Thursday, April 30, 2009

Explanation required please


On 5/1/09 8:29 PM, "Taber, Jane" wrote:

So sorry

Sent from my BlackBerry Wireless Handheld

Jane: Very good of you to say you are “so sorry” , as I caught wind of this comment contained your article in the Globe from a posting on the Toronto Star website. I really could not believe what I was reading with my own eyes, so I naturally went back to read the source (your article) from which the person had been quoting to confirm whether it was accurate or not. I read your piece and left with the interpretation that these were, indeed the word and thoughts attributed to Michael Ignatieff , when in fact you are now confirming they are Tom Flanagan’s. Never could their be two different ends to the academic and political spectrum than Micahel Ignatieff and Tom Flanagan. I was not alone in my misinterpretation of your article. Therefore out of sense of fair play and good journalism and the reputation of Michael Ignatieff. I would strongly encourage you to correct this widespread misunderstanding that exists amongst your readers that Flanagan and NOT Ignatieff is of the moral standing that: “As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe”

Thank you and knowing you will do the right thing, given that reputations are essential to whom we are.

Or as Michael Ignatieff himself has written...”“We need words to keep us human”. An essential aspect of which requires that they be the actual “words” of the “human” in question.

Brent Fullard


I think you have misread the quotation. The Globe is quoting Tom Flanagan about Ignatieff, not what Ignatieff is saying there.

It is poorly written but read it again after reading the prior paragraphs and I think you'll see.

"So far, however, Mr. Flanagan said, Mr. Ignatieff is improving and has made few missteps, with the exception of recent musings on raising taxes to pay down the deficit.

The problem lies in Mr. Ignatieff's years as a university professor. As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe."Flanagan is the gift that keeps on giving... to the Liberals. First he tells us that 'yeah, there is a hidden agenda' then he tells us that 'Harper's budget is bad but it is necessary for him to keep his job', he had the helpful comment that we are not any longer a "constitutional democracy but an electoral democracy" in trying to pretzel around the Constitution to say that the coalition was un-Constitutional.

And now he reveals the inner modus operendi of the Harper government.

Today’s Globe: The problem lies in Mr. Ignatieff's years as a university professor. As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe."

What became of Ignatieff’s “Canadians deserve the truth”. That is beginning to sound more like the incomplete thought that it is.

This is very disconcerting to hear, especially given that I have been totally perplexed as to why the Liberals are NOT exposing Flaherty’s TOTAL LIE about tax leakage or HIGHLIGHTING the fact that $100 billion in takeovers have been triggered by this policy causing the loss of over $1 billion in ANNUAL TAX LOSSES, a number that will grow to $7.5 billion, unless we can find some PAID ELECTED POLITICIAN who thinks their job is something other than “ mostly to conceal the truth.”

Just exactly who does the Liberal Party stand for in the income trust fraud: Taxpayers or Bay Street?

Explanation required please

$3.8 billion Chrysler investment 'not ideal,' Harper says

Stephen Harper must be hoping we all have short memories, because this was HIS IDEA for the auto industry a short two years ago, This doesn’t sound too “ideal” either:

Harper’s 'Green levy' hurts Big Three

Globe and Mail
May 30, 2007

OTTAWA, TORONTO — The Harper government's "green levy" tax on less fuel-efficient vehicles threatens investment in Canada's auto sector, a major lobby group warned federal lawmakers yesterday.

The Canadian Vehicle Manufacturers Association also cautioned that Ottawa's scheme to subsidize more fuel-efficient cars is distorting the market, sending more than two-thirds of the cash to Toyota Canada Inc. buyers, half of which will reach purchasers of a single model, the Yaris.

Ottawa expects to extract $110-million annually by a levy slapped on purchases of so-called gas guzzlers - about $55-million of which will come from autos sold by the Big Three U.S.-based auto makers.

"At a time when facilities are being closed in many regions of the world because of global overcapacity - including some in Canada - capital is no longer fixed and can be moved globally and every dollar on the bottom line is being counted," Mark Nantais, CVMA president, told the House of Commons finance committee.

"A $55-million tax is one more obstacle to explain as one develops its business case for new investment in Canadian operations," he told MPs sitting on the committee.

He warned that Ottawa's surprise 2007 budget move to dole out subsidies and penalties for purchases of various cars based on fuel efficiency is a historic intervention in the auto market.

"This measure constitutes, in my mind, the single most significant intrusion into - and disruption of the functioning of - the competitive automotive marketplace," Mr. Nantais said.

His group represents the Canadian arms of the Big Three U.S.-based auto makers: DaimlerChrysler Canada Inc., Ford Motor Co. of Canada Ltd. and General Motors of Canada Ltd., all of which have also spoken out publicly against Ottawa's auto "feebate" scheme.

In addition to lobbying Ottawa directly, Mr. Nantais made a presentation earlier this week in Oshawa, Ont., home of General Motors, where he urged Oshawa City Council to push the federal government to eliminate the feebate program immediately.

Conservative Finance Minister Jim Flaherty shrugged off concerns about his budget's subsidy scheme, saying it's inevitable some car makers will be upset if fewer of their models qualify for rebates than they would prefer.

"There's some line-drawing inevitably that happens there, and some companies are more happy than other companies about the line-drawing and they're talking about that with Transport Canada which is responsible for the line-drawing."

Mr. Flaherty suggested, however, that the fuel-efficiency cut-off point for the subsidy could be revised in the future.

"That can change over time," Mr. Flaherty said.

Feebates also penalize some technologies being developed in Canada and used in Canadian-made vehicles, Mr. Nantais said, pointing to so-called cylinder deactivation, which involves some cylinders of an eight-cylinder or six-cylinder engine shutting off when a vehicle is cruising, which reduces fuel consumption.

The levies from the scheme will cost Chrysler, Ford and GM $67-million while providing $47-million to Toyota Canada Inc., he added.

The Toyota Yaris consumes 6.4 litres of gas for every 100 kilometres it travels, which means it qualifies for a $1,000 rebate by falling below the line of 6.5 litres per 100 kilometres.

Honda Canada Inc. has already acted on its own by offering $1,000 rebates to buyers of its Fit subcompact, which competes against the Yaris, but uses 6.6 litres of gasoline to travel 100 kilometres. It misses the cut-off for the rebate by one-tenth of a litre

PGA penalizes Tiger Woods

In the interest of leveling the playing field of golf and to assist other players to win more tournaments, trophies, prize money and lucrative sponsorships and endorsements, the PGA announced today its new Arbitrary Golf Fairness Plan, in which Tiger Woods will be assessed with a 5 stroke penalty on all future PGA sponsored events.

The five stroke penalty assessed to Mr. Woods was determined by a review of his past performances in tournaments over the last five years in which he won by 5.2 strokes relative to the average of the top ten finishing players of each tournament.

This measure was the result of extensive lobbying of the PGA by other lesser players as well as the major providers of endorsements who found that there weren’t enough good players to go around and for whom the good players, like Tiger Woods, were becoming far too expensive to secure for product endorsements.

The measure was brought into effect by Jim Flaherty, formerly the Finance Minister of Canada, and a special advisor to the PGA.

In announcing this new program, Mr. Flaherty justified it by stating:

“You have to either leave it alone or fix it,” Mr. Flaherty shrugged Wednesday. “We were going to see too many players in the country not win tournaments. That's a clear and present danger to fairness in the PGA. I thought we had to act arbitrarily and capriciously."

Canada's Politicized & Paranoid Investment Board (CPPIB)

Below is the first of three incoming emails/phone calls I received from the Canada Politicized & Paranoid Investment Board (CPPIB). Each one escalated to someone higher in the apparatchik at the CPPIB

Why did the CPPIB attempt to stifle CAITI's right of free speech over CPP's income trust losses? So they lost a ton of money from Flaherty’s idiot income trust move. Big deal, what’s a measly $300 million anyway?

I am sure Flaherty did something, maybe in the way of bonuses or something to shut these guys up and have them ultimately play the “heavy” with no avail.

Or maybe Flaherty employed that concept, the term for which I learned from Elizabeth May....job blackmail?

