As smug as some people may be that they didn’t own income trusts on that fateful Halloween, they shouldn’t be so smug if they own an RRSP, since Harper’s raid on income trusts was actually the first raid on RRSPs. The recently introduced TFSA is Harper's second raid on RRSPs.
Why? Because the Harper government and the devious civil servants in the Department of Finance are highly covetous of the half trillion dollars of tax deferred savings that are presently "tied up" in RRSPs. They want to get their greedy hands on these tax dollars at the earliest opportunity. Flaherty's recently introduced Tax Free Savings Account is merely a coy diversionary tactic to get Canadians' eye off the real prize, namely RRSPs.
One need only look at the income trust tax to get a sense for the broader tactical mission that is afoot by these insurgents in office.
The popular premise upon which the income trust double taxation was introduced was the notion that income trusts cause tax leakage. Such a conclusion can only be achieved if the taxes paid on income trusts held in RRSPs are ignored. By ignoring 38% of the taxes paid on income trusts, Harper and his gang of thugs lead by Mark Carney and Jim Flaherty were able to concoct a false story that income trusts cause tax leakage. They backed up this fraudulent claim with 18 pages of blacked out documents.
They subsequently demanded that these documents be returned. How very self-incriminating. Much like the tape with Harper’s acknowledgment that Chuck Cadman was offered (but declined) a $1 million life insurance policy.
By ignoring the taxes that are ultimately paid from withdrawals from RRSPs, the Harper government is seriously undermining the entire Registered Retirement Savings Plan system. The only benefit that the government confers upon Canadian taxpayers under the RRSP system is the ability to defer the payment of taxes on that limited portion of pretax income that can be contributed annually to an RRSP. For the government to then ignore these taxes that are being ultimately paid makes a complete policy mockery of what the RRSP is.
It is a diametrically opposed notion that on the one hand the government establishes a policy, namely RRSPs, that encourages Canadian taxpayers to save for retirement with pretax income, and then to establish a policy, namely that double taxation of income trusts, that can only be rationalized if the taxes paid on a popular RRSP savings vehicle are totally ignored.
The hypocrisy of the situation is made even more flagrant when the new taxation only applied to “public” income trusts and not all income trusts, including those that are private, like Jim Flaherty’s own law partnership of the purchase of Thunder Energy Trust by the Public Sector Pension Plan, who will hold Thunder Energy Trust as a private income trust and arbitrarily be free of the 31.5% tax and free of any of the arbitrary growth restrictions that would apply of it were “public”.
The ultimate hypocrisy of the situation was highlighted when Flaherty was attempting to justify the sale of BCE to Ontario Teachers’ and US private equity, an outcome that occurred as a direct result of his preventing BCE from becoming a tax maximizing public income trusts. His wise words of hypocrisy and selective justification were: "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 why do the taxes paid by Ontario Teachers’ pension plan retirees get counted and the taxes paid by RRSP holders do not?
Why does the government permit pension plans to own income trusts free of tax and yet RRSPs can not?
Why does the government then permit pension plan retirement income to be eligible for income splitting and RRSP income to not be eligible?
There is something very inconsistent and highly insidious going on here, especially when it is acknowledged that only 25% of Canadian have employer pension plans and 75% of Canadians do not. Which group do you suppose the architects of this disparity, people like Jim Flaherty and Mark Carney belong to? The 25% of the 75%?
Thursday, April 17, 2008
Harper’s raid on income trusts is a clandestine raid on RRSPs
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8 comments:
Canadians must indeed be a trusting people to believe that governments like Harper's are looking after voters best interests.
It is obvious that Harper and Flaherty are politicians that look after their interests first and voters last.
It is comforting to see that Harper is becoming Canada's version of Mugabe, a strongman with no real power base and ever more desperate to remain in power at any cost.
Perhaps the alleged Cadman bribe scandal and 'in and out' Elections Canada scandal will finally drag the CONs down.
I wonder when Canadians will wake up to the Conservative's attempts buy a majority with gimmicks like the TFSA and finally throw these bums out.
This whole thing looks more sickening the more I look at it!!
The small investor was shafted supposedly for the common good of all Canadians because we were an insidious drag on the Canadian economy & on the gov`ts ability to collect it`s fair share of taxes.
Who is believing this load of bull CRAP--unfortunately , most of the public at large--unless you were personally affected , it s tough luck----hooray for Harper & Flaherty , they saved us from that hoard of old freeloading trust investors wh o are ripping off all us taxpayers.
