Wednesday, February 25, 2009

Flaherty’s income trust tax carve-out for pension funds, insufficient to stem their massive losses.

How is it that income trusts cause tax leakage when held in an RRSP, but not when held in a pension fund? Otherwise why would Flaherty have allowed pension funds to own income trust and not pay the 31.5% tax?

Does that strike you as tax fairness? Of course not. Flaherty’s Tax Fairness Plan is actually a Tax Arbitrage Plan that Flaherty handed over to the pension funds so they could exploit on a predatory basis the income trusts held by the Average Joe and bolster their own under funded selves. What form of government sponsored highway robbery is that? The federal governments ripping off taxpayers to the sole advantage of the Provincial sponsored pension funds? Any wonder that all 10 provincial finance minister sent in letter of support for Flaherty’s idea of a tax fairness plan? On demand, as it were?

Meanwhile this rip off of income trusts investors by the provincial plans, all of whom exploited the tax arb handed to them by Flaherty, are reporting major losses. What other corrupt practices are going on within these funds vis-a-vis the Harper Government? Notice how vociferous these pension funds like Ontario Teachers were during the Goodale round and how totally passive and submissive and outright supportive they became during the Flaherty round? It’s called being “bought off” with a bespoke policy carve out.

The Liberals should be outraged, as they created the RRSP over 50 years ago with the sole policy intent of allowing the Average Joe to use an RRSP to replicate the benefits of those with pensions? That concept has been defiled by Flaherty. Where are the Liberals on this? In bed with the pension plans themselves?

Also, where is the Toronto Stock Exchange on this? Why would the TSX roll over in the face of a 31.5% tax that only applies to PUBLICLY LISTED income trusts and not those self-same trusts when held privately? Is the TSX actively trying to go out of business by losing listings and allowing a market that has represented 50% of new issue activity to die......based on the government’s demonstrable lie about tax leakage. It is all beginning to feel quite incestuous to me?

Quebec pension giant Caisse posts $39.8B loss (February 25, 2009)..... Caisse group to buy Legacy Hotels Income Fund for C$2.5 billion ( Jul 12, 2007)

OMERS books $8-billion 2008 investment loss (February 23, 2009) ....OMERS buys Teranet Income Fund for under $2 billion, cuts price (October 28, 2008)

Public Sector Pension Plan picks off Thunder Energy Trust for $4.00 per unit, even though it is exempt from new trust tax ( April 26th, 2007 )

Lots of other examples of the Tax Arbitrage Plan in action have occurred, that are too numerous to list.


Anonymous said...

Policy by Roulette Wheel?


Dr Mike said...

How many ways are there to say "sold down the River" , "screwed again", "got the shaft".

This is indeed sad when all levels of gov`t conspire to kill off a bunch of old folk`s livelihoods & the income of other small investors for their own gain by killing the best investment vehicle Canada has ever seen.

These clowns fabricate proof that turned-out to be unpresentable---they could not even justify the tax & yet it passed.

Gross misconduct on the part of all involved & that includes the politicos that voted for it & the compliant media who continued their butt kissing ways to placate a stonewalling gov`t.

Sad , sad , sad.

Dr Mike Popovich.

Anonymous said...

Sad sad sad?

Dr. Mike: Didn't you mean to say:

Predictable predictable predictable?

Kephalos said...

I've not given up hope that there will come a day when the movers of the Income Trust Crime against ordinary Canadians will be held to account.

When I say "account", of course, I mean trial and suitable punishment. There is no doubt in my mind that if the Income Trust Crime had been committed in the US, UK or other major economy, those responsible would be serving soup to fellow inmates.

The starting point here is Flaherty's blcked-out 18 pages. Lying to Parliament needs to be an indictable offense.

Dr Mike said...

Right-on Katie!!!

As Mike Holmes would say "those buggers"

Dr Mike.

Anonymous said...

I also liked Seymour Schulich's idea when he was on BNN and said the income trust decision was the worst business decision he had seen in 40 years.  Seymour said that politician's should  put  up 10% of their net worth and if they lie they lose it.


Dr Mike said...


Great idea!!

The 10% could go to the offended parties.

If they lie a second time , 20% , & so on till they are broke like the rest of us.

Dr Mike.