I subsequently learned that the CPPIB was totally paranoid about these trust losses coming to light at the time of the one year anniversary of the great halloween Betrayal. Note the date when they first contacted me:

From: "Pedrosa, Manuel"
Date: October 30, 2007
Subject: Re: CPP has lost $158 million

Good Afternoon,

I would like to speak to someone about your scrolling marquee on your Web site that declares that the Canada Pension Plan has lost $158 billion as a result of Haper’s broken promises.

The only contact information on you Web site is this e-mail address.



Manuel Pedrosa
Specialist, Communications
Communications and Stakeholder Relations
CPP Investment Board
One Queen Street East
Suite 2600
Toronto, ON M5C 2W5

Tom Caldwell speaks on trusts, and Harper's lack thereof


Just listened to Tom Caldwell talking with Pat Bolland on BNN about buying back Canada's industry.

A very good interview! Tom touched on trusts as well and the dishonesty of our Government.

Just in case you missed it.


Happy birthday Stephen!

How do you plan to celebrate the big 5-0......raiding seniors’ nest eggs? the double tax on the donkey’s RRSP?.....snuff out $35 billion of Canadians’ life savings?.....carve out the pension fund turkey's? ....lie about tax leakage?

All the best birthday boy. Here are some media greetings just for you:

Today’s Gazette: Harper's in deep, deep trouble:

Today’s Calgary Herald: Harper turns 50 with nowhere to go but down

Today’s CFRB: Happy Birthday Stephen! Will you be staying?

My letter to the politicized CPPIB of November 2, 2006

Even before this $11 million bonus flap, Flaherty had ALREADY POLITICIZED the CPP

Date: Thu, 2 Nov 2006
Subject: CPPIB Supports taxation of Income Trusts?

Based on comments attributed to CPPIB Spokesperson, Ian Dale, I understand that the CPPIB came out yesterday in favour of the new tax to be levied on Income Trusts.

I find it highly unusual that the CPPIB would make such a statement on such a highly politically charged issue particularly when it directly contradicts the position previously taken by other prominent Canadian Pension Funds, namely Teachers. Would the fact that CPPIB answers to Ottawa have anything to do with it, whereas Teachers answers to its pension beneficiaries?

As I analyze it, there only exists two scenarios, either CPPIB presently has an investment in Income Trusts or it does not.

In the first scenario, why is CPPIB shooting itself in the foot by taking such a position, given that over the long term these new rules will result in a permanent impairment in value of some 30% of CPPIB's investment, whilst killing the viability and sustainability of this important asset class ( at least important to some Canadians...namely those seeking stable and consistent income for retirement.)

As perplexing as the first scenario may be, in some respects the second scenario is the most troubling as it calls into question the independence of the CPPIB from the elected officials in Ottawa. If CPPIB has no "skin in the game" why is it supporting these moves when it most negatively affects the income of retired Canadians. After all, I thought that's the business CPPIB was also in.

I look forward to your response.

Brent Fullard

Obama announces forced government merger of Chrysler with fiat

Obama announces forced government merger of Chrysler with fiat:

Fiat, Chrysler deal signed: newspaper website
Thu Apr 30, 2009 11:37am BST

MILAN (Reuters) - Italy's Fiat (FIA.MI: Quote, Profile, Research) and U.S. car maker Chrysler LLC CBS.UL have signed their anticipated partnership deal, Corriere della Sera newspaper said on its website on Thursday.

"Fiat-Chrysler, deal done. The signature is there," the website said.

Chrysler has been set a deadline of May 1 by the U.S. government to secure the survival deal.

(Reporting by Jo Winterbottom)

Congratulations to Caldwell Securities, who are against “The Sellout of Corporate Canada”

Click on image to enlarge.

cc: Bay Street, Fleet Street, Ottawa

When it rains, it pours.

For all of you who may not have seen today’s ad by Caldwell Securities, I refer you to the back cover of today’s Globe and Mail’s main section, regarding “The Sellout of Corporate Canada”

I applaud Caldwell Securities for speaking on this issue in such a clear and public manner. As the President of CAITI ( I share these same concerns as evidenced by our advocacy over the last 2.5 years and as evidenced by full page ads of our own such as the one attached that ran in the Toronto Star and Calgary Herald entitled Jim Flaherty’s Great Canadian Giveaway Sale as well as the ABC’s of BCE, to name but two such CAITI advocacy ads, both of which can be clicked on for your viewing pleasure, and total dismay in terms of public policy of the Stephen Harper government, by edict and concealment as opposed to by public consultation and empirical transparency and accountability.

I think the income trust giveaway sale was actually a phony “scratch and dent sale” in which the obvious parties were going to benefit from the “tax arbitrage” handed to them under the false arguments of “tax leakage” and “ponzi schemes”. Are Canadians really that gullible and passive to accept patent nonsense as the substitute for empirical evidence?

Surely those who manage other people’s life savings aren’t so passive and gullible. I am most pleased to see that Caldwell Securities is NOT passive on the obvious takeover of Canada by foreign interests and the role played by the obvious disparities in our tax code, many created by this government itself, such as the income trust tax, the restrictions on the growth of income trusts if publicly held by Canadians and the elimination of withholding tax on leveraged buyout loans, whose only purpose is to strip pretax earnings out of Canada. Stephen Harper has turnd Canada into a cleptocracy, from what previously was a democracy with, generally, the interests of all Canadians in mind, rather than the privileged few.

Interesting that Caldwell, like CAITI, is speaking from the perspective of INVESTORS and not CAPITAL USERS. Meanwhile the capital users are represented in Ottawa by whom? You got it.....self interested Corporate Managers with groovy titles like CEO and Director, the very people who got Ottawa to sabotage the only vehicle that gave Canadian companies a natural immunity from foreign takeover. Even Ottawa knew that to be the case, before they let Jim Flaherty and his Somali pirates have their way with Canada’s tax code that saw income trusts double taxed in RRSPs but not in the hands of others. This was premeditated piracy and has turned Canada into a cleptocracy if it is allowed to stand. See Steven Chase article entitled “ “Trust tax linked to private equity buyouts” on June 13, 2007.

Ottawa has to STOP taking advice from self serving corporate managers who profess to speak on behalf of the business owners who pay their salaries and lucrative bonuses and stock option and stop pretending to speak about what’s best for the country.
That reminds me of the expression of “What’s good for General Motors, is good for the United States”. Look where that mentality got the United States.....not to mention GM.

When I was the Executive Managing Director of Equity Capital Markets at BMO Capital a group of my colleagues made a huge pitch to Power Corporation to show them ways in which they could employ the trust model to their benefit. Usually after the monumental work that goes into such a pitche, you receive a lot of feedback. In that instance, the only feedback that was provided by the CEO of Power Financial was “Income trusts are bad for Canada”.

Well speak for yourself. What’s bad for Canada is Directors and CEOs who go to Ottawa to sabotage the very thing that they know their owners want, as reported by the Globe on November 2, 2006:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico.”

That’s Stephen Harper’s idea of public consultation...squeaky wheels with special access.

These corporate managers are very narrowly focused and are generally driven by greed. Since when did a corporate manager not like a foreign takeover of the company he managed? Really? So of course the advice that corporate managers lay on Ottawa, such as the advice of Michael Sabia or Dominic D’Alessandro or Paul Desmarais Jr, or Rick George of Suncor, on income trusts will be TOTALLY SELF SERVING. Even failed takeovers get rewarded under this corporate regime as witnessed by the $21 million “consolation prize” handed to Michael Sabia. These people motives of greed and vaiity, and often failed attempts at “empire building” are obvious, but what’s not obvious is the answer to the question:

Why are politicians such Pollyanna pansies? Are they too naive and inexperienced in the ways of Bay Street or too vain not to realize they are being gamed? Please wake up and start listening to the CAPITAL PROVIDERS who are the VOTING TAXPAYERS after all, as a group we OWN these COMPANIES that these corporate managers, cum saboteurs of tax policy, profess to represent.

In the Caldwell ad, the point is made: “Current worldwide economic challenges now present great opportunities for Canada....Government policies and taxation regimes should also be re-examined with this goal in mind...The investment merits of thinking bigger are clear.”

