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.


Transcanada said...

Great post Brent! Flaherty's latest rant at Ontario is just another attempt to divert attention from his own mistakes.

Robert Gibbs said...

Let's not forget that Norman Bates (McGuinty) and the government of Ontario also benefited nicely from the IPO of Teranet Income Fund in June, 2006, conveniently just months before Flim-Flam Flaherty's treacherous and treasonous income trust announcement on Oct 31, 2006.

Having said that, let Dim Jim Flaherty continue spewing his venom.

Then, perhaps, Ontarians - and indeed all Canadians - will rightfully send him and his intellectually and morally corrupt CON cohorts to the netherworld of political purgatory where they belong.

Pocks on all their houses.

Dr Mike said...

"It`s not my fault , It`s Dalton`s fault" will be the new Flaherty cry into the wind as an election is fought sooner than later.

We all know that the tactic of blame-shifting certainly works--put the perception of wrong-doing out there often enough , & there will be some who will believe.

Flaherty is just hoping that he can produce enough derision to get himself off of the hook as the economic crap hits the fan in Ontario.

It always surprises me how many folks can actually be fooled by this guy.

The problem is that he is consistently speaking out of both sides of mouth at the same time--the problem then becomes , which side do we believe.

Maybe the answer is neither.

Dr Mike.

Robert Gibbs said...

Mass Sex Scandal In Canada!

Forget the brew-ha-ha in New York over Governor Eliot Spitzer's sexual indiscretions, we have our own mass sex scandal right here in Canada.

Ever since the election of the CONservatives in 2006, Stephen Harper and Jim Flaherty have been committing mass buggery to the entire Canadian population for over two years now.

Income trust investors, seniors and retirees have been particularly "violated".

I suggest a metal-plated "chastity belt" to reduce the risk of becoming a victim of further "indecent acts" by this CONservative government.

Mary the Golfer said...

Flaherty & Sorbara are two peas in a pod & it seems neither can add. Can both of these men be so clueless that neither could see the obvious loss of tax that would occur.

If they were both that far out in left field that they didn`t notice that something was wrong with the calculations that were presented to them , then it is time for a change at both ends.

The government is no place for incompetence or shady dealings & it seems that if we get one then we will as a result , get the other.

Mary P