Friday, September 5, 2008

Is Flaherty himself guilty of "short-term, ad-hoc, subsidy thinking"?

Is Flaherty himself guilty of "short-term, ad-hoc, subsidy thinking"?

In January 2008, at the time of its greatest need, Flaherty flatly refused to invest a dime in the Ford Essex Engine plant saying any such investment would be "short-term, ad-hoc, subsidy thinking" and that “"politicians aren't very good at picking business winners and losers",

These two comments apply perfectly to Flaherty’s signature legislation known as the Tax Fairness Plan, which has been nothing but an exercise in a tax failure plan.

The Tax Fairness Plan was designed with the sole purpose of eliminating choice in the marketplace for both issuers and investors, in the fantasy belief that one size fits all and that the government alone knows best how to pick “winners from losers”.

Flaherty also coldly and cynically realized that he didn’t have a hope in hell of bringing this Manulife/Power Financial/BCE bespoke tax policy over the finish line if he did anything to upset the pension funds like Teachers’, CPP et al. As such, Flaherty resorted to a policy of gross discrimination by taxing RRSPs that hold public income trusts at 31.5%, but not taxing pension funds that hold private trusts in a like manner. Instead they are taxed at ZERO.

This very carve out is why OMERs is toady bidding for Teranet a public income trust and if successful will take it private. It’s their way of avoiding the tax and exploiting those existing holder who are faced with the imminent threat of paying this tax. This is called highway robbery, more specifically tax arbitrage highway robbery. It is also called “"short-term, ad-hoc, subsidy thinking". The subsidy comes from the fact that all these trusts that are being acquired under this pension fund loophole and by foreign private equity via leveraged buyouts on which virtually no tax is paid in Canada, which is presently costing Ottawa $2 billion a year in lost tax revenue relative to pre-Flaherty. Once the entire sector goes this inevitable way, the annual subsidy will increase to $7.5 billion a year, post Flaherty

As for picking winners from losers, hopefully the voters of Whitby-Oshawa will be able to see through to the incompetent person that they sent to Ottawa to represent them, in the form of Jim Flaherty, Minister on the Run.

Ford decision wasn't a Tory change of heart

Madelaine Drohan

Ottawa - The Harper government made it clear from the get-go that it was not interested in picking business winners and losers and would not be doling out the type of aid that companies had grown used to under the Liberals. Does its decision this week to lend Ford Motor Co. $80-million to resurrect a mothballed engine plant represent a change of heart?

Prime Minister Harper and Finance Minister Jim Flaherty struggled mightily to portray support for the ailing car maker as something new and innovative that fit within their previous plans and not just a politically motivated gesture aimed at bolstering support for two Conservative MPs with a tenuous hold on their ridings.

Mr. Flaherty had the toughest job because only last January he was calling similar aid by the government of Ontario "short-term, ad-hoc, subsidy thinking". He repeated comments made as far back as his days as a provincial minister that "politicians aren't very good at picking business winners and losers". His defence that the money would come from something called the Automotive Innovation Fund, which sounds all flashy and modern, was not entirely convincing.


Anonymous said...

Ad hoc?

Without a doubt.....ZERO public consultation after promising he would never tax income trust

Short term thinking?

Well thought whatsoever given to the infinitely predictable negative consequences of his actions, like the private equity leveraged buyouts of companies like BCE that has led to massive tax losses, major job losses and vastly reduced capital which Flaherty responds "ITS NOT MY FAULT".

Anonymous said...

I hope voters of Whitby see thru this snake-oil salesman. That is all he is. And the worst finance minister EVER in Canada.

Polyian said...

It's amazing the voters of Whitby elected him in the first place after the mess of debt Flim Flam Flaherty left in Ontario. Flaherty is totally incompetent.

Dr Mike said...

It`s a sad day indeed when the small public investor is stepped-on , gouged & penalized for investing in a perfectly legal market entity , whereas , pension funds are not.

Mr Flaherty , the question is why inflict a tax upon us but not upon Pension funds.

Perhaps you needed their support but we were expendable.

Thanks from the bottom of my heart.

Dr Mike Popovich.