Friday, November 14, 2008

After Harper's income trust betrayal, many questions still remain




After Harper's income trust betrayal, many questions still remain

Financial Post
November 3, 2007
Brent Fullard

Stephen Harper broke his election promise to never raid seniors’ nest eggs through taxing income trusts, by doing that very thing on Halloween 2006. One year later the following questions remain:

Where is the government’s proof of alleged tax leakage? How could the proposed conversions of BCE and Telus into income trusts have had any effect on tax revenue when neither were paying taxes as corporations and were not expected to for several years? What policy advantage is there, now that BCE has been taken private through a highly debt-leveraged buyout, and which has caused a loss of the $793 million more per year BCE would have paid as an income trust?

How is the stated objective of tax fairness and levellng the playing field achieved when government-sponsored pension plans are allowed to own trusts, free of tax, in their private equity portfolios, while 70% of individual Canadians are not?

Harper wrote the following in the National Post on Oct. 26, 2005: “Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine”. If so, then why did he so abruptly and without notice or consultation reverse his promise, leaving investors with losses of $35 billion and their incomes reduced by 31.5% and in some cases 50%? How is this socially just or fair?

Meanwhile why are Jack Layton and the NDP supporting this policy when they profess to be against wholesale foreign takeovers of Canadian businesses and supposedly in favour of protecting seniors’ retirement savings? Where is Jack Layton’s and the NDP’s proof of tax leakage?

Taken as a whole, this is a travesty of democracy – starting with the breaking of a promise, the false premise for breaking the promise, the complete absence of consultation and the litany of adverse policy repercussions as the aftermath of a policy borne out of zero accountability and a complete lack of government transparency. Narrow special interests have successfully manipulated Canada’s New Government for their selfish ends.

Transparency and accountability are the cornerstones of a democracy. The real danger to Canadians is that the Conservative government is flagrantly undermining our democratic institution known as Parliament, if major tax laws are bring enacted and passed on the basis of their foundations being assumed to be true, when in fact no proof whatsoever has been provided by the government.

This is an extremely dangerous precedent to have established, since it gives extraordinary powers to the government to pass important legislation by invoking supposedly fact-based arguments that are devoid of fact-based evidence.

Stephen Harper, together with the Jack Layton and the members of their respective parties, are acting in concert to abrogate Canadian’s democratic institution known as Parliament. As such we are calling for a public inquiry to fully examine the matter of alleged tax leakage, particularly in light of the government’s announced reduction in corporate tax rates by a staggering 32%, from 22% to 15%, in 2012. If the original policy intent on income trusts was to “level the playing field” with corporations, then this changed tax regime for corporations announced by the government this week demands a reexamination of the extent to which these most recent measures will have tilted the playing field in favour of corporations and to the detriment of income trusts.

Brent Fullard
President & CEO
Canadian Association of Income Trust Investors

4 comments:

Ron said...

Wow - some people just can never get a life. While a few lost a bit on the policy shift, many benifited. If you are totally unaware of how the economic outlook of the world has changed in the last year you need to read a newspaper. If the only thing you can complain about Harper is he changed an economic policy in the face of a worldwide crisis, may I suggest you grow up. I am retired and I have lost more of my savings in the last 6 months due to the stock market tumble than anyone lost in Mr Harper's justifiable change of policy. Bitterness will eat you alive. Be happy we have a decent, competent PM and not a outright thief and thug we had for so long.

CAITI said...

Ron:

I dare say, you are the one who needs to get a life, or failing that get a few facts.

The recent turmoil in the markets do nothing to vindicate Harper's betaryal of the past. If anything, Harper's betrayal of the past simply demonstartes he is the last person to be trusted with solving the economic challenges of today.

The man is a charlatan of the higest order.

Meanwhile you seem intent on misportraying the facts yourself. Why is that? What could you possible mean by: "While a few lost a bit on the policy shift, many benefited."

Where's the analysis that supports such a nonsensical proposition? ALL CANADIANS suffered from Harper's income trust policy to the extent that there was no tax leakage in the first place, but now the $108 billion of policy induced takeovers has cause the loss of $1.6 billion a year in ANNUAL tax revenue to Ottawa. Where's that shortfall going to come from in the future?

Brent Fullard

Dr Mike said...

Ron

You stated that this policy was justifiable.

What do you mean exactly??

Flaherty`s reasoning was based upon tax leakage for which he issued the 18 blacked-out pages as proof---if you have the contents of these pages which would show the policy to be justifiable , I will be the first to admit it if I am wrong.

You also stated that only a "few" lost a "bit" but "many" gained.

If you consider 2.5 million a "few" who lost 35 million , "a bit" , & the likes of Manulife , Power Corp & BCE the "many" , then I suppose you are right.

The rich & powerful seem to count for a bit more than the rest of us .

Come on Ron , give us the 18 un-blacked-out pages ---I dare you.

Dr Mike Popovich.

Dr Mike said...

Ooooooops!!!!

The 35 million should read 35 billion.

I was so shook up by your statement Ron , that I had a brain fart.

My mistake.

Dr Mike.