I have no idea where Caldwell Securities is coming from on tax policy, however my point has BEEN CLEAR and CONSISTENT from the OUTSET and supported by EMPIRICAL EVIDENCE and FACTS....Prove the income trust case...or drop the tax, as thoughtfully REITERATED by Diane Francis on the weekend and as highlighted as a concern with yesterday’s takeover of Eveready by US Clean Harbors Inc. for all the reasons described in the Department of Finance memo reported on by Steve Chase (above) and enunciated here:

Income trust fiasco should be reversed

Why the income trust issue REFUSES to go away...

No income, no trust

Why not take aim at the government?

Anonymous said...

Goodale brought income trusts up in the House today. Others did earlier this week. Why not take aim at the government?

CAITI said...

Why not take aim at the government?

For the simple fact that the Liberals are FAILING to prosecute this issue PROPERLY and are simply "dancing" around the issue.

The Liberals have had 2 and half years to message this issue properly and completely FAILED to deal with it properly in the 2008 election.

They are the Official OPPOSITION aren’t they?

Raising the issue in the House is INSUFFICIENT unless the Liberals tell Canadians that tax leakage is a LIE.

Or do you suppose in "Taking aim at the government, we will get them to admit that TAX LEAKAGE IS A LIE, after all, the tax leakage lie is only the SOLE BASIS on which this fraudulent policy was SOLD to Canadians and was the SOLE BASIS on how Harper got away with breaking his SOLEMN ELECTION PROMISE.

Meanwhile CAITI has been taking aim at the government with hundreds of BULLSEYE shots to the core of this policy.......meanwhile the LIBERALS KEEP MISSING THE TARGET COMPLETELY with their lams spitballs and paper clips questions that I almost think are intended to miss and inflict no har, insofar as this policy is concerned?

VERY disconcerting.

I look forward to being proven wrong.

Brent Fullard

Jim Flaherty's Great Canadian "tax leakage" Giveaway Sale

MacLeans’ Aaron Wherry writes about Question Period yesterday:

“Back came Goodale, surely ready for this: “Mr. Speaker, two and a half million Canadians remember that he said the same thing about income trusts.” The Liberal side stood to cheer.”

Meanwhile yesterday it is also reported, in the real world, that: Eveready Inc. (TSX:EIS). Energy signed a definitive C$464 million cash and stock deal to be acquired by US Clean Harbors Inc. (NYSE:CLH), North America's biggest provider of environmental and hazardous waste management services.

On December 31, 2008 Eveready Inc. converted from a growth oriented income fund into a growth oriented, dividend paying corporation, and thereby is still vulnerable to foreign takeover, making the takeovers from the trust tax policy total $100 billion and causing $1 billion in Annual tax loss revenue per year, or twice the amount that Flaherty alleged income trust were causing. If nothing is dome, this tax loss will increase to $7.5 billion a year, the equivalent of a 1.5% GST increase to be incurred by ALL TAXPAYERS across the country.

With all due respect Mr. Goodale, this issue is not about the 2.5 million Canadians, it is about ALL CANADIANS and whether Canada is a true democracy or not and whether Parliament passed legislation that is in the interest of ALL CANADIANS or whether it is passed to serve the narrow interests of a handful of corporate managers who did an end run around their shareholders to SABOTAGE an alternative that they didn’t like, but which they knew their shareholders wanted, so they went to Ottawa to put the fix in and Ottawa complied with this fraud of a policy that was premised on the lie about tax leakage.

These series of full page CAITI newspaper ads is what this issue is REALLY about. This tax policy madness has to stop NOW:

Lie Conceal here

Mr. Flaherty: Your tax leakage analysis is here

Jim Flaherty’s Great Canadian giveaway sale..... see above, or click here

Why is Jack Layton selling out Canada’s here

If Flaherty’s right, then 91% of Canadians must be here

Stephen Harper’s insidious attack on here

And ONLY “least” importantly, this issue is about:

I don’t want to be a burden to my here

Why can Diane Francis of the Financial Post (click here) get this right on April 25, 2009, and the Members of Parliament and the Liberals. NDP and Bloc CAN NOT? Whose bed are they sleeping in?

See also this April 7, 2009 article in Sun Newspapers across the country: No income, no trust

See also Hill Times major exposé of April 20, 2009: Why the inccome trust issue REFUSES to go away

Wednesday, April 29, 2009

Why can't Mark Carney answer a simple straight up fact based question?

Here we have a video in which Thomas Mulcair, Deputy Leader of the NDP and his Party’s Finance Critic asking Mark Carney whether the income trust tax achieved its intended purpose of addressing the “notion” (Thomas Mulcair’s word) that income trusts were causing a tax revenue loss, in light of the many takeovers of Canadian trusts by foreigners, such as the takeover of Prime West Energy Trust by middle eastern oil company?

Why can’t Mark Carney give a straight answer? This is not rocket science. What is he trying to hide, if not the same thing he was trying to hide with his 18 blacked out pages of so-called “proof”.

Meanwhile Deloitte (see below) has already answered the question that Mark Carney is EVADING in this video with Mulcair, in their study entitled: Income trust buyouts: Lots of activity little Tax revenue

Also view the Youtube tape (see below) of the Globe’s Eric Reguly on BNN stating that these trust takeover and the associated tax losses they produce are a “disaster” on the part of Jim Flaherty.

How long before we declare Flaherty’s “experiment” a FAILURE? The NDP can be heroes if they EXPOSE the TAX LEAKAGE LIE. So too the Liberals and the Bloc. Come on folks, what’s the hang up? Canadians aren’t sheeple.....or do you think we are?



ERIC REGULY: Click here


Mr Goodale: The tax leakage pandemic goes on UNABATED. Action required NOW

The Liberals have to get their head out of the sand on this income trust matter, as their INACTION and lack of ADVOCACY on the trust file and in exposing HARPERS GROSS LIE OF TAX LEAKAGE is contributing to tax leakage by allowing these trusts to be ACQUIRED BY FOREIGNERS such as this takeover announced TONIGHT. FAILURE TO act in OPPOSITION to this loss of taxes from these takeovers means the LIBERAL PARTY IS BEING REMISS and becomes COMPLICIT in these TAX LOSSES. Your action and advocacy is required NOW:

Eveready Inc. (TSX:EIS). Energy. Up on 5,370,941 shares on news it signed a definitive C$464 million cash and stock deal to be acquired by Clean Harbors Inc. (NYSE:CLH), North America's biggest provider of environmental and hazardous waste management services.

On December 31, 2008 Eveready Inc. converted from a growth oriented income fund into a growth oriented, dividend paying corporation.

Who is more credible: Jack Mintz or the NDP's Finance Critic?

Letter from Denise Savoie:

“Dear constituent: I have spoken with Judy Wasylycia-Leis, our party’s Finance Critic, she is confident that the government’s estimates of future tax leakage are accurate.”?

From: Jack Mintz
Date: Tue, 28 Nov 2006

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

If CPPIB claims to NOT be political, why did David Denison stiff arm me on this?

CNW Newswire: Attention News Editors:

Liberal Candidate for Whitby-Oshawa seeks information on the losses sustained by the Canada Pension Plan, as a result of Jim Flaherty's income trust betrayal

TORONTO, Sept. 11 /CNW/ - Today Liberal Candidate for Whitby-Oshawa,
Brent Fullard delivered a letter (below) to the CEO of the CPPIB seeking detailed
information on the losses sustained by the Canada Pension Plan, and therefore
all Canadians, as result of Jim Flaherty's income trust betrayal.

September 11, 2008

Canada Pension Plan Investment Board
One Queen Street East
Suite 2600, P.O. Box 101
Toronto, Ontario M5C 2W5

Dear Mr. Denison, President & CEO:

Re: The losses sustained by the Canada Pension Plan by Jim Flaherty’s Income Trust Tax

I am writing to you as the federal Liberal Candidate in the upcoming election for the riding of Whitby-Oshawa, the riding of Canada’s Minister of Finance, Jim Flaherty which as you know will be taking place on October 14, 2008.

