trusts and they who promised to usher in a new era of accountability and transparency - and that took the form of 18 pages of blacked out documents released under the Access to Information Act as the "proof" of alleged tax leakage.

Those 18 pages are more akin to graffiti than our paid billboards, as the 18 pages are a true blight on transparency and democracy.

Brent Fullard
President & CEO,
Canadian Association of Income Trust Investors
Yonge Street, Toronto

Thursday, March 27, 2008

Today marks the fifth anniversary of Harper's "let's invade Iraq" call to arms

Maybe we should celebrate today with a nationwide distribution of bumper stickers that read: Support the troops, by not supporting Harper.

After all, it was five years ago today that Stephen Harper foolishly proclaimed that Canada should blindly follow the US and Britain into the invasion of Iraq. He made that proclamation in the Wall Street Journal no less.

How very appropriate, since we now learn that this war will cost the US three trillion dollars, the equivalent of $30,000 for every single American household.

In deceivin' Stephen's Wall Street Journal piece below, notice how he tries to pawn off the mission as a "multilateral coalition of nations". What complete BS, since the Iraq invasion was anything but a "multilateral coalition of nations". It was done without even receiving UN sanction, for crying out loud. More like a "unilateral coalition of raiders".

Even worse is how Stephen Harper tries to falsely link Saddam Hussein with 9-11. Even the Penatgon has since fessed up to that conflated piece of George Bush propaganda. Sort of like how Harper went on to falsely conflate income trusts with tax leakage, although he has yet to admit to that exercise in utter falsehood and fiscal mismanagement, which only cost selected households in Canada $30,000, and up. Many of those who could least afford it. Seniors on fixed incomes whose nest eggs he promised he would never raid.

Stephen Harper certainly is scary. Imagine if Canadians were ever to extend this guy a majority. I shudder to think. Hang on to your wallets and first born children, the man is not to be trusted. This kind of "leadership" can only lead to ruin:

Wall Street Journal |
March 28, 2003
Canadians Stand With You


Today, the world is at war. A coalition of countries under the leadership of the U.K. and the U.S. is leading a military intervention to disarm Saddam Hussein. Yet Prime Minister Jean Chretien has left Canada outside this multilateral coalition of nations.

This is a serious mistake. For the first time in history, the Canadian government has not stood beside its key British and American allies in their time of need. The Canadian Alliance -- the official opposition in parliament -- supports the American and British position because we share their concerns, their worries about the future if Iraq is left unattended to, and their fundamental vision of civilization and human values. Disarming Iraq is necessary for the long-term security of the world, and for the collective interests of our key historic allies and therefore manifestly in the national interest of Canada. Make no mistake, as our allies work to end the reign of Saddam and the brutality and aggression that are the foundations of his regime, Canada's largest opposition party, the Canadian Alliance will not be neutral. In our hearts and minds, we will be with our allies and friends. And Canadians will be overwhelmingly with us.

But we will not be with the Canadian government.

Modern Canada was forged in large part by war -- not because it was easy but because it was right. In the great wars of the last century -- against authoritarianism, fascism, and communism -- Canada did not merely stand with the Americans, more often than not we led the way. We did so for freedom, for democracy, for civilization itself. These values continue to be embodied in our allies and their leaders, and scorned by the forces of evil, including Saddam Hussein and the perpetrators of the attacks of Sept. 11, 2001. That is why we will stand -- and I believe most Canadians will stand with us -- for these higher values which shaped our past, and which we will need in an uncertain future.

Messrs. Harper and Day are the leader and shadow foreign minister, respectively, of the Canadian Alliance.

Sorry Terry, nothing could be less analogous

Unsuccessful in his attempts to "vaporize" me, Terry Corcoran is still vainly attempting to villain-ize me, with his reference today to the folks who are attempting to recoup their losses on Asset Backed Commercial Paper, with the allegation that:

“Mr. Hunter and Mr. McFeely have set themselves up as the Brent Fullards of the ABCP fiasco”.

Terry Corcoran once again proves himself the master of tortured analogies, much like the time he inveigled the concept of lesbianism into his piece of journalistic trash entitled “Town Hall Kiss off” which was some twisted account of John McCallum’s Town Hall meeting at the Design Exchange in Toronto about a year ago.

Except today’s tortured analogy about ABCP has nothing remotely similar to the income trust issue, since:

(1) Holders of ABCP were not given solemn assurances by the government in office about the “save haven” nature of their investment.

(2) Holders of ABCP actually hold something that is truly akin to a ponzi scheme (certainly a pyramid scheme) as opposed to income trusts which the National Post has attempted to brand income trusts as. If that were the case, then why did Canwest Media issue such a ponzi scheme, only to buy it back under opportune government induced circumstances?

(3) Holders of ABCP should have realized that you never make an short term investment in long dated paper, unless you are foolish enough to believe that you can always win the game of musical chairs. Meanwhile income trust investors were making a prudent long term investment in stable companies and other companies which afforded investors with commodity exposure upside and downside.

(4) Bay Street didn’t come to the rescue of Income Trusts as they did ABCP, even though Bay Street knows the tax leakage allegation is a trumped up myth and even though Bay Street made $4.1 billion in income trust underwriting fees, not including secondary trading commissions.

(5) The ABCP fiasco was one of its own inevitable creation. For the Caisse de depot to have had the exposure it did was grossly imprudent. Meanwhile hapless income trust investors are made into scapegoats-after-the-fact for the government’s double crossing, double taxing of income trusts, by being accused by the likes of Terry Corcoran for not being “sufficiently diversified”. Just exactly how does one diversify against government lies and capriciousness?

(6) There are 2.5 million retail income trust investors in Canada and throughout the world, whereas there are 1,600 retail investors in ABCP.

(7) And finally, holders of ABCP weren't the victims of some false trumped up allegation that ABCP causes tax leakage that was perpetrated on income trust investors by an intellectually corrupt bureaucrat in Finance who later became the Governor of the Bank of Canada as his personal reward. But then wasn't Mark Carney trying to position himself as the saviour of the Asset backed fiasco and the Montreal Accord? I guess if he actually had any meaningful involvement they would have called it the Ottawa accord, wouldn't they have?

Sorry Terry, you are getting most desperate to suggest that these ABCP “greater fools” are anything close to the cause being championed by CAITI on behalf of Canadians on the betrayal of a generation, known as the Income Trust Fiasco. But then you must know a lot about “greater fools”. After all, wouldn’t that pretty much include all of your most loyal readers?

Jack Mintz gets caught in his own sad twisted logic

If you were to identify one person who played the greatest role in fostering the false belief that income trusts cause tax leakage, it would be Jack Mintz.

Shamefully, Jack Mintz says one thing publicly, i.e., that income trusts cause tax leakage, and quite another thing privately i.e. “I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero”.

What kind of "academic" does that make Jack Mintz?

Funny how no one in the press has picked up on that utter contradiction in Jack Mintz’s logic. Sorry Jack, you can;t have it both ways. You can’t on the one hand be running around using an analysis that excludes all the taxes paid by income trusts held in RRSPs and the next minute be saying that Finance was wrong not to include them.

This is the crux of the tax leakage hoax being perpetrated on Canadians by Corporate Canada and all their minions like Jack Mintz and John Manley. By conveniently leaving out ALL THE TAXES paid on the 38% of income trusts held in RRSPs, Mark Carney was able to concoct an argument for tax leakage. Such exclusion of these taxes is absurd. In fact Jack Mintz describes just how absurd it is in this week’s edition of Canadian Business.

