Confessions of a recovering Globe and Mail reporter

Globe and Mail reporter Derek DeCloet recently got eviscerated by his readers for the piece he wrote this past Tuesday entitled: “Jim Flaherty, trust investors' best friend. Seriously”

Readers’ comments are here . Assuming they haven’t been expunged.

As the article’s title indicates, this was a rather inane piece of journalism and a total distortion of reality. But the Globe is known for that. Income trust investors thank Jim Flaherty?

Obviously Derek felt under some pressure to defend himself to his readers after the article had appeared and made this rather revealing observation in an email to Bruce Benson of Calgary:

“You know what the sad part is? Income trust investors make some good points. The best argument you've got is on tax leakage. Flaherty's tax-leakage estimates are not only unproven, they are probably unprovable.”

As confessions of a recovering Globe and Mail reporter go, this is a pretty good start.

I have no idea what Derek means by “they are probably unprovable.” That’s just intellectual laziness......Hey, Derek we’re talking about a simple construct of arithmetic here. Would you accept this line of logic from your bank teller if there was a dispute over your bank account balance?

Of course you wouldn’t. So why would 2.5 million Canadians who lost $35 billion amd an essential investment alternative accept it from you or any one else?

This confession also reveals something else very disturbing, namely that Derek DeCloet and/or the Globe and Mail, obviously don’t do their homework.

The definitive study on tax leakage was done by HLB Decision Economics in collaboration with the Department of Finance during the Goodale consultative round in 2005. It proves there is no tax leakage.

That study was entitled “The tax revenue implications of Income Trusts dates" dated November 23, 2005

That's exactly is how I began my trek on this income trust journey by calling a former colleague at BMO Capital Markets and asked the simple question:

“Whatever became of that study that CAIF commissioned for the Goodale round? Did it ever get published? What did it conclude about tax leakage?”. I had the study in my hands two hours later and spoke to its author, Dennis Bruce, within 48 hours.

I guess I would make a lousy news reporter. Gather the available facts first, understand them. Speak to the author of the report. and then act. Meanwhile the Globe has had a better part of two years to do that, and they clearly have not.

Perhaps there is still hope for our recovering reporter, Derek CeCloet, although I am not holding my breath.

Meanwhile the other source of tax leakage numbers widely bandied about in the press, Jack Mintz, has totally discredited himself with this following admission:

“I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero”.

The question I have for Jack Mintz is the same question I have for Derek DeCloet, which is

“So what the hell are you doing about it?”

Admitting one thing in private and doing the exact opposite in public has a name. Actually several names. I prefer the term hypocrite.