It is important to voters in “Whitby-Oshawa” that their representative in Ottawa is acting in a responsible and prudent manner at all times. The same is true for all Canadians insofar as their Finance Minister is concerned. This inquiry concerns Mr Flaherty’s policy to tax an aribitrailiy selected subset flow through investment vehicles but not others, such as his law firm tax flow through vehicle Flaherty Dow Elliott & McCarthy, which pays no taxes.

In order to accurately inform Canadians of one of the many ways in which Mr. Flaherty’s policy to tax publicly traded income trusts, (and not all other firms of trusts, including REITs) negatively affects all Canadians, I am requesting from you detailed information on the “mark to market” impact of this tax on the public income trust portfolio holdings of the Canada Pension Plan.

I cite the following from your website:

“While the CPP Investment Board operates at arm’s length from governments, we are subject to very rigorous accountability requirements. Accountability is deeply ingrained in the CPP Investment Board's legislation, governance and in the policies and practices of the board, officers and employees.”

It is in this regard that I am writing to you, as Canadians are in need of accountability on the issue of the taxation of public income trusts and the impact it has had on their retirement assets within the Canada Pension Plan.

Unfortunately the level of portfolio disclosure afforded Canadians concerning the income trust holdings of the Canada Pension Plan and the timing of the tax announcement (October 31s, 2006) means that there is insufficient public information to make this calculation with absolute precision, due to timing differences and limited disclosure.

However a close approximation of the loss sustained by the Canada Pension Plan can be made, as follows.

On October 29, 2007 , the CPP income trust holdings (excluding REITs) held by CPP on March 31, 2007 had declined in value by $173,346,000 if those holdings had remained in place from the announcement date (October 31, 2006) onward.

On September 8, 2008 , the CPP income trust holdings (excluding REITs) held by CPP on March 31, 2007 had declined in value by $206,935,000 if those holdings had remained in place from the announcement date (October 31, 2006) onward.

We seek more detailed disclosure from you on the holdings of public income trusts by the Canada Pension Plan on October 31, 2006 and various points in time, specifically two weeks, six months, twelve months and eighteen months after the announcement as well as presently, in order to ascertain the absolute level of loss experienced by all Canadians and to demonstrate the fact that the loss incurred at the outset has been sustained over time, as is concluded from our analysis and as corroborated by the sustained loss in the broader income trust index.

In the event that the various investment positions held in the CPP have been sold at points during these various periods of time, please perform a “run down” analysis in which it is assumed that the monies received from the sale of public income trusts were not reinvested, but remained as cash at the time of sale to the end of the time period in question.

We request this information from you on a timely basis in order that your findings can be fully disseminated to the voting public. well in advance of the October 14, 2008 election date on this important policy matter affecting the retirement security of all Canadians, both inside and outside the CPP.

If you have any questions please call me at 647 505 2224 (cell)

Thank you in advance,

Yours truly

Brent Fullard
Liberal Candidate for Whitby–Oshawa
Campaign Headquarters
1540 Dundas St E.
Whitby ON
L1N 2K7

Hey! CPPIB already allowed ITSELF to be politicized !!!

Here we have the Globe reporting that the CPPIB is at risk of being “politicized”, if MP’s roll back some of the bonuses paid to CPPIB executives. This ignore the fact that the CPPIIB already allowed itself to be politicized by Ottawa/Flaherty on their reaction to Flaherty’s income trust tax, which the CPPIB came out an spoke in favor of. Perhaps those favourable statements by the CPPIB on November 1, 2006 are tied to very these rich private sector type bonus schemes at CPPIB?

Why would the CPPIB have spoken in favour of the income trust tax, if it caused them to lose $300 million from their IT holdings? Why would I have received 3 incoming calls from ever more senior people from the CPPIB to remove the statement that scrolled across the “news ticker” of the site that made note of the losses by CPP from Harper/Flaherty’s income trusts tax?

If that ain’t political then I don’t know what is? They have allowed themselves TO BE POLITICAL. Therefore Andy Willis’ arguments are AGAIN, the obverse of reality.

See: Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty

Politics threaten CPP Investment Board integrity

Andrew Willis
Globe and Mail
April 29, 2009

Canada runs a pension plan that's the envy of the world, crowned by a well-funded, professionally staffed, independent fund manager in the CPP Investment Board.

The integrity of that fund manager is in danger.

The problem is money – bonus money. CPPIB recruited top executives on the strength of two promises: They could make their own investment decisions, free from political interference, and their compensation would be comparable to peers in the private sector. On the basis of those guarantees, professionals left lucrative private sector jobs to run the country's retirements savings.

There is now pressure to break that second promise.

Grandstanding Liberal, NDP and Bloc members of Parliament grilled CPPIB executives yesterday over the bonus payments they will likely receive, despite expected losses at the fund this year. The $109-billion CPPIB fund was down 13.7 per cent or $13.8-billion in the first nine months of the year ended March 31, 2009.

The strongly-worded advice from a few MPs was to turn down long term bonus payments.

Bad idea, on every level.

The populist posturing from MPs could derail a very good thing for the Canadian people.

First, the CPPIB board worked long and hard to set up a compensation system that is largely focused on long-term performance – a big chunk of paycheques reflect the fund's results over four years. That encourages the long-term investment thinking a pension fund demands – managers have no incentive to swing for the fences to make short-term targets.

Second, the comp structure was set out in employment contracts. Companies don't tear up these contracts with employees without suffering grave consequences. Sticking with the swinging-for-the-fences analogy, a big league slugger with big-time guaranteed money still gets paid, even if the team doesn't win the World Series.

Compensation is a matter to be decided by the CPPIB's board, not by an MP in Ottawa.

And what seems lost on the MPs, who have their own gold-plated pension plan, is that CPPIB is likely going to outperform benchmarks. Yes, they will have lost money last year. Welcome to the club. But the team likely lost less than peers, or their performance standards.

If CPPIB executives are forced to turn down bonus payments, despite meeting performance goals, the best people on this team should quit, and some will quit. The fund's ability to recruit will be destroyed. That would be an enormous setback for Canada.

Why is it MPs can't step back from Parliament's partisan poison, and recognize that CPPIB fund managers did a decent job in a lousy market? Is everything in Ottawa about scoring points?

If you're wondering, here's how compensation broke for CPPIB chief executive officer David Denison in 2008: $475,000 salary, $1.2-million annual bonus, $1.9-million LTIP.

Tuesday, April 28, 2009

Reach for the flops....Ottawa edition

This comment
“It is very difficult to predict the next crisis,” Mr. Carney said Tuesday during testimony to the House of Commons Finance Committee. “One should never assume that because it hasn't happened that it won't happen.” April 28, 2009

Ranks with this comment:
“My own belief is that if we were going to have some kind of of crash or recession, we probably would have had it by now” Stephen Harper, September 15, 2008

Or this inane and incriminating comment:
“I guess if we were incompetent, we wouldn’t admit to it” Brian Ernewein, Department of Finance, at the Public Hearings on Income Trusts, when challenged about the Department’s bogus tax leakage claims February 1, 2007

Only the intellectually corrupt want to change the channel from "tax leakage"

Hello Diane,

Thank you for the article on income trusts. It is one of the few cogent pieces in the press these days not revelling in the froth of panic and disaster.

I wonder how this government can justify throwing billions of taxpayer money at companies who can't make products customers want while squashing a productive income trustsegment of our economy based on a false premise of "tax leakage".

Harry Truderung
private citizen

Talk about intellectually corrupt, here's TD Bank's take on things

This letter from Ed Clark’s office, below, is a very conniving little number.

In it, TD Bank is arguing that their customer, David Marshall should like the trust tax because it brought greater certainty, ignoring completely that the greater certainty that Harper had brought to David Marshall was an era to be forgotten. Huh? Sort of like, like it because you don’t like it. This letter obviously was “lawyered” before it went out.

Notice what is IMPLICIT about the known falsehood on the part of TD Bank on the matter of tax leakage, in the use of the words “plan is based on the assertion that the federal treasury has lost millions in tax revenue.”

Then in the next sentence, the “alleged” tax leakage takes on the form of “likely greater tax loss”? What an intellectually corrupt train of thought!