What a con job!!
All you have to do is read the comments from Tory bloggers concerning the trust tax--these people do not have a clue--the worst thing is , these are people that have been placed on these blog sites to attack us because their level of knowledge is supposedly better than most.
It was just too bad that the Auditor General got cold feet & placed the Cons ahead of her good name--now even that has been lost.
Thanks to Jimmy , RRSPs have become a joke--the TFSA would have been great if it had been established 20 years ago at a time when it could have done us some good--if you are retired , time is no longer on your side.
Well , thanks JIm for nothing.
Keep up the bad work.
Dr Mike Popovich
New Documents Reveal Flaherty Intentionally Ignored Rules To Award Speech Contract To Conservative Friend
DANIEL LEBLANC
From Thursday's Globe and Mail
April 17, 2008 EDIT
OTTAWA — Conservative Finance Minister Jim Flaherty ignored the warnings of bureaucrats last year who said there was no "reasonable rationale" to direct a $122,000 contract to a Conservative friend and speechwriter without going to tender, documents show.
A senior Finance Department bureaucrat told Mr. Flaherty on Jan. 22, 2007 that federal rules call for a competitive process to hire a communications firm for such a major undertaking.
"A competitive process is necessary to meet a requirement of this nature," Mike Giles, head of the department's corporate services branch, said in an e-mail to Mr. Flaherty's then-chief of staff.
But Minister Flaherty entered into a "verbal agreement" with Conservative friend Hugh MacPhie three days later to write the 2007 budget speech.
The terms of Mr. MacPhie's work were finalized in February of 2007 and the untendered contract was signed by Mr. MacPhie and Mr. Flaherty's then-chief of staff, David McLaughlin, on March 2. The contract was "not to exceed" $98,580, but the total cost [mysteriously] increased to $122,000.
Documents released under the Access to Information Act show that Mr. Flaherty justified the decision to hire Mr. MacPhie by pointing to his past work for the government and the fact he was "knowledgeable of the Minister's speaking style and approach."
However, federal rules state that the government must seek multiple bids for contracts worth more than $25,000.
When news broke earlier this year of the existence of the untendered contract, Mr. Flaherty was forced to acknowledge the "administrative function was not followed."
The newly released documents prove that the breach rested directly with Mr. Flaherty, and not with the bureaucracy.
"Mr. Flaherty gets a double blame for knowingly breaking the rules, and for implying it was not his fault."
The Access to Information documents show that Mr. Flaherty told civil servants of the desire to issue "a sole source contract" on Jan. 19. Three days later, Mr. Giles warned that it was not the appropriate process for this type of work.
"A contract over $25K would have to meet the contracting policy," Mr. Giles said. "Communications is a fairly widely available commodity, and therefore, it would be difficult to come up with a reasonable rationale that would allow you to proceed on a sole-source basis."
The Finance Minister also conveniently ignores the billions in tax revenues the government collects every year from pension and RRSP withdrawals (The annual income withdrawals are now in excess of $50 billion, all of which gets taxed as income by the current government). In other words, the current government doesn’t have to wait for tax revenues accruing in pension plans, they are already getting billions of dollars of tax today thanks to the contributions made years ago, and given up by previous governments. Previous governments gave up the claim to those tax revenues (contributions) so that future governments (i.e. this government) could benefit from the tax revenue that has been accruing in those accounts.
It is essentially a windfall for the current government. They didn’t have to give up the tax on the contributions (previous governments did), but they get the benefit of taxing the withdrawals ten, twenty or thirty years later. Therefore this government has to provide for current contributions so that future governments can enjoy the same benefit down the road. All they are doing is ”paying it forward”.
Flaherty does not care about the future , other than his own. He has the foresight of a Dew Worm & the financial savvy of a Gnat.
We are running out of options to save some of the trusts for our future. Without the credit crunch , the number of trusts would be much less that it is now.
Putting the Liberals in power Is our only hope.
Mary P from Rodney.
Mary:
Excellent points.
And absolutely & strategically, one cannot argue with your statement:
"Putting the Liberals in power Is our only hope."
Conservatives & "Friends Of Science" Anti-Climate Change Group To Be Investigated For Elections Financing Corruption
"In summary, this Conservative-linked "Friends of Science" funny business saw tax-deductible money flow from a community charity group through a University of Calgary trust fund, to mysteriously pay for anti-Kyoto, anti-Liberal radio ads in Ontario."