The article in question in entitled “What’s not to like?” and is a complete cheerleader exercise by Jack Mintz to extol the virtues of Flaherty’s recent Tax Free Savings Account versus an RRSPs. Canadians should be very skeptical about the motives behind the TFSA, because its true intent is to disband RRSPs, so that the greedy government can get its hands on the half trillion of untaxed dollars that reside in RRSPs. But that’s a separate story.

In this article Jack Mintz makes the very telling admission that with respect to RRSPs that:

“The government shares not only the cost of the investment put into an RRSP, but also the risk, since the amount of tax collected from withdrawals will depend on the performance of the plan.”

So there you have it. Mintz is acknowledging two key matters, (both of which incidentally are self evident), namely:

(1) Taxes are collected by Ottawa when withdrawals are made
(2) The government is paid to wait for these taxes, since the value of the taxes increase with the “Performance of the plan”

So the question simple becomes: Does the government receives more taxes if the contributions had been taxed today, or more taxes if the contributions were taxed upon withdrawal.

This is where Jack Mintz can be of no service in answering this question, because it is not a tax question. IN order to answer this question a person will need to have taken Economics 101. Economics 101 teaches that the lowest cost of capital in any economy, by definition, is the federal government. Therefore, by extension, the returns on all other investments in an economy must exceed the federal governments cost of capital. Take an example. If the 10 year borrowing rate for the government of Canada is 3.00%, then the expected return on an equity investment will have to be something in excess of 3.00, let’s assume 6.00%,

As such, $1.00 contributed to an RRSP today would have raised the government $0.38 in taxes, or alternatively, had it been invested in an RRSP for 10 years, it would raise the government $0.68 in taxes (38% of $1.00 compounded for 10 years at 6.00%). IN present value terms, this $0.68 in taxes is worth $0.51 today ($0.68 discounted at 3.00% for 1o years.

As such, there is no cost to the government associated with waiting for these taxes. In fact tha government is economically better off, unless of course Jack MIntz wants to argue that $0.51 is less than $0.38. I wouldn't put it past him, however.

Flaherty himself admitted this hard reality when he defended the sale of BCE to Teachers’ pension plan by stating:

"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."

So if it's okay for Teachers’ pension plan, then why not the 75% of Canadian who don’t have employer pensions and rely on their RRSPs?

This simple, yet insidious, difference in the treatment of income trusts held in RRSPs is the sole basis for the allegation that income trusts cause tax leakage. The government simply chose to arbitrarily and without any economic justification, excluded 38% of all the taxes that income trusts pay.

No wonder they got leakage. This also explains why Canadians only received 18 pages of blacked out documents as proof, and why these 18 pages were demanded be returned.

As for the Canadian news media and their coverage of this story, “you’re doing a good job Brownie”. Let me guess, news reporters in Canada must all belong to the select group of 25% of Canadians who have employer pensions?

Wednesday, March 26, 2008

Don Martin of the National Post brands Harper a "warrior" to Dion's "wimp"

No doubt, in today's National Post opinion article, Don Martin was thinking of that warrior episode contained in Stephen Harper's Wall Street Journal editorial below of March 28, 2003 entitled "Canadians stand with you".

Just imagine if we'd followed GI Joe Stephen Harper's warrior advice on Iraq, circa March 28, 2003, we too could be celebrating five years of Iraq invasion morass.

Come to think of it, the false premise of weapons of mass destruction as the pretext for the invasion of Iraq turned out to be as credible as Stephen Harper's equally unproven assertion that income trusts cause tax leakage as the pretext for inflicting a $35 billion loss on Canadians retirement savings to the benefit of all who read the Wall Street Journal, such as US private equity firms and Goldman Sachs.

Why would anyone fight for democracy abroad, when there is so little of it here at home? Meanwhile Stephen Harper may be the inner warrior, but would anyone actually be daft enough to follow him into battle?

I can't speak for Don Martin.

Wall Street Journal |
March 28, 2003
Canadians Stand With You


Today, the world is at war. A coalition of countries under the leadership of the U.K. and the U.S. is leading a military intervention to disarm Saddam Hussein. Yet Prime Minister Jean Chretien has left Canada outside this multilateral coalition of nations.

This is a serious mistake. For the first time in history, the Canadian government has not stood beside its key British and American allies in their time of need. The Canadian Alliance -- the official opposition in parliament -- supports the American and British position because we share their concerns, their worries about the future if Iraq is left unattended to, and their fundamental vision of civilization and human values. Disarming Iraq is necessary for the long-term security of the world, and for the collective interests of our key historic allies and therefore manifestly in the national interest of Canada. Make no mistake, as our allies work to end the reign of Saddam and the brutality and aggression that are the foundations of his regime, Canada's largest opposition party, the Canadian Alliance will not be neutral. In our hearts and minds, we will be with our allies and friends. And Canadians will be overwhelmingly with us.

But we will not be with the Canadian government.

Modern Canada was forged in large part by war -- not because it was easy but because it was right. In the great wars of the last century -- against authoritarianism, fascism, and communism -- Canada did not merely stand with the Americans, more often than not we led the way. We did so for freedom, for democracy, for civilization itself. These values continue to be embodied in our allies and their leaders, and scorned by the forces of evil, including Saddam Hussein and the perpetrators of the attacks of Sept. 11, 2001. That is why we will stand -- and I believe most Canadians will stand with us -- for these higher values which shaped our past, and which we will need in an uncertain future.

Messrs. Harper and Day are the leader and shadow foreign minister, respectively, of the Canadian Alliance.

Tuesday, March 25, 2008

Ontario became a “have not” province on Halloween 2006..... having no evidence of alleged tax leakage

Forty percent of income trust investors reside in the province of Ontario.

That’s one million Ontario residents who were lied to by Jim Flaherty and his false and wholly unproven allegation that income trusts cause tax leakage. These Ontario residents have lost $14 billion in their hard earned life savings.

Jim Flaherty's right about one thing. I guess that makes Ontario the last place that you'd want to invest.

These investors' fate was sealed when Ontario’s Finance Minister Greg Sorbara wrote a letter dated January 28, 2007 to Jim Flaherty that contained the naked claim that “We believe that these changes will protect federal and provincial revenue from significant tax leakage.”

Believing something is one thing, proving it is another. Where is the proof of tax leakage?

