Saturday, July 26, 2008

Harper's idea of transparency



Show us the numbers, income trusts demand


STEVEN CHASE
Globe and Mail
December 7, 2006

Ottawa — The embattled income trust sector is demanding that federal Finance Minister Jim Flaherty release calculations justifying his claim that trusts are costing Ottawa half a billion dollars in lost tax revenue each year.

Private sector analysts have questioned Ottawa's figures and suggested the revenue bleed has been significantly overstated.

When he slapped a surprise tax on income trusts on Halloween, Mr. Flaherty justified it by saying the investment vehicles were costing Ottawa $500-million annually in lost tax revenue and warned this hemorrhaging could grow to threaten federal finances.

He also said that annual losses would have climbed to $800-million annually if Telus Corp. and BCE Inc. converted to trusts.

Trusts say they've yet to receive details from the Finance Department on how mandarins got the loss estimate.

"There's nothing backing up these numbers that Jim Flaherty has been throwing out," said George Kesteven, president of the Canadian Association of Income Funds.

"It's never been analytically substantiated."

The Globe and Mail has also requested the data from Finance.

Mr. Kesteven said work by some other analysts has contradicted Ottawa and concluded that income trusts are tax neutral, meaning they cost the federal government nothing in lost tax revenue.

One Calgary royalty and income trust analyst is trying to use the federal Access to Information Act to prompt Finance to release the detailed analysis it conducted to derive its tax loss estimates.

Gordon Tait of BMO Nesbitt Burns says his own work concludes that Ottawa reaped more, not less, tax revenue after firms converted to income trusts.

"We looked at 126 businesses that converted from equities to trusts between 2001 and 2005 to prove that," Mr. Tait said in a study.

"We found that on average the government stood to collect 2.2 times more in taxes by taxing the distributions of the trust than had been paid by the corporations prior to their conversion."

The Tories broke a campaign promise by slapping a levy on trusts, which pay few or no corporate taxes. They said this would apply immediately to new trusts but that existing trusts would be exempt from the levy for four years.

Separately, a move is afoot by the Bloc Québécois to try to extend the grace period for existing trusts to 10 years from four.

The Bloc has written Mr. Flaherty asking for the amendment when he introduces legislation to support the levy. The Bloc backs the trust tax, however, and say they do not plan to withdraw this support if the grace period is not extended.

The Bloc is also lobbying other parties to support the grace-period extension. The minority government situation means the Bloc and Liberals have the power to rewrite the trust bill in committee to extend the grace period to 10 years. The Liberals say they've not yet decided what they will do.

11 comments:

The Right is Where it's At said...

As things stand right now when will be the first year that income trust will have to pay tax?

Dr Mike said...

the right is where it's at said...
As things stand right now when will be the first year that income trust will have to pay tax?

July 27, 2008 12:52 AM

What do you mean by this??

The full trust tax begins in 2011.

As it stands now , the average corporate tax rate is just under 7%.

The new trust tax will be 31.5% minus the new adjustments to lower the rate for corporate tax leaving the tax on trusts to be grossly unfair if Flaherty`s true objective was to level the playing field between trusts & corporations.

Big difference between 7% & 27%.

So what is this guy up to.

Fairness certainly is not it.

Protecting Gov`t revenues is not it.

Hmmmmmmm.

Dr mike Popovich.

Anonymous said...

Blogger The Right is Where it's At said...

As things stand right now when will be the first year that income trust will have to pay tax?

This question can be answered in one of two ways, depending on what your true intent in asking the question is.

FIRST ANSWER:

The taxation of trust earnings is fully in place today, as all trust earnings are fully taxablr in the hands of their owners. The Department of Finance will tell you that the average rate of taxation of trust distributions, which represent 95% of the underlying business, is 38%. I repeat 38%. If you don't like that number then talk to the Department of Finance.

SECOND ANSWER:

Depends upon what knid of trust you are talking about. If you are talking about a REIT, the answer is never. If you are talking about a trust held privately by a pension fund, the answer is never. If on the other hand you are referring to a trust like Prime West Energy that was acquired for $5 billion by Abu Dhabi Energy by way of a levergaed buyout loan whose interest is dedcutible against earnings in the corporate model, then the answer is never. If you are referring to the income trust known s Flaherty's law firm Flaherty Dow & Elliot, the answer is never.

You see, there are so many loopholes and exceptions in this trust tax thing and absoultely no evidence of its alleged factual underpinnings, that to call it a Tax Fairness Plan is an abuse of the English language, not to mention an abuse of our Parliamentary system of democracy.


My advice to "the right is where it;s at" would be to try to acquaint yourself with a few of the rudimentary facts before displaying your profound ignorance on this subject in an attempt to be "cute" with your questions.

