Could it have something to do with the fact that they’re “owned” by Teachers and BCE?
On October 31, 2006, Jim Flaherty shocked a couple of million investors out of their shorts by dumping a 31% tax on income trusts. This was ten months after the Harper Conservatives won office by promising they’d never do such a thing. The reason given: If income trusts were not slapped down then giant companies like Bell would convert to trusts, and Ottawa would be out hundreds of millions in tax dollars.
As a result of that move, Bell was prevented from converting, which would have seen dividends paid to investors, who would have then paid income tax. About $800 million a year. Instead, Bell went shopping for new shareholders, leading to the takeover – about to happen – by the Ontario Teachers pension guys. To pull this off, BCE will be burdened with $32 billion in debt.
So, here’s the outrage: BCE will not be paying any corporate income tax this year or next year or the one after. Not a cent. Jim Flaherty just blew his foot off. Worse, a grossly-indebted company is now struggling, and on Monday laid off 2,500 people. There are thousands more to follow, I’m told.
This is another example of a government that has absolutely no idea of the consequences of its actions. Income trusts. Over-spending. Forty-year mortgages. Bragging the dollar up. And mighty Bell, now a mess of wires and junk bonds.
Monday, July 28, 2008
Posted by Fillibluster at 11:57 PM