Meanwhile we have Jim Flaherty engaged in a battle of words with Ontario Premier Dalton McGuinty, where Falherty is calling upon Ontario to lower the corporate tax rate. Meanwhile the two of them conspired to RAISE the tax rate on buisnesses by an unprecedented 31.5% back on Halloween 2006. Let’s examine the trick or treat consequences of that unproven measure to the welfare of Ontario:

-Canada’s financial center, Toronto, experiences a major loss of capital market’s competitiveness, that had generated $4.1 billion in underwriting revenues over the previous ten year period
-Canada’s money managers, based in Toronto, lose a growing market that is ideally suited to the demographics of Canadian saving for retirement. Must return to selling ill-suited products
-Toronto Stock Exchange less able to compete with NYSE and AMEX, since they have the Master Limited Partnership market, and the TSX losses its comparable product
-Ontario government losses substantial tax revenues, due to resultant takeovers of ONTARIO based trusts to foreign private equity and tax deferred pension funds, in the following chronological order:

(1) Sunrise Senior Living by US Ventas, Inc. $2.28 billion
(2) Great Lakes Carbon by US Oxbow Group. $786 million
(3) Norcast by UK Pala Investment Holdings Ltd $87 million
(4) Lakeport Brewing by Belgian Labatt Brewing Company $210 million
(5) Entertainment One by UK Marwyn $177 million
(6) Amtelecom by Bragg Communications Inc $131 million
(7) KCP by US Caxton-Iseman Capital Inc. $826 million
(8) Union Energy Waterheater by US Alinda Capital Partners LLC $1.74 billion
(9) Canada Cartage by US Nautic Partners $254 million
(10) Stephenson's Rental by US EdgeStone Capital Partners $120 million
(11) Arriscraft International by US General Shale Brick Inc. $107 million
(12) Osprey Media by Quebecor Media $514 million
(13) Countryside Power by US Fort Chicago Energy Partners $207 million
(14) E.D. Smith by US TreeHouse Foods $313 million
(15) Movie Distribution by EdgeStone Capital Partners / Goldman Sachs $239 million
(16) Legacy REIT by, Caisse de depot $2.47 billion
(17) Golf Town by OMERS Capital Partners $237 million
(18) IPC US REIT by US Behringer Harvard REIT $ 1.4 billion
(19) Spinrite by US Sentinel Capital Partners $80 million

Since neither Flaherty nor Sorbara did the math or had the foresight or competence to realize that the wholesale devaluation of the income trust market would set these companies up for foreign takeover by way of tax eliminating leveraged buyouts, please allow me to do the math and the summary damage:

Losses sustained by Ontario residents: $14 billion
Increased demands on social services: unknown
Loss of Ontario based businesses to foreigners: 19 (to date, more to come)
Loss of Ontario based businesses to foreigners: $12.7 billion
Loss of Ontario head office jobs and decision making: unknown
Loss of Ontario tax revenue: estimated at $560 million a year (40% of $1.4 billion)

Conclusion: Dalton McGuinty and Jim Flaherty should stop their childish pissing contest. There’s more than room enough for both of you at that podium of fiscal disgrace and irresponsibility. The two of you are equally irresponsible in damaging Ontario’s economic future. What a country bumpkin Dalton McGuinty was to trust Jim Flaherty on this matter, or any other matter, for that matter.

Dalton McGuinty can take pride in the fact that his Minister of Finance, Greg Sorbara, destroyed a vibrant sector of the economy of Canada beyond the borders of Ontario. Specifically the 20 of Canada’s oil and gas production that is held in trusts. Evidently Ontario has an aversion to collecting taxes at the rate of 38% from Alberta’s burgeoning energy economy. Or was that just another thing that you failed to realize when you so readily signed on to Flaherty’s most recent ill conceived concept, called the double taxation of income trusts, to the great detriment of Ontario. Take a bow.

Monday, March 24, 2008

Canada’s Parliament is a joke. A virtual Salem witch trial, court of injustice

How many democratic institutions around the world pass major legislation into effect without even lifting a finger to determine whether the assertions upon which they are based are true or false?

Well, that’s exactly what happened in Canada when Parliament passed into law the double taxation of “public” income trusts. All other income trusts were left unaffected, thereby targeting only average Canadians seeking to provide for their retirement through use of their RRSPs.

The premise upon which this tax measure was based was the premise that income trusts cause tax leakage. No evidence has been provided by the government to support that thesis. As such, the notion that income trusts cause tax leakage is as credible as a UFO sighting or something akin to the Salem Witch Trials.

Back in the late 1600’s there was much angst on the part of puritanical Massachusetts that their community had been invaded by members of the occult. It was believed that witches had entered their midst. The legal courts of the day sentenced 19 men and woman to be hung for being witches. This was known as the Salem Witch Trials.

The popular techniques of the day for determining whether someone was a witch, was based on the diagnosis of a single doctor’s theory. William Griggs. On that basis these accused individuals were sentenced to death by hanging.

The allegations and theories that income trusts cause tax leakage are as well founded in science as the Salem witch trials. Except this is 2008 and tax leakage is as easily determined a concept as balancing one’s cheque book.

Rather than answer the question of tax leakage head on, and releasing the data behind the 18 pages of blacked out documents, we had the Finance Minister and senior members of the Department of Finance advancing a number of highly spurious and occult-like arguments to “prove” the existence of tax leakage. They divined their occult arguments this way:

Hon. Jim Flaherty (Minister of Finance):
“The market reaction to a policy that levels the playing field between income trusts and corporations, that makes them equal, not worse, shows that a built-in tax advantage existed. Otherwise, the investors would not have reacted the way they did. There would have been no market correction.”

So that’s Flaherty’s witch hunt rationale: If you tax something, like an income trust or a house, and it’s market value goes down, it is proof that there is tax leakage. Would the same hold true if the dividends of TD Bank or Power Corporation were double taxed at an additional 31.5%, would their precipitous decline in value prove their was tax leakage from TD Bank or Power Corporation?

What utter spurious nonsense being advanced by people who should know better or who do know better.

The income trust issue is not without its Dr William Griggs. Foremost of whom is Dr. Jack Mintz, a self appointed expert in all things tax leakage related. His independence on this matter is highly suspect, as he is a part of the corporation food chain and a former member of the Department of Finance, and remains part of that food chain as well..

Here was the manner in which Jack Mintz’s logic was invoked by Flaherty at the public hearings. How’s this for lackadaisical logic?

“On October 19, 2006, Mr. Mintz said and I quote: “It is silly to argue that there isn't any tax loss. Everyone knows the reason people go into income trusts is because there are tax benefits. That's the way the law is.”

Silly? Here's what's really silly. Rather than the calculation of alleged tax leakage being some lame exercise in “he said, she said”, the matter of alleged tax leakage needs to be proven in a manner consistent with the important role that Parliament plays in every Canadian’s life.

Alleged tax leakage needs to be raised to the standard of the Auditor General who proclaims that “Parliamentarians need objective fact based information on how well the government raises its funds [taxes].”

So where’s the proof? The Green Party and the Liberal Party are demanding the truth be told about alleged tax leakage.

Prove the case or drop the tax This isn’t Salem Massachusetts 1692. Or is it?

Do Canadians really benefit when lies become enshrined in sweeping tax legislation?

Friday, March 21, 2008

FSCO erred in law, thereby granting Ontario Teachers’ with zebra mussel status

Anyone who resides around the Great Lakes will know the major pest that zebra mussels represent to this freshwater marine ecosystem.

Zebra mussels were introduced by humans to the Great Lakes through the bilge water effluent of cargo ships and soon took over the entire ecosystem by consuming virtually all the available nutrients, thereby vastly reducing its biodiversity and threatening its very existence.

Evidently the Ontario pension regulatory body known as FSCO thinks this is a desirable outcome in the context of the pension plans it regulates, such as Ontario Teacher’s Pension Plan.

In its bid to acquire 51.6% of BCE, Ontario Teachers’ came up with a novel structure involving Morgan McCague whose sole purpose and crude contrivance is to circumvent the following rule:

“the administration of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation”.

Wisely the CRTC would have no part of such a deliberate attempt to circumvent, directly or indirectly, the rules that govern Ontario Teachers which are diametrically opposed to the requirement that BCE be Canadian controlled, given all of Teachers’ partners in this proposed deal are non-Canadian. As such Konrad von Finckenstein suspended the public hearings on February 26, 2008 and reconvened them for March 11, 2008 and asked Teachers’ to bring proof in the form of a letter from FSCO, that Teachers’ had not violated its own regulations.