Meanewhile this fraudulent tax measure has one purpose in mind, which is to disenfranchise Canadians from their ownership of this country/ Simply look at the trust tax. Or better yet look at the simultaneous measure that Flaherty brought in under the direction of US Treasury Secretary Henry Paulson to ELIMINATE the 15% Canadian tax that foreigners used tp have to pay on interest payments on Canadian corporate loans.

So let me get this straight. Canadians are to be taxed twice on income trust distributions ( at 31.5% and then at their personal rate of taxation that averages 38%) and yet if those same distributions were structured as interest payments then US investors would pay ZERO.

Brilliant. Morons. Send in the clowns.

Have a nice day. Enjoy the real tax leakage of Harper the Bozo.

Brent Fullard

Anonymous said...

Hey "the right is where it's at"

I visited your blog site for the better part of 10 seconds. Long enough to see your motto of

“The Truth Shall Set You Free”

I couldn't agree with you any more.

Apparemntly we may have a different view on how that principle is applied in the real world/

If you didn't realize it, which is quite possible, this blog posting entitled "harper's idea of transparency" as well as the entire income trust issue (Read: betrayal) turns on the question of the "truth".

You see there is nothing ambiguous and vague about the concept of tax leakage. As with your bank statement there only is one truth.

So where is it? Where is Harper's truth about tax leakage. Why all the mystery and subterfuge? Why invoke nonsensical arguments about nation security to hide the truth from Canadians.

Please either live by your motto of "The truth shall set your free" or get a new one. Perhaps "Lie Conceal Fabricate will make Canadians into indentured servants"

That has a nice ring to it don't you think?

Please advise.

Brent Fullard

Mary P said...

the right is where it's at said...
As things stand right now when will be the first year that income trust will have to pay tax?

July 27, 2008 12:52 AM

If you have something to say then spit it out.

Quit beating around the bush making it look like we got a break for 4 years.

This trust tax was unsubstantiated no matter how you look at it. It won`t be any more fair in 2011 than it is now.

Mary P.

PS--maybe you can tell us what is on the 18 blacked-out pages of proof for tax leakage.

The Right is Where it's At said...

I just asked a simple question when they would be taxed. In which I got the answer thanks.But then I also get attacked.People I think you should just relax. I meant nothing by it period. Do you attack people just because they ask a question? You see I thought this blog is here to inform people about income trust. Silly me I guess not!

Anonymous said...

Dearest The right is where its at:

My sincerest apologies for assuming your question was actually a rhetorical one, more intended to make a point that to gather some very basic rudimentary facts.

In your search for the truth, if in fact that was the purpose of your question, you would be much wiser to ask questions that begin at the beginning rather than marginal questions that deal with the policy itself which is starting at the end.

Better to know whether the policy's underpinnings have any validity or proof to them, since a very wise man once said "“The Truth Shall Set You Free”.

Hey, come to think of it, that was you!

Now prove to us that you actually believe in your own words and whether you are deserving of the moniker "wise man".

If not I retract that statement of you possibly being "wise".

Let us know how you make out in your search for the truth, as contained in 18 pages of blacked out documents, in which taxes that are being remitted to the government are being ignored. Nice.

Brent Fullard

The Right is Where it's At said...

Dearest Mr. Brent Fullard let me make a few things perfectly clear here.

1) I'm not a member of the Conservative party of Canada or any other party as a mater of fact never was.

2) I never was a finance minister. I do not know Mr.Flaherty. I'm not and never was in any meetings with him. So when you say this:

"Let us know how you make out in your search for the truth, as contained in 18 pages of blacked out documents, in which taxes that are being remitted to the government are being ignored. Nice."

You really should be asking this to finance department why those pages were blacked out. I'm not going to speculate on the reason why.

As you know by now,that my politics are on the right of the political spectrum.

Now that said: Do I think that this Conservative government is perfect? "NO" of course not! But I do believe it is far better than the former liberal government that we have had in the last 13 long years. Just remember one think that we almost lost this great country that we all care and love so much. It was under a liberal government (1995). Believe it or not I did vote liberal in the 90's. But I digress.

Anonymous said...

Hey Mr. "right"

Thanks for that most edifying of self confessionals. What makes you think we even care about your past voting preferences? What brand of toothpaste do you favour?

But we are most appreciative of you confirming for us the hypocrisy that resides in yur motto "“The Truth Shall Set You Free”.

You have no interest in the truth as it pertains to our issue, as it would only serve to upset the world of your "imperfect" Cons, as you have described them.

Just think, you could actually subscribe to your own motto and help make these Cons into perfect beings.

But that would require some work on your part, so no point bothering.

Best wishes and zero admiration,

Yours truly,

Brent Fullard

The Right is Where it's At said...

Mr.Fullard:

"Thanks for that most edifying of self confessionals. What makes you think we even care about your past voting preferences? What brand of toothpaste do you favour?" "Colgate";)

Anonymous said...

Colgate?

Wow, what an extremely witty repartir