Tuesday, July 15, 2008

Globe and Mail has deleted reference to the unproven nature of Flaherty's tax leakage allegations


The Globe and Mail printed a story today provided by Reuters. See below.

It has been “sanitized” by the Globe so as to reinforce the false belief that income trusts cause tax leakage with the words “Trusts are popular investment vehicles structured to pay little or no corporate tax” and the words “ Mr. Flaherty said the sector's growth threatened government tax revenues.”

The Globe deleted the following from the original Reuters news story, in order to provide an unbalanced account of the news:

“But critics of the trust tax, who say Flaherty has not been able to prove his tax leakage argument, took little consolation from the rules.

Brent Fullard, president and chief executive of the Canadian Association of Income Trust Investors said Ottawa dragged its feet on the conversion rules because it "bought compliance from the industry" on the controversial new policy.

The initial outcry over the tax plan was massive and market losses totaled more than C$20 billion.

"Why did it take 20 months? If nothing else, it reveals how little work they did beforehand," Fullard said.”




Ottawa releases rules on trust conversions

Reuters

July 15, 2008

The Canadian government released draft rules yesterday designed to allow income trusts to convert to a corporate structure without taking a tax hit. "We are guardedly optimistic that these guidelines will provide income trusts with the clarity they so desperately need to make structural decisions going forward," said George Kestevan, chairman of the Canadian Association of Income Funds. Finance Minister Jim Flaherty stunned investors in October, 2006, with a surprise plan to begin taxing the then $200-billion income trust sector as of 2011, backtracking on a Conservative Party campaign promise. Trusts are popular investment vehicles structured to pay little or no corporate tax, allowing them to pass on a steady flow of cash to unitholders as distributions. But Mr. Flaherty said the sector's growth threatened government tax revenues. The new tax prompted most trusts to plan to restructure as corporations.

11 comments:

Dr Mike said...

I just love the media in this country---they know who their masters are & are not afraid to show it.

Who needs responsible journalism anyway---the truth appears to be highly overrated from their standpoint.

It is a shame too because the media has the power to be the defining voice for the citizens of this country & not just the voice of some guys in an ivory tower with agendas of their own.

Perhaps , we all need to reassess the true value of the media & put it in a place more relevant to the worthiness of it`s content , like the bottom of a bird cage.

I continue to be disappointed in the media on a daily basis & there is very little hope of any resolution.

Dr Mike Popovich.

Robert Gibbs said...

Reminds me of their one-sided reporting and 'opinion' pieces after Harper and Flaherty first terrorized Canadian income trust citizens on that fateful day of Oct 31, 2006.

I believe their frivolous and grandiose headline the next day was something like "The Party's Over."

No wonder I discontinued my subscription.

Fred said...

Are you referring to the online or print edition of the Globe. The online edition includes the text which you claim was deleted. False accusation or assertions destroy credibility. That is why Flaherty has none.

Check it out and see for yourself:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080714.wtrusts0714/BNStory/robColumnsBlogs/

Anonymous said...

Fred:

Print or online?


I suggest Read the fist line of the blog for your answer:

"The Globe and Mail printed a story today provided by Reuters."

No false assertions from this individual (me).

Brent Fullard

Fred said...

I have compared Reuters' release and the article in the Globe and the only difference I can find is that Reuters has "Flaherty" while the Globe has "Mr. Flaherty". Reuters has had "Kestevan" whereas the Globe has "Mr. Kestevan".

Exactly what words did the Globe add or remove from Reuters' release?

Anonymous said...

Fred:

The PRINTED version of the story in the Globe omits the following:

“But critics of the trust tax, who say Flaherty has not been able to prove his tax leakage argument, took little consolation from the rules.

Brent Fullard, president and chief executive of the Canadian Association of Income Trust Investors said Ottawa dragged its feet on the conversion rules because it "bought compliance from the industry" on the controversial new policy.

The initial outcry over the tax plan was massive and market losses totaled more than C$20 billion.

"Why did it take 20 months? If nothing else, it reveals how little work they did beforehand," Fullard said.”

Fred said...

I have only seen the online version. From what you say then, the online version and the printed version differ. I wonder why? Is this because Flaherty's crowd only reads printed versions? Or, is the group most affected not that "online"?

Keep up the effort!

Anonymous said...

Fred:

Yes the two versions differ signtificantly....printed from online.

Obviously the Globe prefers that the "uproven nature of tax leakage" goes unreported to their mass audience, in the hopes that any challenges to the fundamental core of this policy get swept under the carper....for all to ignore and forget.

Some newspaper. I am reminded of Pravda.

Brent Fullard

Fred said...

Not just Pravda, how about a government of a totalitarian leaning?

My thoughts on the income trust issue.

The income trust decision reveals very clearly a fundamental deficiency with our government. It is not responsive to the general electorate. It is in the hands of vested interests.

The income trust decision, made behind closed doors, did not consult the electorate and was detrimental to many ordinary Canadians. It had nothing to do with fairness in taxation.

At a minimum, grandfathering existing trusts would have allowed promises to be kept and could be considered acceptable. However, eliminating the disruption of provincial corporate tax flows was also being addressed. Why else would all ten provincial finance ministers agree with Flaherty? What did he give them for their support?

The vested interests, from Canada's corporate community, members of “Club Canada”, despised the income trust structure. Pressure to convert to a trust would mount for some. Conversion would put them in a position of real fiduciary responsibility which, as majority shareholders they could easily circumvent to their benefit and to the detriment of non-controlling shareholders.

Considering the treatment of REIT the whole affair wreaks of hypocrisy. REITS must be controlled by another group of vested interests who find the structure advantageous to their interests.

The income trust decision also required breaking a promise. Rampant moral relativism appears to condone the continuing practice of breaking election promises.

Should opportunity arise, I would ask Harper the following questions: 1) Can government be trusted? 2) How to explain breaking a promise, clearly made, to a young adolescent? I wonder if he has any experience applicable to Question 2?

It is surprising how little outcry Canadians made, and continue not to make, considering that the tax leakage has never been publicly demonstrated, that the attempt to demonstrate it was preposterous and the subsequent denial that the destruction of the oil patch was related to the decision. But realistically, it should not surprise, ordinary Canadians see little hope of affecting “their” government. And government knows that Canadians will just grin and bear it.

Dr Mike said...

Fred

Excellent comments--you are spot on.

The amazing thing is that the gov`t got away with this without breaking a sweat & could not care less about the small investor.

Even Flaherty recently said that the trust index has regained it`s lost value--shows you either how little he knows or that he continues to be the master of the snow job--have I got spreadsheets for him.

Dr Mike Popovich.

Anonymous said...

Oh well ..The only thing I can do is to vote againist this Con gov't in the next election.

I will never Forget this betrayal by the Cons on income trusts. I voted for the Cons last election based on their stance on Income trusts.

Today, I feel that their is no real difference between the Liberals and Cons. They are basically liars and cheats. Liberals are the lesser of the two evils.