Even though he had been in possession of the letter on March 10, 2008, this was the reaction of the CRTC Chairman at the public hearings on March 11, 2008 upon informing that audience that FSCO had ruled in Teachers’ favour:

“I must say I am astounded. The interpretation that FSCO puts on these things is not the one that either I as a lawyer or former judge would put on that legislation and regulation.”

I think this is the reaction and conclusion that 100 people of 100 would ascribe to such a ruling. Teachers’ then went on attempting to plead confidentiality for this FSCO letter and asked that it not be made part of the public record. The reasons for this are obvious upon reading the letter. The CRTC Chairman wisely rebuffed that attempt at subterfuge.

Highlights of the letter include the following qualifications in the conclusions:

"In providing the comfort that this letter may give you, I point out the following:

No judicial or tribunal decisions interpreting the meaning of section 11(1) of Schedule III of the Pension Investment Regulations have been brought to my attention. The conclusion I have reached is based on the plain meaning of the words in section 11(1) of Schedule III of the Pension Investment Regulations, without the benefit of judicial interpretation.

The extent of the inquiries made into and analysis of this complex deal are necessarily limited by the time limits I was asked to abide by.

FSCO does not have authority to, and does not issue advance rulings; this letter is not a decision, consent, order or approval made under the Pension Benefits Act."

So what does nay of this mean? How is it plausible that federal pension regulations that make it abundantly clear that Ontario Teachers is not meant to be the zebra mussel equivalent in the capital markets and is to own no greater that 30% of a given corporation, and then FSCO renders its judgment of acquiescence that permits it to own 51.6%?

To make the zebra mussel analogy even more applicable, Teachers’ is going about this exercise by way of a leverage buyout. It and its US partners are acquiring all of BCE for $8 billion. They are vacuuming up $32 billion of equity investment by long standing “widows and orphans” type investors with a mere $8 billion in capital. They have puffed themselves up by a factor of 400% in order to displace average investors in what was previously Canada’s most widely held public company.

They achieve this through a means that is also analogous to the zebra mussel and that is by getting BCE to devalue itself so that it’s only worth $8 billion by taking on $32 billion in new debt, on top of the $12 billion of existing debt, thereby desytoying the credit worthiness of the company and the paper held by existing bondholders. Meanwhile the company itself is burdened with this massive debt load, which will only render it less competitive and the costs of its essential services will rise. The Canadian government will forego $800 million to $1 billion in annual taxes, enough to fully fund the RESP program.

It’s impossible to find something in this deal to like. Meanwhile FSCO’s ruling thingy has opened the floodgates of pension plan zebra mussels into the Canadian Capital Markets. Only 25% of Canadians belong to pensions. So why should pensions be able to blow through this 30% rule imposed by federal regulation? Pension plans administrators are meant to be participants in the capital markets, not the controlling elements of capital markets.

Even Teachers’ themselves acknowledged that they aren’t equipped to play such a role, upon stating:

“Teachers’ is not the expert when it comes to operations, and our two US partners have appropriate experience as savvy telecom investors” Teachers’ former President and CEO, Claude Lamoureaux

“We bring the money, but our partners, Providence and Madison Dearborn are experts in this field”
Teachers’ current President and CEO, Jim Leech

Enough already, play by the rules, The FSCO letter is technically offensive and in no way complies with the intent of the legislation. Why the CRTC found it acceptable (or have they?) is beyond me, since as a non lawyer and non judge:

“I too am astounded”.

Thursday, March 20, 2008

Stephen Harper is a Misleader

Just Like His Ministers, Stephen Harper Fails Brenda Martin

OTTAWA - Prime Minister Stephen Harper must demonstrate that he is willing to fight for Canadian citizens by demanding action on the Brenda Martin case, Liberal Leader St├ęphane Dion and Liberal Consular Affairs Critic Dan McTeague said today.

"The Harper government has been far too passive in handling this case," said Mr. Dion. "It is my hope that the visit by Conservative MPs Jason Kenney and Rick Norlock was not simply a photo-op to limit the political damage to Conservatives from public outrage over Brenda Martin's predicament. It's time for this government to show some leadership and demand action on this file," he said.

Mr. McTeague pointed out that the Mexican Embassy's press release on Monday's phone call says it was President Calderon who called Prime Minister Harper, not the other way around, as Mr. Harper has suggested. In fact, the call had been previously scheduled.

"The embassy states the call's main purpose was to exchange points of view and coordinate strategies for the upcoming North American Leader's Summit. The press release included a vague reference to a discussion on progress in the treatment of consular affairs that has taken place in the bilateral relationship, given the substantial increase in the number of visitors traveling between the two countries. It acknowledges the work carried out through the Early Alert Group in some highly visible consular cases to improve the quality of attention provided. There is no mention at all of them discussing Brenda Martin," said Mr. McTeague.

The Prime Minister's Office has declined to confirm if Mr. Harper did indeed raise Ms. Martin's case. This leaves Canadians questioning the true level of Mr. Harper's personal involvement in this matter and in bringing Ms. Martin's case front and centre to the Mexican president. (LOL caught again Stevie)

Mr. McTeague described the entire affair as a travesty of justice that has led to a Canadian citizen being imprisoned for two years without being afforded fundamental and internationally-recognized legal rights.

"Mr. Kenny has joined the growing list of Conservatives who have repeatedly dashed the hopes Ms. Martin had about being released. If there was no public outrage over this case, the Conservatives wouldn't even be trying to cover up their inaction and incompetence - they would merely continue to ignore her as they have for almost two years," he said.

Mr. Dion said that the Prime Minister's excuse that he can not intervene on her behalf is ridiculous.

"How, then, can he say that Canada will intervene with Saudi Arabia to spare the life of Mr. Kohail? How is it also possible for Canada to have legal assistance treaties with other countries - including Mexico?" he said.

"There are many examples where states can and do stand up for their citizens. When will Mr. Harper finally stand up for Brenda Martin?"


For More Information:

Glenn D. Bradbury
Office of the Honourable Dan McTeague, P.C., M.P.

Response to an e-mail sent to

We’re getting a lot of response to our billboards that are running in Flaherty’s riding. Some of those billboards, like the one above, can be seen at Here’s a response to an inquiry of today:


As for accentuating the positive, that would be good advice for someone who is running for office. We are not running for office. We are an advocacy group. We are seeking to make the government in office accountable and to be transparent. Stephen Harper and Jim Flaherty promised to bring a heightened level of accountability and transparency to Canada, if elected. Where is it? They also promised to never tax income trusts. They flip flopped and did the very opposite. They claimed that income trusts cause tax leakage, and yet provided zero proof to support the basis for their flip flop.

We simply want the facts. If income trusts cause tax leakage, it’s one thing. If income trusts don’t cause tax leakage then it’s another. Where’s the proof? Are we not entitled to proof, in light of all their other promises of being accountable and transparent and the promise to never tax income trusts? All Canadians should seek the truth on this issue since the truth is so easily determined, much like it’s easy to determine the balance in your savings account at the bank. Why the cloak and dagger mystery about alleged tax leakage? Where’s the accountability and transparency? Eariler I sent you the 18 pages of blacked out documents. Were you able to locate the answer to tax leakage in those papers?

Meanwhile the Green Party has called for a public inquiry into alleged tax leakage and the Liberal Party have asked the Auditor General to provide Canadians with an honest answer. The Auditor General can be trusted to be honest and non partisan in her assessment.