That pretty much confirms that TD Bank knew that tax leakage was a policy hoax. Remember Ed Clark was also the architect of the NEP. The NEP was intended to increase Canadian ownership of our energy sector, whereas the TFP has had the exact opposite having seen Prime West go to Abu Dhabi Energy and TransAlta Power go to Li Ka Shing. The rest of Canada’s 20% oil and gas sector in trusts is sure to go the same way.

Meanwhile all trusts need to be preserved, provided they don’t cause tax leakage, which Ed Clark is IMPLICITLY saying they don’t. Too bad that TD Bank never invested in a retail distribution network, and therefore was no where in the underwriting of income trust new issues. Is that a valid reason for people, like TD Bank customer David Marshall, to lose $35 billion an be deprived of investment CHOICE?

Dear Mr. Marshall,

Thank you for your recent email addressed to Mr. Ed Clark regarding the
Federal Government’s income trusts proposal and the Tax Fairness Plan.
I understand your concern about the changes affecting income trust
investments, as this is an issue that has been raised by others as well.

As you already know, the Minister of Finance’s plan is based on the
assertion that the federal treasury has lost millions in tax revenue,
and the belief that the growing popularity of income trusts would likely
result in greater future losses of tax revenue to the federal treasury.
As I’m sure you are aware, the Government of Canada began a review of
the income trust sector in September, 2005, leading to a great deal of
uncertainty on this issue. TDBFG considers the fact that there is now a
greater measure of certainty in the marketplace on this issue as being

I would like to thank you for taking the time to share your perspective
with us.


Sarah Kendall
Manager, Executive Response Team

Thanks to Harper, Mike Beath is now living beneath the poverty line

What a fraud for a policy that falsely claimed it would “strengthen Canada’s social security for pensioners and seniors” did it ever intend to do that, pray tell?

Diane Francis:

Thank You. I am one of the converted in any case, but thank you from the bottom of my heart. Thanks to Stevie, my wife and I are presently living below the poverty line for one reason only: We believed him when he said that "We will not touch Income Trusts". Yes the market crash also helped, but we were there prior to it.

I do have one Question for you: What reasons are there for not having more reporters probing this obvious cover-up?

Thanks Again,

Mike Beath

Our modern-day excuse for a democracy....

......CTVGlobeMedia and Torstar propagating patent lies about tax leakage.

Something rotten in the state of Canada?

Globe and Mail
April 28, 2009

In Elizabeth May's just-published book, Losing Confidence, she talks about how we suffer from collective amnesia. Quoting Jane Jacobs, the Green Party Leader says we seem to readjust rapidly without noticing all that has been lost.

Such is the case, says Ms. May, in respect to the pillars of our parliamentary democracy. They continue to rot, but we're sort of used to it by now. The media report the latest degradation and move on. A new year comes. Last season's abuses are behind us, allowed to stand.

Ms. May isn't about to let us forget. In her well-written book, she witheringly takes stock. She charts the total stranglehold the prime minister has on power - worse, she says, than ever before. She charts how freedom of the press has become the right of a few all-powerful owners - worse than ever before. She charts how our state police have become politicized and untrustworthy - worse than ever before.

"If Canadians," she writes, "heard about a country where a handful of people controlled all the news media, where the state police could deliberately interfere in an election ... where the prime minister enjoyed excessive power, we would justly picture a Third World nation that languishes behind modern democracies."

Ms. May describes last December's prorogation of Parliament as "breathtakingly anti-democratic." Never had a PM sought to end a session of Parliament within days of its opening. "Never in the history of modern parliamentary democracy anywhere in the world had a prime minister sought to shut down the government to avoid losing a confidence vote."

By way of a big-stretch comparison, she goes all the way back to England's Charles I. He, too, shut down Parliament when he found its restrictions unpleasing. In his case, it resulted in civil war and his execution.

In Canada, the drama was over in a couple of weeks. We've moved on, Ms. May says, the result being yet another precedent in place for the malfunctioning of democracy. What the PM got away with boggles her mind. How could he say Stéphane Dion did not have the right to take office without an election when it would have been perfectly legal and perfectly constitutional in a minority Parliament?

How about his near apoplexy over a coalition government? Here she cites Stephen Harper's own letter of 2004 to the Governor-General saying she should know that he and the opposition parties, separatists included, were prepared to work together as an alternative should the Liberal Parliament be dissolved. But, despite this, Mr. Harper was able to turn, "with his usual accomplices in the media," the idea of a coalition government supported by democratically elected Bloc Québécois members into some sort of monstrous power grab that outraged the Canadian public.

To hear Ms. May tell it, Canadians were hornswoggled. The advent of imperial prime ministerial rule began, she notes, under Pierre Trudeau and, under Mr. Harper, has reached its nadir.

It's not just this anti-democratic trend that has the Green Lady stirred. She weighs in on several others, not the least of which is the concentration of media power. Very few are prepared to talk about this issue. Certainly the media aren't. But Ms. May lets loose.

She revisits previous commissions on mass media that decried the trend toward too much power in the hands of too few media owners. The 1981 Kent commission said the situation had become deplorable. But if it were deplorable then, Ms. May makes the case that it's even worse now, with media monopolies crowding out independent voices. The public again is badly served. Governments won't move on the problem because the corporate media owners "tend to be the friends and power base of the parties most often in power."

Ms. May, who stays away from her environmental causes in this book, trashes NDP Leader Jack Layton for selling his soul to political expediency while he unjustifiably gave a free ride to the Liberals.

But the important thing is what she has to say about the system. Ms. May doesn't break new ground in this book. But she has pulled together the many distressing strands, enabling readers not just to see the trees but the whole ugly forest that is our modern-day excuse for a democracy.

Ignatieff's "Canadians deserve the truth" versus Harper's "Canadians must trust".

I have written extensively in the past how Stephen Harper’s letter of justification for his income trust tax double-crossing double-taxing betrayal was centered around the phrase used in his form email response of “Canadians must trust”. What an absurd proposition to ask of the electorate vis-à-vis their paid elected representatives, at the best of times, but how much more insanely absurd coming from someone who just broke his promise?

No doubt, the same line of reasoning was used by Rev. Jimmy Jones a as he fed Kool-aid to his masses with the chant of Canadians must trust. See here

Harper’s doctrine of “Canadians must trust” is why we have 18 pages of blacked out documents to support the loss of $35 billion of Canadians’ life savings and the justification for losing investment CHOICE.

Meanwhile, in a parallel universe we have the Auditor General saying; “Parliamentarians need objective fact-based information on how well the government raises its funds (taxes)”, and yet still no proof of tax leakage?

We also have the Finance Committee in a parallel universe writing as their number one recommendation that: “It is imperative that a democratic government be as transparent as possible when levying a new tax so that it can be held to account by its citizens. The Committee, therefore, recommends that the federal government release the data and methodology it used to estimate the amount of federal tax revenue loss caused by the income trust sector.” and yet this measure was passed by the Liberal controlled Senate and still no proof of tax leakage?

And finally we have the new Liberal Leader Michael Ignatieff saying that Harper’s income trust policy was an act of “VANDALISM” and that it was based on a “FALLACIOUS” analysis. All that is well and good, however it has to actually manifest itself in tangible terms, for Michael Ignatieff to announce his leadership by stating that “Canadians deserve the truth”?

It is becoming increasingly difficult to reconcile that rhetoric with the fact that Canadians have received NOTHING in the way of truth about alleged tax leakage and for us to observe on a daily basis the Liberals doing nothing about getting the truth about tax leakage. We need results. Only from results can we achieve inspiration. Words are useless, without clear action and conviction of purpose, otherwise this is just another exercise in Harper’s “Canadians must trust”.

To which my response was contained in my April 7, 2009 Op Ed in Sun newspapers across the country...........No income, no trust

Manulife and Power Corp.: Hoisted on their own petard

It is a well reported and documented fact that the “main movers” behind Harper’s income trust tax were the life insurance companies, Manulife and Power Financial (owner of Great West Life, and London Life).

So too was BCE, but that will be the subject of a separate analysis.