Mike De Souza , Canwest News Service
Published: Monday, April 14, 2008
OTTAWA - A radio ad campaign that attacked the former Liberal government during the 2006 election campaign was funded through so-called "research" accounts at the University of Calgary, a newly released audit has concluded.
The internal audit by the university revealed that the accounts, which received money from a community charity organization, collected more than $500,000 in tax-deductible donations.
The money was then spent to promote the activities of Conservative-linked anti-climate change group "Friends of Science", a Calgary-based group that includes former oil industry insiders.
Several sections of the audit, released to Canwest News Service under the Freedom of Information and Privacy Act, were blacked out by the university on the grounds that they may "harm an ongoing law enforcement investigation."
According to the audit, the radio ads ran in five markets of Ontario: Peterborough, Ottawa, Kitchener-Waterloo, London and Thunder Bay. The ads "were paid for from the accounts," and "may be considered third-party advertising under the Elections Act," said the audit.
The "Friends of Science" pledged in its own newsletters before the election to have "a major impact" on the vote, and it boasted that its campaign to change public policy "was working," after Prime Minister Stephen Harper's minority Conservative government was elected.
Complaints to Elections Canada have been filed, asking for an investigation into whether the "Friends of Science" should have registered as a third-party advertiser, as required by law.
The audit also revealed that some of the money was used to pay lobbyists and staff of the "Friends of Science".
"These payments should be further assessed to determine whether the activities of the consultants were political," said the audit.
Canwest News Service previously revealed that a Conservative spokesperson during the 2006 election campaign, Morten Paulsen, was also on a paid contract to do communications work for the "Friends of Science".
"In summary, this Conservative-linked "Friends of Science" funny business saw tax-deductible money flow from a community charity group through a University of Calgary trust fund, to mysteriously pay for anti-Kyoto, anti-Liberal radio ads in Ontario."
Flaherty’s Tax Policies Are Designed With His Own Personal Circumstances In The Forefront Of His Mind
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- Flaherty, as Ontario Treasurer, on the one hand advocated jailing the homeless, while at the same time introduced tax credits for private school just as his children were entering private school.
- Flaherty, as federal Finance Minister, breaks a Conservative election promise and drops a bombshell on October 31, 2006 with his new trust tax, ruining the savings and futures of ordinary average Canadians and retirees, yet exempts privately owned trusts and flow through entities such as his and his wife's law firm Flaherty Dow Elliott.
- Flaherty, as federal Finance Minister, introduced income splitting for seniors, but just for those with pension income like himself, and not for the other 85% of seniors without pensions or who won't benefit from such a measure.
- Flaherty, as federal Finance Minister, introduced the Registered Disability Savings Plan with tax deductible contributions of up to $200,000, for persons just like himself, his family and his third son who is developmentally challenged.
- Flaherty wanted to resurrect the Ottawa to Whitby-Oshawa Via train service, even though it was considered highly uneconomic, yet beneficial to him and his election prospects.
- Flaherty commits millions of dollars to a new Toronto to Peterborough Via train service, even though it is considered highly uneconomic, yet beneficial to him and his fellow Conservative MPs.
- Flaherty creates a new Tax-Free Savings Plan, which won't benefit most individuals who have little left to save, but will benefit wealthy people like himself and his wife.
- Flaherty introduces a $45 million program tailor-made to channel funds to his wife's pet project in their Whitby-Oshawa riding, with criteria that leaves no time for any other organization to come up with a proposal for a project.
Meanwhile, here is a story that some enterprising journalist may wish to track down.
Apparently, when Flaherty was part of Mike Harris's Ontario Cabinet, a number of schools across the province were deemed redundant, including one in Whitby. This property was purchased from the province by Flaherty’s wife after the town declared it had no interest in purchasing the property. One year later, apparently the town had a change of heart and purchased the land portion of the property from Flaherty’s wife at a price equal to what she paid for the land and building, leaving her with zero cost and the sole owner of the building.
No doubt land registry office records could verify or deny the veracity of this story.
This building was converted by Flaherty's wife from a school to a centre for handicapped children.
Is this the project into which these federal funds will now flow?
Who owns the facility itself that will receive the federal funding?
Flaherty's wife?
Inquiring minds need to know.
[With files from Brent Fullard and CAITI]
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