Accepting Jim Flaherty at his word has come at enormous personal and financial cost to many hundreds of thousands of Canadians across this country. Many who can least afford it. How would you like to learn at age 78 that your retirement income is about to be cut in half because of the Canadian Government? I can send you any number of personal testimonies from such Canadians who trusted this government on this issue that I am sure you would find heart wrenching. Surely they deserve an explanation for their abrupt hardship.

With proof will come trust. I seek to trust the government in office. To do that I need proof, not the empty words of a politician or political party.

Meanwhile, are you aware of the fact that Jim Flaherty’s law firm is the equivalent of an income trust? Ask Jim Flaherty how much tax is paid by Flaherty, Dow & Elliott (FDE). FDE is a what is called a Flow Through Entity, or FTE. Income trusts are FTE’s. Provided an FTE pays out 95% of its earnings to its owners, then the FTE itself does not pay tax. The owners will pay the taxes instead. Why can Flaherty, as a lawyer, do something and it is okay, and I do the same thing and it is considered bad? Meanwhile Jim Flaherty loves to preach about “leveling the playing field”?

Do we all have to become lawyers, like Flaherty, to get ahead? Imagine a world full of lawyers. We would all starve and be without shelter. There wouldn’t even be ambulances for insurance litigation lawyers to chase.

Canadians will only get as good a government as they demand. Good government has to be provided throughout a party’s term in office and not just fanciful hollow promises made at election time. If promises aren’t enforced by the voters, then the cycle of phony promises by politicians of all stripes, will continue on unabated.

Do you think that would be a good habit to continue? We are simply seeking the truth about alleged tax leakage and to stop the endless cycle of false promises from politicians who, if they are successful in such a scheme, are simply stealing your vote, and occasionally stealing your money or your neighbour’s hard earned savings.

At which point, I can start accentuating the positive, with a billboard entitled "Auditor General reveals the truth about tax leakage", since whatever her answer is, the mere fact we have an answer will be a major victory for transparency and accountability in Canada. Only then, can we hope to have good policy. One that is based on fact rather than dogma.

Tuesday, March 18, 2008

Harper lost Quadra due to income trust issue, has Mark Carney to thank

The Harper candidate from Quadra was interviewed over the weekend by CPAC and was asked whether there were any issues that constituents in Quadra were concerned about, more so than others, as follows:

CPAC reporter: “Is there anything that the [Harper] government has done to hurt you?”

“Welllll.....I think there are a lot of people unhappy about the way the income trusts were treated” Harper Candidate Deborah Meredith

Here were the results of that byelection. And to think, Harper overruled the BoC Board to appoint income trust fraud artist Mark Carney as Governor of the Bank of Canada. Proof of fraud? Read the ways and means motion as a start. Or this account of past misdemeanors.

Meanwhile, here's the number that Mark Carney did on Quadra's byelection results"

Conservative Deborah Meredith 7,283

Liberal Joyce Murray 8,141

Swing factor: 429 voters who would have perhaps otherwise voted Con, but voted Liberal.

Full CPAC interview here

As for Mark Carney, perhaps there is an alternative explanation, such as the one offered up by Senior Department of Finance Official, Brian Ernewein, who testified before the Income Trust Public Hearings that on the matter of their alleged tax leakage numbers being highly suspect: "I guess if we were incompetent, we would not admit to it."

Cadman and income trust scandals on the campaign trail

Here is a very telling 3 minute interview by CPAC of the Liberal and Conservative candidates in the Quadra byelection, while they were out campaigning recently.

Note the role that the Cadman scandal and the income trust betrayal play in the minds of voters and as acknowledged by both candidates. The best is at the end. I think those admissions weren't sanctioned by the PMO.

These two issues are certain to play a major role in who forms Canada's next government:

Monday, March 17, 2008

When will Harper come to the rescue of the falsely imprisoned income trust investor?

Mexico sure is a backward place for anyone to get justice.

Just ask Brenda Martin who has been falsely imprisoned on trumped up charges.

Mexico is getting as bad a reputation as Canada and the events of Halloween 2006, when Jim Flaherty thought he would make Canadians saving for retirement more captive to the financial wares of Corporate Canada.

The democratization of the Canadian Capital markets was not in the interest of those extremely narrow interests who felt threatened by Canadians' clear preference for the investment model known as income trusts.

To bring about this false captivity of income trust investors, simply required a set of false trumped up charges. The foremost of which was the fraudulent claim that income trusts cause tax leakage , or the false claim that income trusts have a negative effect on the economy.

Now that former Prime Minister Paul Martin has been to visit jailed Canadian Brenda Martin in jail, Stephen Harper is in catch up mode. So he dispatched Jason Kenney to Mexico to secure her release. Dispatching Jason Kenney to Mexico conjures up two very “income trust moments”. One was the raucous Jason Kenney town hall meeting reported on Global News and the other in the Globe and Mail, as follows:

"Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada [but not a registered lobbyist], even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources."

Brenda Martin was charged with being involved is some internet fraud scheme that was masterminded by Alyn Waage that bilked investors of over $60 million. Meanwhile back in Canada we have Jim Flaherty masterminding (is that an oxymoron?) the income trust scam that has bilked investors of over $35 billion of their life savings. Hence the Liberals and Green, parties have both called for investigations into alleged tax leakage and to ascertain the truth.

Maybe then we can get some justice back into the Canada, and free Canadian trust investors from their false imprisonment. Maybe we should make Brenda Martin our spokesperson. I understand she is quite effective at awakening the moribund Canadian press, who wouldn’t know an injustice if it came up and robbed them blind and threw them in jail or tax leakage if was hidden under 18 ages of blacked out, trumped up documents

Stephen Harper wants to put Canada on the map

Unfortunately this is not the map you want to be on. This particular map indicates (in red) the countries in the world where it is a criminal offense to criticize the government in power.

As for Canada's creeping inclusion on this map, one need only acknowledge Stephen Harper's penchant for threatening legal action to create chill amongst his opponents in the official opposition. he uses the same chill tactic with senors bureaucrats such as the Head of the Canadian Nuclear Regulatory Agency, the Canada Wheat Board or Elections Canada.

Stephen Harper is however his own worst enemy, since on the Cadman matter he issued his own unequivocal self incrimination, by stating:

"The insurance policy for a million dollars, do you know anything about that?" Zytaruk asks.

"I don't know the details. I know that there were discussions," Harper replies on the tape. "This is not for publication?"

"This will be for the book, not for the newspaper," answers Zytaruk, who works for a Surrey newspaper.

Harper goes on to explain on the tape that the offer to Cadman was "only to replace financial considerations he might lose due to an election." He adds that the offer was carried out by people who were "legitimately representing the party."

He also tells Zytaruk that he knew there was little chance Cadman would agree.

"They wanted to do it, but I told them they were wasting their time. I said Chuck had made up his mind," Harper said.

Here's more on the map that you actually don't want Canada to be on. The best way to avoid that outcome is to remove Harper from office:

How to use the map:

The purpose of this map is to raise awareness of the growing problem of government-imposed restrictions and sanctions that limit access to online information and restrict the free expression of opinions, beliefs, and ideas. The .pdf version of the map will be continually updated with notes to track specific incidents, country-by-country, as information becomes available.

Freedom of expression:

“Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”
—Article 19, Universal Declaration of Human Rights, UN General Assembly, 1948
Data Source: Freedom in the World 2008, Freedom House

To learn more about this issue, visit the following sites:

John McCallum: of Flaherty, Bell and taxes

Flaherty, Bell and taxes
Financial Post
Published: Saturday, July 07, 2007

Finance Minister Jim Flaherty needs to clarify his position on tax-deferred vehicles and whether or not they cause tax leakage to the federal government.