These life insurance firms had two distinct motives to kill trusts. What isn’t as well known is how their lobbying to kill income trusts served to hoist these two supposed "masters of the universe” (at least in politicians’ minds) on their own petard, but first let’s understand their motives:

(1) A given business formed as a Trust commands a higher value in the market for two reasons (and neither related to taxes proper):

(a) the requirement that it pay out 95% of its excess earnings to its owners, in order to preserves its trust status

(b) by convention, income trusts are not permitted by their owners to make non-accretive acquisitions, ie acquisitions that do not serve to increase distributions, by virtue of being uneconomic

(2) For these two reasons ALONE, there is a value “bump” to be had by converting to a trust. This creates pressure on management to effect such a conversion, which means a different lifestyle for management, one in which they have to work for a living and actually contribute incremental economic value added. Not a pretty picture for people who used to make “Hail Mary” acquisitions in the hopes they will work, or to accumulate excess earnings to fund large stock buybacks that trigger artificial stock price gains, into which stock options can be exercised and sold. For example, under a trust, Power Corporation would not have been permitted by its owners to have acquired Putnam in 2006, since it was a non-accretive acquisition.

Power hoisted on its own petard:
March 11, 2009: POWER CORP. WRITEOFFS “The main components of other items in 2008 were the write-down by Power Corporation of intangibles assets and goodwill relating to the acquisition of Putnam in 2007 ($983 million)”

(3) The LifeCos were having a tough time competing with the new kid on the block, namely the formidable income trust market, when it came to their own retirement investment products like life annuities and the like. Life annuities provide a modestly higher yield than a GIC, however when you die, there is no residual value to leave your children as an inheritance. Income trusts were higher yielding and their principal was not life dependent. Manulife wanted to get into the new area of variable annuities and did so, during the very week following Flaherty’s trust drive by shooting with a new product called Income Plus......that embodied market risk that Manulfe CEO Dominic D’Alessandro decided he was smarter than the market, and in order to drive higher earning (and higher stock option gains), he decided NOT TO HEDGE those risks. Throughout that whole time D’Alessandro was exercising his stock options.

Manulife hoisted on its own petard:
March 7, 2009: INSURERS PLUMMET TO EARTH, Financial Post: Kin Lo, a professor at the Sauder School of Business, said Canada's top insurance companies had strayed from responsible business practices."Insurance is about protecting people from risk and what we have seen is the insurance industry going out and seeking risk," he said . As a result Manulife stock dropped by 70%.

Here we have the two main proponents of the income trust tax., Paul Desmarais Jr. and Dominic D’Alessandro lobbying Ottawa to kill their competition, the effects of which are all negative including on themselves. This is a microcosm of the entire global financial meltdown, which can be explained by two things:

(1) People and organizations having the freedom to go “places” where they shouldn’t by virtue of lax regulations, and

(2) People and organizations being motivated to go “places” where they shouldn’t by virtue of their compensation arrangements

Power bought Putnam, a non-accretive acquisition because their shareholders had no say in the acquisition, and presumably the executives though they would be handsomely rewarded though stock options and the like. Two years later Putnam was written down by $1 billion. Manulife began selling life annuities that brought market risk to its balance sheet, but because it was never disclosed, then no one was the wiser when its CEO decided not to hedge these risks, for the sole purpose of inflating earnings. His stock options motivated this kind of gambling mentality and all throughout he was exercising them for gains. Two years later, Manulife’s value was tanked by this very act.

So why is Ottawa taking guidance from these people in the first place and not consulting with all Canadians and all market participants in a completely open and transparent way? This can not be permitted to occur again, since as Michael Ignatieff says:

"Successful countries knock down the barriers -- of red tape, regulation, and monopoly -- that divide citizens, confer unfair advantages or prevent people from working together"

Enough already with the unfair advantages being bestowed on the Power Corp’s and Manulife’s of this country

Ottawa has been completely GAMED by the managers of businesses that the capital providers own, in order to shut down a model that the owners prefer (ie income trusts) in order to permit the model that managers prefer (corporation), to persist and to be abused. What is wrong with this picture? Meanwhile the false tax leakage argument was the justification-at-large on which these narrow self interests were allowed to be achieved and falsely perpetrated on Canadians.

Is Ottawa up to the task to expose what is actually at play here namely a battle over who controls a company. The managers who lobby Ottawa, or the true owners who are being ignored and never consulted?

This is why tax Leakage MUST be exposed, otherwise Canadian democracy has been completely high acked by this crowd and owners are now taking instructions from the paid help, as was revealed in this Globe article of November 2, 2006:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

Jim's developing quite the little reputation?

Today’s Globe article on new credit card rules starts off with the line “He's the Finance Minister who suffocated the income trust sector and unleashed a deficit-inducing spending plan, but Jim Flaherty's most prominent legacy might turn out to be "the Flaherty box."

This is very insightful, since we have Michael Ignatieff referring to Flaherty/Harper’s income trust tax as being an act of “vandalism” that was premised on “fallacious” analysis and now we have the Globe likening it to infanticide?

These two descriptions are more like it, since Flaherty’s act of double taxing income trusts based on the falsehood of tax leakage IS an act of VANDALISM in destroying $35 billion of Canadians’ savings and was the act of INFANTICIDE by killing an investment choice that was essential to Canadians saving for retirement income and which represented the future of Canadian capital markets and a unique competitive advantage for all......except a corrupt and conniving few.

Hmmm......The Tax Suffocation Plan?.......I thought the purpose was to level the playing field, rather than level income trusts?

New credit-card rules coming
Globe and Mail
April 28, 2009

He's the Finance Minister who suffocated the income trust sector and unleashed a deficit-inducing spending plan, but Jim Flaherty's most prominent legacy might turn out to be "the Flaherty box."

He is expected to unveil new regulations governing credit cards next week, as governments ramp up efforts to clamp down on the industry in the wake of the economic crisis. Key elements will be the imposition of a minimum 21-day grace period, and a requirement for large-font disclosures about interest rates that are being likened by some to the warning boxes on cigarette packages, according to sources.

Ignatieff’s words of wisdom, inscribed at the Whitby Public Library

During the last election, in which I ran as the Liberal candidate against the incompetent and deceitful Jim Flaherty, a number of senior Liberals graciously offered to come out and campaign with me. Michael Ignatieff was the first to come and was followed by Bob Rae, Carolyn Bennett, Scott Brison and John McCallum. Rather than campaigning door to door, I thought a more effective use of Michael Ignatieff’s time would be if we held a press conference to re-announce the Liberals commitment of $1 billion to the Advanced Manufacturing Prosperity Plan (AMP) that had been announced in February 2008, but which didn’t have much profile during the election itself.

It was under the AMP that I had been successful in securing from the Liberal leadership a commitment to match the automotive commitments that had been opportunistically announced by Harper in the days leading up to the election, in the ridings of Windsor (Ford Essex engine plant). St. Catharines (GM Transmission Plant) and Oshawa (GM Car Assembly, where I myself had worked upon first graduating from university). Michael Ignatieff announced that the Liberals would do likewise and unlike the Harper CONservatives, we were actually good for our word, when making such commitments that affect people's lives.

The press conference was very well attended by both local and national media, and I had the opportunity to introduce Michael Ignatieff after first being introduced myself by Liberal MP Mark Holland. My introduction was completely ad-libbed and ended with me saying words to the effect of : “it is my privilege to introduce you to a person who is not only a man of words, but also a man of his word....Michael Ignatieff”

This is all a very long winded way of saying that I truly believe in that today, that Michael Ignatieff is a man of his word.

After the event had finished, a small group of us headed off to the beautiful new Whitby Public Library where I told Michael we had a small surprise for him there, as I wanted to show him something that he was completely unaware of and which predated his entering public life. Handsomely inscribed in the glass transom over the inner doorway to the Library appears the following (see attached):

“We need words to keep us human” Michael Ignatieff (1947 - )

How could Michael not have been impressed, which he clearly was. Here was this beautiful edifice to learning and to books that had been recently built in Whitby and his words had been selected by the Librarian’s board to welcome all visitors to the Library with Michael’s statement on the importance of words in keeping us human.

