Any one who actually thinks Michael Sabia pursued the conversion of BCE into an income trust for any reason other than to assist the Harper government in shutting down income trusts is either naïve or delusional. If I am wrong about that, then Michael Sabia in failing to get permission for BCE to convert to an income trust, will have to go down as one the world’s worst lobbyists, since this is a person who was extremely tied into Ottawa on both the political and bureaucratic fronts, having served in senior capacities in the civil service and having been appointed as one of 10 appointees to the NACC.
These connections, together with the easily demonstrated policy argument that income trusts DO NOT cause tax leakage, should have easily allowed the gifted Michael Sabia to have gained the requisite permission from the Department of Finance, where he worked a Director General of Tax Policy, for BCE to have converted to a tax maximizing income trust........assuming however that was his real goal, as opposed to playing some game with the public and his shareholders to kill income trusts through the faux crisis he allowed to ensue, and be falsely reported upon by the news empire at his disposal, namely BellGlobeMedia, now CTVGlobeMedia.
Now we have Michael Sabia becoming the CEO of Caisse, which is one of the largest pension funds in the country, which is a most unwelcome development for income trust investors.
These large pensions funds, like Caisse, were extended an exclusive carve out by Flaherty from the draconian 31.5% tax on income trusts and the growth constraints imposed on income trusts. Why? Because they got a separate deal from the deal that governs RRSPs. Why? Because they have clout with Ottawa and average Canadians do not. Thanks to Flaherty’s corrupt thinking, these pension funds are able to acquire the undervalued and devalued income trusts from average Canadians and through the mere act of taking these trusts private, the pension funds are absolved of paying the 31.5% tax or abiding by the growth constraints. This is Flaherty’s corrupt idea of leveling the playing field. Affording unfair economic advantage to the 25% of Canadians with pensions, that are being denied the 75% without pensions.
How does the mere act of taking an income trust private, deal with all the alleged evils of income trusts? By definition it does not, but then these alleged evils are all phantom evils in the first place and have zero basis in fact.
Flaherty created a situation where these pension funds are incentivised to act in a PREDATORY way, much like the incentivised predatory lending practices in the US subprime market, where the pension funds can pick up these devalued trusts and own them free of the 31.5% tax and the growth constraints.
Michael Sabia played a pivotal role in creating the false circumstances, or faux crisis, that provided the Harper government with the excuse it needed to renege on its election promise concerning income trusts. Now, as the head of the Caisse it will be interesting. and most hypocritical to see to what extent Michael Sabia exploits this enormous loophole in tax legislation that he helped create, as his predecessors at the Caisse have and as OMERs, PSP and many other advantaged pension funds have done so and continue to do so, as recently as the purchase of Teranet Income Fund by OMERS in December 2008.
Where are the Opposition parties, like the Liberals, when in comes to protecting Canadians from these grossly unfair tax policies and the obvious predatory practices that they have resulted in, and which were obvious from the outset were going to occur? Who is on first?
Saturday, March 14, 2009
Posted by Fillibluster at 11:21 AM