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."

Essentially, what he has done here is given his blessing to tax-deferred vehicles for the 30% of Canadians who are fortunate enough to have a government-or corporate-funded pension plan while at the same time hampering the other 70% of Canadians who rely essentially on their RRSPs and savings for retirement. I wonder if this tax unfairness was deliberate or yet another unintended consequence from a Minister who is proving himself completely out of his depth with the Finance portfolio.

John McCallum, Ottawa

John McCallum is the Liberal party's Finance Critic

See also: Harper should fund RESP bill by halting BCE sale

Flaherty’s sage advice for Bear Stearns investors

In these troubled times of financial market uncertainty, it's always good to reflect upon the wise advice of Jim Flaherty, who remarked to a senior financial advisor at a bank owned dealer earlier this year, concerning the major losses on income trusts experienced by his clients, that:

“You can’t be much of a financial advisor if you don’t know that you don’t have a loss until you sell”.

As Finance Minister of Canada, I wonder if Jim Flaherty has ever heard of margin calls?

Perhaps Jim could give Henry Paulson a call and suggest he use that line with the holders of virtually worthless Bear Stearns paper:
“It’s only a loss, blah , blah”

I also wonder whether Jimbo has used that pristine logic of his on Purdy Crawford in resolving the Asset Backed Commercial Paper fiasco:. Something along the lines of :

“You can’t be much of a corporate lawyer and financial restructurer if you don’t know that you don’t have a loss until you sell”.

Meanwhile we are now entering a phase of the markets to which Jim Flaherty is tempermentally ill suited. Jim Flaherty is prone to panic when things look bad. Rather than gather the facts he is prone to rash action and reckless conduct.

Flaherty will gladly blame anyone, including premiers of provinces for his personal failings. Flaherty will even blame income trust investors for believing and taking stock in his income trust lies. Too bad we aren't buying his lie about tax leakage, as easily as people bought his lie about never taxing income trusts.

Just like back on Halloween 2006 when he panicked and responded to the pressure from those who had privileged access to him as recounted here is glory detail.

Income-trust crackdown: The inside story

I love Flaherty's fear mongering part about "clear and present danger". Sorry to say, but Flaherty himself is the "clear and present danger", not the threat to preserving BCE as a public company in the hands of tax paying Canadians, as opposed to a leveraged buyout rag tag basket case in the hands of private equity, which is the pathetic end result that Flaherty's ill-conceived income trust policy forced on to Canadians and one of Canada's iconic companies.

Thursday, March 13, 2008

New York has a Governor who pays for sex. Canada has a Prime Minister whose party pays for votes.

Problem was, Harper’s henchmen thought Chuck Cadman was a prostitute, when in fact the only prostitute was going to be the Canadian democratic system, had Harper’s henchman had their alleged ways with Chuck.

Time to chuck the henchmen and all those who were complicit is this disgraceful conduct, starting with Harper himself and his unequivocal statement of self incrimination:

“The insurance policy for a million dollars, do you know anything about that?" Zytaruk asks.

"I don't know the details. I know that there were discussions," Harper replies on the tape. "This is not for publication?"

"This will be for the book, not for the newspaper," answers Zytaruk, who works for a Surrey newspaper.

Harper goes on to explain on the tape that the offer to Cadman was "only to replace financial considerations he might lose due to an election." He adds that the offer was carried out by people who were "legitimately representing the party."

He also tells Zytaruk that he knew there was little chance Cadman would agree.

"They wanted to do it, but I told them they were wasting their time. I said Chuck had made up his mind," Harper said.


Green Party gives new meaning to the "Bell Fund"

I think the PR folks at Teachers’ are going to have to work overtime to come up with an explanation of how pursuing the inherently uneconomic LBO of BCE under current market conditions will be to the betterment of its 271,000 plan members that it’s so fond of invoking, rather than fully funding the RESP program as the Green Party upon the government to do.

I think Teachers’ plan members are keen on higher education, more so that lower returns. I also think the Bell Canada Act says that the company’s works are to be for the “general advantage of Canada”.

Harper should fund RESP bill by halting BCE sale

Media Release For Immediate Release

March 13, 2008
Harper should fund RESP bill by halting BCE sale VANCOUVER – The Green Party says the Harper government should cease threats to trigger an election over the Registered Education Savings Plan (RESP) private member’s bill, passed by Parliament last week. The bill would allow parents to claim income tax deductions based on contributions to RESPs and estimates put the cost in the area of $900 million or less per year. “Prime Minister Stephen Harper should stop attempting to subvert the will of Parliament by declaring this bill a confidence motion,” said Green Party leader Elizabeth May. “He could easily fund this tax cut by halting the attempted takeover of Bell parent company BCE by the Ontario Teachers’ Pension Plan. If Teachers’ takeover bid is successful, federal government coffers will be robbed of anywhere from $800 million to $1 billion in lost tax revenue. This money could be put to better use providing parents with a tax break on education savings.”

Because the $32 billion in borrowing required by the takeover bid would place the company deeply in debt, BCE earnings would be sheltered and therefore non-taxable. Furthermore, the government would collect no tax on interest paid to foreign banks according to new rules in the 2008 budget. Ms. May also pointed out that Teachers’ bid to become BCE’s majority shareholder violates the terms of the Pension Benefits Standards regulations, which clearly state that a pension plan may not own more than 30 percent of a company. Teachers’ is exploiting a loophole in Ontario pension law to break the 30 percent ownership limitation rule. “Mr. Harper is choosing to fund corporate takeovers which create no value for society while denying savings for our children’s future education. Student debt in Canada is now estimated at over $10 billion dollars and the government has a responsibility to help students emerge from this crippling debt load. It is in the public interest for Mr. Harper to stop the BCE takeover and use the tax savings to help parents keep their children out of debt. Isn’t this what Ontario teachers would want?”


Contact: Camille Labchuk Press Secretary 613-562-4916 ext. 244

Wednesday, March 12, 2008

Energy Trusts hope Auditor General will set the record straight on tax leakage

CALGARY, March 10 /CNW/ - Following a move by the Federal Liberals, members of the Coalition of Canadian Energy Trusts (CCET) are also asking Auditor General Sheila Fraser for a formal investigation into the tax leakage claims made by the government as a basis for its October 31, 2006 decision to tax income trusts.

"After 17 months and many requests for the details of the Finance Department's calculations, we remain stonewalled by the federal government on this issue," says Sue Riddell Rose, president and CEO of Paramount Energy Trust and co-chair of the CCET. "Neither we nor other experts could find evidence of tax leakage to back up the government's claim, so we are encouraged that the Auditor General may be able to set the record straight with an investigation."

In December 2006, the Coalition presented a 251-page report detailing the role played by energy trusts in the Canadian economy and outlining the expected negative results of the government's broken promise not to tax income trusts (Canadian Energy Trusts: An Integral Component of the Canadian Oil and Gas Industry). In the report, the CCET disputed the claim of tax leakage and publicly invited the government to disclose its calculations. The government has yet to respond.

A formal request through the Freedom of Information Act, seeking data on which the government based its decision to tax trusts, yielded no information other than blacked-out documents.