Just as we need words to keep us human, so too do we need numbers to keep us honest. This has been my personal pursuit since the afternoon of November 1, 2006 after making but ONE phone call to a former colleague of mine at BMO Capital Markets and asking the question: “What ever became of the study on tax leakage that was commissioned last year during the Goodale round? Did it ever get published? What did it show?”.

To my amazement and initial disbelief, he told me that it did get published and that it showed that income trusts do not cause tax leakage. I was not inclined to believe him and so asked him to courier it to me, whereupon I received it on the afternoon of November 1, 2006. Upon reading the report entitled: ”The tax revenue implications of income trusts”, I learned that the authors (HLB Decision Economics) had worked collaboratively with the Department of Finance to create the tax leakage model. They agreed on everything, data, assumptions, methodology etc. etc., but differed on only one key thing.....the treatment of the taxes collected by Ottawa on the 38% of income trusts held in RRSPs. HLB gave value to these taxes, whereas Finance assigned ZERO value. This one difference between HLB and Finance was the SOLE SOURCE of Flaherty’s and Harper’s allegations of tax leakage and the sole argument for why they broke their solemn promise to “never raid seniors nest eggs by taxing income trusts.”

Rather than flying off half cocked with this enormous revelation, I then tracked down the lead author of the study, Dennis Bruce, who I spoke with the next day and confirmed that my interpretation was correct, in that Finance assigns zero value to this certain stream of tax payments. This is so fundamentally wrong on so many levels including the most fundamental precepts of finance. However you don’t even have to know anything about finance to conclude that this is fundamentally wrong, when you stop and ask yoursel what does an RRSP actually confer on taxpayers apart from the ability to defer taxes on monies contributed to them? Nothing. That is the sum total of what an RRSP is, the ability to defer taxes on monies that have been set aside to save for retirement. That is the entire social purpose of an RRSP, to encourage Canadians to save for retirement by setting aside a limited amount of their earnings and defer the payment of taxes on those limited amount of earnings.

To create tax policy that deny this policy intention of RRSPs, is to render RRSPs invalid. Furthermore, in the act of not acknowledging the taxes collected by Ottawa from RRSPs, the government then turns around and taxes them a second time at the whopping 31.5%, such that income trust distributions get double taxed at rates as high as 62%. This is both an absurdity and a deliberate attempt to kill income trusts for a bunch of nefarious reasons advanced by the managers of businesses whi don;t want to follow the direction provided to them by their true owners, the shareholders. Meanwhile Flaherty then gave the pension funds a distinct advantage over RRSPs with respect to income trusts, as they can own these very same trusts privately and NOT pay the 31.5% tax/ This is grossly discriminatory and completely contradicts why RRSPs came into existence in the first place.

Therefore, we need the tax leakage numbers to keep us honest and to keep all of Ottawa honest and to restore true tax fairness and to make Parliament function like a democracy and not the cleptocracy that this bespoke policy represents, and for whom the real beneficiaries had been pre-ordained from the outset.

We also need to heed these other wise words of wisdom of Michael Ignatieff’s that I will close with. I hope the point being made here is obvious to all of you as it pertains to this income trust rip off, when Michael states:

"Successful countries knock down the barriers -- of red tape, regulation, and monopoly -- that divide citizens, confer unfair advantages or prevent people from working together" Michael Ignatieff

Please Michael, stop this absurdity of a policy, and pursue the truth about tax leakage. We need numbers to keep us honest, otherwise we are conferring unfair advantages on certain people to the detriment of others, in which case we have no hope of being a successful country, free of barriers, free of red tape, regulation and most of all, free of Manulife and Power Financial’s intended monopoly over our investment savings.

Please give them and their corporate ilk the royal boot, and give Canadians the truth that you say that Canadians so richly deserve.

We accept no substitutes for the truth, in either time, substance or commitment. This is a huge opportunity for you to define yourself and free yourself from the corporate shackles of past governments. The global financial meltdown provides you with the opportunity to define these self interested corporate managers for who they truly are......hangers on and opportunists seeking to exploit others for their nefarious ends.

We need numbers to keep government honest.

Monday, April 27, 2009

Mark Carnage

David Sweet, MP

There is no question that the income trust model may not have been appropriate for all businesses or sectors. Unfortunately the problem was addressed with a sledge hammer approach without any grandfathering provisions that could have saved the equity market carnage that was inflicted on unsuspecting Canadians relying on existing trusts for retirement. Harper has been caught in a lie because there was no grandfathering provision or selective thinking with regard to industries where the trust model makes sense such as the energy sector.

No one objects to proactive thinking in government to protect revenue flow but this decision appears to have backfired as the takeovers continue and future revenue flows disappear anyway. As for USA, there are sectors that continue as MLPs and some of these guys are the ones scooping up some of our good energy operations. So the Americans used some selectivity and we did not in curtailing the expansion of these structures across other industries.

David, the arguments about tax burden and fairness have never held up from the perspective of experts outside the government ranks and so we continue to beg to differ on this one. There is a fine line between acting clearly and decisively and acting impulsively without adequate information. It would have been better for our Government and for Canadians to have put a moratorium on new trust issues until adequate consultation with the private sector was done.

There is no way Flaherty should have recommended the move without wider inputs. This is where he broke with good process built over decades and lost the trust of those in the know outside the Government. Those who were left out of the process can only view the move as an exercise of arrogance, almost as big as when Harper poked Dion in the eye last Winter and almost lost control of the Government to a highly undesirable coalition.

I appreciate your time taken to respond to my concern, however, the points of the response are the same party line arguments that we have been hearing ever since the faux pas was made. I’m disappointed that there is no interest to address this matter from my constituency and I believe that with time the true impact of what was done will be even more negative than it is already showing and will be the legacy o f Steven Harper, Jim Flaherty and the Conservatives. Good leadership means admitting when mistakes are made and taking corrective action. Denial is not.

Again, David, thank you for responding


Xxxxxxx Xxxxxx, CA

Diane: "It's too bad the people in government aren’t as intelligent as you."

Diane – your article in the National Post concerning income trusts was excellent, and hit the nail on the head.  As a person that is currently semi-retired, I rely heavily on the income generated from my income trusts but am not spending anything right now until I see what is going to happen at the end of 2010.  If all of the other retirees have the same attitude as me, no wonder money isn’t flowing.  I have stopped putting money into the markets, no point in putting any in as the only stocks that were any good were those that were trusts and paid an income.  Dividend income isn’t any good as they pay such a small percentage.  A good income trust with a 10 to 20 percent return can be lived on, but dividend income can not. 

Currently I pay a lot of money into income tax because of my trust income, but that income is eroding, one of my trusts switched to a corporation, I now only get π of the income from that company than what I used to, and consequently I will pay less income tax next year than last, and that only hurts the government coffers.  I will wait to see what happens, and if Mr. Harper does not reverse his position on trusts, then I will start investing in the US equivalent as I need to maintain my income level.

During the election campaign, I watched Mr. Harper discuss how distressed his mother was over the losses in the stock market and how it was affecting her income.  Later, when being interviewed on TV from Washington at an economic conference he stated that he did not like to interfere with the free market system, and he would protect the most vulnerable, the seniors.  He has interfered with the free market system with his income trust decision, and he has definitely hurt the most vulnerable.  He has protected nobody but the large pension and insurance corporations. 

With my income the way it currently is, I would most likely lose most of my pension income as it will be clawed back.  If the income trust tax does come to pass, not only will the government get a lot less tax from me, but I will also be collecting my full pension and income supplement which costs the government a lot more money.  My standard of living will dramatically drop.  Mr. Harper’s mother, and myself really want to thank Mr. Flaherty and Mrs. Harper’s Son for tampering with the income trusts.

In December, Mr. Flaherty and Mr. Harper reversed their decision on the mini-budget they were proposing, after the 3 muskateers ganged up on him, Mr. Harper indicating that he had made a mistake, he had miss calculated the ramifications it would have.  He was humble enough to recognize a mistake and try to take measures to correct it in January, 2009.  I urge him to recognize the mistake he made in tampering with income trusts, reverse his decision, and help me and millions of other Canadians get the value of their income trust shares back as well as retain our monthly distributions so we can continue to pay our share of income taxes and support the government.