"Canadians deserve to know what facts the government used for such an important change in policy," says Riddell Rose. "This broken promise by the Conservative government continues to have lasting and disastrous affects on the average Canadian investor, and it has shaken the industry to the core. As advocates for our unitholders, many of them seniors, who were severely mistreated by the government with the sudden change in the rules, we will continue to press the government for the answers we've sought since the beginning." The CCET continues to believe that any concerns the government may have had about energy trusts can be rectified through communication and understanding leading to a solution that would not be so harmful to innocent unitholders.

The Coalition of Canadian Energy Trusts represents over 30 energy trusts headquartered in Canada and employing thousands of Canadians. It also represents the millions of Canadian unitholders who saw the value of their investments drop by $35 billion following the announcement of the so-called Tax Fairness Plan on October 31, 2006. More information about the Coalition and its partners can be found at

For further information: or to schedule interviews, contact: Daorcey Le Bray, NATIONAL Public Relations, (403) 444-1482,

Tuesday, March 11, 2008

“I am astounded” CRTC Chairman

Those were the words of Konrad Von Finckestein that began today’s CRTC Hearings, upon being notified that Teachers’ had received a letter from its regulator, the Financial Services Commission of Ontario, that stated that Teachers’ ownership of 50+% of BCE did not run afoul of the Pension Benefits Standards regulation that reads:

“the administration of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation”.

Teachers asked that the letter from FSCO be kept confidential on the basis that it contains “proprietary information”. The Chairman of the CRTC balked at this and ruled that the letter will be posted on the CRTC website, in its entirety, with the exception that the share price paid by Morcague will be abridged. It was clear that by the term “proprietary” that Jim Leech meant that Teachers had found a proprietary way around the pension rules that were satisfactory to its regulator.

The CRTC Chair made reference to the second last paragraph of the letter where it appears that the FSCO determines beneficial ownership of these shares by Morcague on the strength that he paid for them ,although we’ll never know how much.

Such a basis for the determination of beneficial ownership flies in the face of all legal precedent as described in our submission to the FSCO in a letter dated March 5, 2008. The Supreme Court of Canada has upheld the ruling that true beneficial ownership turns on the issue of which party has the right to direct transfer of ownership of the shares in question. In the case of the Morcague arrangement, Morcague does not have the right of transfer of ownership. Teachers’ does. The FSCO made the wrong ruling.

Meanwhile the CRTC is being deferential to the FSCO on a key aspect of ownership, even though in Jim Leech’s own words of today, the FSCO does not have the “authority” to make binding rulings. Meanwhile, left to his own devices, Konrad Von Finckenstein finds the FSCO letter and its conclusion to “be astounding”.

Who could argue with that? Apart from Teachers’ and its cozy regulator.

Sunday, March 9, 2008

The self-dealing sovereign wealth funds known as OMERs, Teachers' and PSP

There is considerable angst these days about the emergence of sovereign wealth funds. The concern being that these large pools of capital are designed to achieve sovereign ends through commercial means.

The exact same thing is occurring in Canada’s back yard through the activities of various provincial and federal public sector pension plans. These entities are better known as OMERs, Teachers’, Caisse de depot, CPPIB, BCIMC, AIC and the PSP. The self-dealing arises from the fact that these plans are funded by government, who in turn are affording these funds with special treatment that puts them at a distinct advantage to the 75% of Canadians who do not belong to pension plans.

One of the favorite and misleading tactics of these domestic sovereign wealth funds is that they constantly falsely portray who it is they are acting for. They constantly invoke their plan members as if these plan members derive benefit from the special provisions that these funds seek form various levels of government, when in fact it is the governments themselves as the plan sponsors who benefit from the special provisions of government. This is called self dealing. It is also called grossly misleading and inherently unfair.

A good example of this tactic in play was the testimony of Teachers’ CEO Jim Leech before the CRTC, where Teachers’ is attempting to break its own 30% ownership limitation rules, to acquire 50+% of BCE:

“Teachers' is responsible for investing the fund and administer the retirement benefits of 278,000 active and retired participants in the field of education in Ontario.”

Notice that there’s no mention here about the Plan Sponsor, the Government of Ontario. Why the wolf in sheep’s clothing routine? Admit it, Teachers’ is a domestic sovereign wealth fund acting in the economic interest of the Government of Ontario. No one else, except the employees of OTPP who get paid performance based bonuses. Teachers’ is not some altruistic enterprise acting in the greater public interest.

By falsely invoking their plan members, rather than their plan sponsors, these funds are exploiting the perception of “in the public good” as they maneuver their way around government policies and gain concessions from government. The examples of these are numerous. None more hypocritical than the “carve-out” the pension plans were handed by Jim Flaherty when he implemented his income trust tax. Here was the comment of Teachers’ on 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).”

This is as hypocritical a statement as ever there was. Teachers’ is no fan of discrimination, except when it is to their benefit and serves to discriminate against others, which is exactly what Flaherty’s income trust tax policy does, since it only applies to “public income trusts”. This provision was deliberately designed to afford the government sponsored pension plans with a bespoke tax carve out, since they can simply own these trusts as “private” trusts and be free of the 31.5% tax. As a practical matter, average Canadians can not own these businesses as “private trusts”, and are therefore grossly discriminated against.

The Canadian sovereign wealth funds rule. They can own trusts and average Canadians can not. How does this possibly address the problem of alleged tax leakage? It doesn’t. How does this possibly create a “level playing field”? It doesn’t. How does this possibly create "tax fairness"? It doesn’t. And how does Teachers’ derive comfort about “not discriminating”? They must be hypocrites or self dealing sovereign wealth funds to reach such a conclusion.

Wouldn't thay have been wiser to simply stay quiet on the matter?

This “carve out” for the pension plans on the income trust tax has been actively exploited by these sovereign wealth funds, with each of OMERs, Caisse, British Columbia Investment Management Corporation, Alberta and the Public Sector Pension Plan having acquired a public income trust to hold privately, since Halloween 2006. Meanwhile Teachers’ is acquiring BCE that was precluded from becoming a public income trust. It will now be held privately.

Teachers' and their US partners are taking $8 billion of their capital and displacing $32 billion of Canadians' investment and turning Canada's most widely held public company into a junk bond basket case.

OMERs’ CEO recently announced that their private equity strategy
will be focused on acquiring more of these undervalued income trusts and holding them privately and not be subject to the 31.5% tax, nor the arbitrary growth restrictions. These guys must be really great money managers. Just like shooting fish in a barrel.

Not satisfied with having the playing field tilted entirely in their favour by the income trust tax, these guys continue to want more in the name of their plan members. They keep crying to their plan sponsors, our very government to grant them ongoing benefits. Teachers’ is in effect arguing to its own plan sponsor, the Ontario government to turn a complete blind eye to the fact that acquiring more than 30% of BCE. Either directly or indirectly, is against its own governing regulations. So who does it got to for permission? The Financial Services Commission of Ontario.

To ameliorate the $35 billion loss sustained by income trust investors what does Flaherty do? He rubs salt in the wound, by granting income splitting. Foe whim you might ask? You guessed it. Pensioners. read: the 25% of Canadians who belong to pensions, namely those least likely to have been adversely affected by the income trust tax, however including all who belong to Canada's domestic sovereign wealth funds.

Meanwhile we have OMERs lobbying to have these restrictions removed. As the Toronto Star reported “the managers of the pension plan for the province’s police, fire and city workers want more power to push companies around. Managers want to assure a steady flow of cash from the $51.5 billion OMERs to supplement contributions from members and taxpayers.”

There we go again, falsely invoking the plan members to get special government dispensation. And invoking their retirement need as being of paramount importance.

Canadians need to awaken to the reality that the capital markets are a zero sum game. Whatever concessions are granted to these sovereign wealth funds are opportunities taken away from others. Why should sovereign wealth funds get to own income trusts and not pay the 31.5% tax. Why should sovereign wealth funds get to own more than 30% of a given corporation? After all, only 25% of Canadians belong to pension funds and 75% do not. Members of pension plans already have the better deal. Why would the 75% allow the 25% to have an even better deal than already exists.

These sovereign wealth funds that go by the names of Teachers’, OMERs, Caisse, BCMC, PSP and the rest of them have to go back to earning their money the old fashion way like the rest of us and not through special tax carve outs and wholesale freedoms to do for themselves and their government plan sponsors what they falsely portray to be doing in the name of their plan members.

Enough already. Teachers’ and the rest of them have to learn its not nice to be the capital market’s schoolyard bully and government’s teachers’ pet, all at the same time.

Meanwhile US legislators have awakened to the fact that these government sponsored pension plans from Canada are nothing more than sovereign wealth funds and have begun treating them as such as in the case of the CPP. The Globe reported that:

“In spite of the CPPIB's protestations, House subcommittee chairman Luis Gutierrez introduced the organization as a sovereign wealth fund.

Likewise, U.S. Federal Reserve Board general counsel Scott Alvarez told the subcommittee that, “broadly speaking,” a sovereign wealth fund is any investment fund owned by a national or state government.”

To wit: OMERs, Teachers',PSP. CPPIB. Caisse, BCIMC, AIC and whomever else that acts as sole agent for a provincial or federal government in Canada

Friday, March 7, 2008

Jim "Willy Wonka" Flaherty & his hypocrisy factory

Jim Flaherty had the potential to be something better than Canada’s worst finance Minister ever, if he had only taken an afternoon to learn the difference between "tax deferred" and "tax exempt". Failing which, he has proven himself to be a financial Neanderthal and complete hypocrite. Allow me to explain.

“Tax exempt” means that taxes are never paid or collected

“Tax deferred”
means that taxes are paid and collected at a later date.

This is where Jim Flaherty comes in. God help us all.

Jim Flaherty claims RRSPs are "tax exempt", when in reality they are "tax deferred".

It is clear that Jim Flaherty has a hate on for RRSPs. This is why he double taxes income trusts in RRSPs.

His logic is:

“As Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow, an obligation to pay for needed social, environmental and economic programs today, not tomorrow. I cannot, and I will not, fund today's programs from tomorrow's revenues”

This is where Jim Flaherty’s hypocrisy factory come in:

Jim Flaherty however tries to rationalize that Ontario Teachers’ buying BCE in debt levered buyout is okay, since:

"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,"

Why then doesn’t that same logic apply to RRSPs and income trusts?

Flaherty isn’t fooling anyone. Here’s what Laurence Booth, an expert in structured finance at Toronto's Rotman School of Management had to say, and who likened the Finance Minister's efforts to stem tax leakage to the title character in a Dutch legend.

"[Flaherty] is a bit like the Dutch boy who has his finger in the dyke. He plugs one hole but then, bingo, another hole pops up."

As such Flaherty thought it was okay to impose a $35 billion loss on Canadians' retirement savings with this lame logic of his and by treating tax deferred RRSPs as if they were tax exempt.

So what does he do for an encore?

He introduces the Tax Free Savings Account. Tax free meaning "tax exempt",as in no taxes ever paid or collected. Tax exempt meaning: “As Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow, an obligation to pay for needed social, environmental and economic programs today, not tomorrow. I cannot, and I will not, fund today's programs from tomorrow's revenues”


Flaherty is deserving of the Lifetime Achievement Award for Hypocrisy in a Leading Role.

Now we learn that Flaherty is opposing the measures passed by the House that would make the $5,000 allowable contributions to Registered Educational Savings Plans eligible for tax deferred status:

Ottawa vows to block education tax shelter

This from the very person who introduced the $200,000 Registered Disability Savings Plan in Budget 2007.

Let’s recap Flaherty;s hypocrisy:

Income trusts in RRSPs: "Bad", since they are tax deferred

Income trusts in pension plans: "Good", since they are tax deferred

Investments in Tax Free Savings Accounts: "Good", since they are tax exempt

Savings in Registered Educational Savings Plans: "Bad", since they are tax deferred

Savings in Registered Disability Savings Plan: "Good", since they are tax deferred

This type of hypocrisy is only lacking a name to make it acceptable. Might I suggest “leveling the playing field” or “Tax Fairness Plan”, or maybe the more accurate description would be "Registered Disability Savings Plan, Writ Large."

Thursday, March 6, 2008

Harper espoused his tolerance for corruption, back on November 14, 2007.

I got the impression back on November 14,2007, that I was the only one making this point: which was the observation that Stephen Harper was arguing for an acceptable level of corruption.

Hopefully subsequent events have made this point more obvious to all to acknowledge.

Back on November 14, 2007 when faced with the prospect that Brian Mulroney was knee deep into scandal with the $300,000 in cash he received from arms dealer Karl Heniz Schreiber, Stephen Harper argued for tolerance on the part of Canadians for corruption by stating his opposition to a public inquiry into Mulroney’s alleged corruption:

“This is not a route that I want to go down, and I don’t think that if the Liberal Party thought twice about it, it is a power they would want to give me.”

Harper thought he could negotiate (in public no less) such a pact of acceptable corruption with Stephane Dion through, you guessed it, bully tactics

This comment and tactic also demonstrates an innate acceptance on the part of Stephen Harper for corruption and dirty tricks. As for the “power” comment, that was very telling as well. Stephen the omnipotent.

As for subsequent events, as Michael Ignatief pointed out in question period today, we now have the Conservative Party involved in alleged tampering with elections at the municipal (Baird/O’Brien), national (Harper/Cadman) and international level (Brodie/Obama)

Stephen Harper thinks ethics are something to be bartered and determined on a relative basis. Such a philosophy of “I’ll call your sponsorship scandal and raise you one Cadman affair” is certainly a race to the bottom. Ethics are to be measured against standards that are absolute in measure and not relative.

We need to establish what are the acceptable levels of corruption. To do that, one need only look to the law and the spirit of the law and not whether a Liberal sponsorship scandal or a Belinda Stronach floor-crossing for a Cabinet post affords Stephen Harper with the prerogative to engage in a Cadman scandal with impunity.

That would truly be a race to the bottom.

Stephen Harper: fish or cut bait

Stephen, the time has now come for you to “fish or cut bait”, as you are so fond of saying and admonishing of others.

Just what exactly what is the interpretation that Canadians should take from the following, if not that you had knowledge, and possible direct involvement, in your party’s attempt to bribe Independent MP Chuck Cadman?

"The insurance policy for a million dollars, do you know anything about that?" Zytaruk asks.

"I don't know the details. I know that there were discussions," Harper replies on the tape. "This is not for publication?"

"This will be for the book, not for the newspaper," answers Zytaruk, who works for a Surrey newspaper.

Harper goes on to explain on the tape that the offer to Cadman was "only to replace financial considerations he might lose due to an election." He adds that the offer was carried out by people who were "legitimately representing the party."

He also tells Zytaruk that he knew there was little chance Cadman would agree.

"They wanted to do it, but I told them they were wasting their time. I said Chuck had made up his mind," Harper said.