As a side point, one of the guests on BNN indicated that he was investing in Hydro Brazil, in order to replace the income he would lose in 2011 when the income trust change happens.  Personally I will be taking a lot of money and investing it outside Canada as will many others due to the decision to tamper with income trusts, and with all of this money flowing out of the country, this is definitely hurting the economy. 

Thanks again for your wonderful article, it is too bad the people in government weren’t as intelligent as you.

Mike G

Will the Liberals be able to get Harper to confess there is no (WMD) tax leakage?

Dear Ms. Francis;
As a long time subscriber and fan of your column I want to thank you for your weekend article on the income trust issue. You presented it very concisely and to the point. Surely even the mad Irishman can see the upside to canceling his horrendous error.
The positive benefits for all concerned it too hard to ignore. Even Harper can surely see that he would scoop the Liberals and at the same time garner back the votes he lost. Even George Bush finally admitted there were no WMD's in Iraq. The positive reaction in the markets would be beneficial to all investors/brokerages/banks/pension funds etc- the list goes on and on.
As you know the Liberals are having a convention this weekend in Vancouver. Maybe some effort could be brought to Iggy to take a stand on this issue- very publicly. I believe he should raise the issue in Question Period. I think many seniors who were staunch  big "C" conservatives are still waiting to see what the Liberal's actually DO on this issue. So far I think Mr. McCallum has been too quiet and he is the one who should be raising it again.
Anyways enough ranting- thanks again.
Rod Archibald

Excerpt from Garth Turner's book, Sheeple

This was probably what Harper told his trained Con seals when the Tax Fraudulent Plan, to turn Canada into a cleptocracy, was first announced to caucus:

“There will be impacts in some of your ridings. They will affect people, and you may be tempted to talk about them. But don’t. Anyone who has anything to say about this will soon find out they have a very short political career.”

—Harper, announcing program spending cuts during a caucus meeting

I guess Murray Leith is a loser....quite literally


there is a much bigger picture here , most people who own it's do so for the income , i compared my fund with aic advantage from july 01 to march 09 with $100,000 initial investment, we issued the fund at $10 in july 01 current unit price is $11.70 and has paid over $8 in income , with distributions added back, march value over $190,000 the aic advantage fund march 09 value $61,000, folks in equity funds that need income are encouraged to do a systematic withdrawal program by their advisors, redeeming a set amount every month .,the example of the chart i will re send to you is sending the Dynamic client $1000 per month , what would the aic fund be worth had a $1000 swip started in july 01 , i would argue it has been depleted to 0 , Murray Leith simply does not get it .

Look at the other comparisons in the chart , it will blow your mind.

Possible swine flu pandemic?

Before this swine flu pandemic had even broken as a story in the news, I happened to analogize Flaherty’s untreated income trust tax that has caused ongoing tax leakage to a “financial pandemic” Click here

Now that the swine flu pandemic has occurred, I see this matter in an entirely new light. There is very little any politician can do to protect Canadians against such a swine flu outbreak, that the “health officials” couldn’t and wouldn’t do on their own.

Meanwhile, the reverse is true of Flaherty’s tax leakage “financial pandemic”, in which there is no incentive whatsoever for the “finance officials” to admit their error, since as Brian Ernewein testified at the Public Hearings: “If we were incompetent, we wouldn’t admit to it.”

So here we have a case where politicians are quick to act on matters they have no control over, and sit on their hands and do nothing on the matters over which they have sole control. When is Parliament going to expose the lie about tax leakage?

Which Opposition Leader will perform the important function of Obama’s Empirical President ( as he seeks to be known as) to Harper’s Imperial Prime Minister, or have the corporations co-opted our politicians into a collective code of silence that would be counter to these executive’s NARROW SELF INTERESTS?

This is becoming the inescapable conclusion. I hope to be proven wrong.

It's about the democracy, stupid

Until the Opposition parties expose Harper’s blatant lie about tax leakage, Canada will not be a democracy but rather a cleptocracy, We haven’t forgotten how this garbage policy was “sold” in the first place or the corporate elite who hoisted these losses on us and who helped corrupt our democracy in the process by end running their shareholder owners and went squawking to corrupt politicians and bureaucrats in Ottawa to bring about that result. Never has Canada’s democracy been abrogated like this before. We won’t stand for it:

This from on Diane Francis' blog


All good points, especially the one about the Department of Finance being creative about "tax leakage".

So creative in fact, that they manufactured this fraudulent falsehood about so-called tax leakage, out of thin air:

Like Tom, neither Canada's Politicians nor Media should live in fear of reprisal

Tom said (on Diane Francis' blog)

"I may be a lone voice in this blog but that’s of no significance. What's far more significant is that the voters have spoken on the trust issue in the last election when a specific policy reversal was on the table."

Correction Tom, irrespective of whether you are the lone voice on this blog, you are clearly the lone idiot in this country who believes that a policy that was premised on the TOTAL FALSEHOOD of tax leakage should be allowed to stand, when that very policy itself is causing tax leakage.

You and Stephen Harper are like Typhoid Mary who brought typhoid to every home in which she worked, only to kill off each successive family, except in your case and that of Stephen Harper, his lies and incompetence are causing tax leakage, where none previously existed?

Smart? No, Brain dead dumb, like all of your blind faith and ridiculous arguments enumerated above.

Like Diane Francis has said from the very outset: "Prove the case or drop the tax".

That's why you were born with a use it supposedly. This isn't communist Russia after all, you are free to exercise your brain without fear of reprisal.

Your full name wouldn't be Tom Flanagan would it? Terry Corcoran? Jack Mintz? Paul Desmarais? Dominic D'Alessandro. Rev. Jimmy Jones?

Controversial income trust just issue won't go away

The Hill Times, April 27th, 2009

Controversial income trust just issue won't go away

Re: "Why this pesky income trust issue refuses to go away..." (The Hill Times, April 20, p. 17).

I'd like to take a moment to thank The Hill Times for allowing Brent Fullard, citizen journalist extraordinaire, the opportunity to express his views on behalf of income trust investors and all Canadian taxpayers, who have been adversely affected by Prime Minister Stephen Harper's inane and self-immolating trust policy.

Yes, these are the same investors who have been forgotten by the government in their rush for expediency in their desire to remove income trusts from investment portfolios everywhere. Without Mr. Fullard's tireless efforts and deep inside knowledge of the Canadian capital markets, this issue would have been buried by the "new" Conservative party back on Oct. 31, 2006.

Michael Popovich
Rodney, Ont.

• Thank you for publishing Brent Fullard's piece on the income trust fiasco. I know there are a couple of million people who were hurt, some devastated, by this and for some reason the media have pretty much stayed away from it. I really hope that you and some other courageous media people will try to figure out what happened.

Yes, Mr. Harper gets full blame. If he hadn't promised to protect Canadian seniors and leave income trusts alone we would have kept clipping bonds and, although our retirement would have been hard, it was possible. Now? I can't believe we were stupid enough to believe him.

They still refuse to disclose why they did it and we're left wondering what kind of shenanigans they're up to. I sure hope you will try to get to the bottom of it.

Neal Fisher
Winnipeg, Man.

• I want to thank you for publishing Brent Fullard's article about the income trust issue. This is an important issue for many of Canada's seniors and other investors.

For seniors, they are an important way to generate income to live on. The vast majority of Canadians do not have government pensions and must rely on themselves.

We must not forget the despicable actions of our government to go unchallenged.

When Finance Minister Jim Flaherty announced his tax on income trusts all his reasons for doing it could have been proven false by any reporter in the land.

Why are public servant pension plans allowed to continue while ordinary Canadians cannot? Why must ordinary Canadian pensioners pay double taxes on income from trusts?

There are many ways to assure tax fairness but taking from one group and giving to a much smaller privileged group is not the way.

Rick Drysdale
Sidney, B.C

• We need to keep this subject current and make Prime Minister Stephen Harper and Finance Minister Jim Flaherty know that this decision of taxing income trusts as corporations is ludicrous. Our senior income has drastically been affected by the arbitrary way in which it was mandated. They can change this and let us make them more accountable.

Gail Clark
Burlington, Ont.