Total Editorial hypocrisy from the National Post

My message to the National Posts’ Editors:

This is total hypocrisy coming from the Editorial Board of the National Post, who blindly supported the double taxation of RRSPs and special carve outs for pension plans under Flaherty's "Tax Fraudulent Plan".

So tell me, you have finally awoken to the reality that an investment vehicle is required that deals with the very dilemma that you now belatedly acknowledge of “The safest investments offer the lowest returns”? Meanwhile Trust Investors were more than happy to pay taxes on these businesses’ earnings at the rate of 38%, therefore the rest of your concern of “are taxed at the highest rate” is a non-operative concern and a figment of your imagination.......just like the tax leakage hoax propagated by people like Terry Corcoran and Jonathan Chevreau who was too busy flailing around “blaming the victim” than he was understanding one iota about which he wrote?

Canada's savings shell game

National Post
April 21, 2009


One of the fastest growing clubs in Canada is the one made up of workers who suddenly have discovered their retirement hopes are in peril. Their plight underlines the need for the federal and provincial governments to reassess punitive tax laws, and stop penalizing Canadians who seek to save a portion of their income for their retirement years.

On Friday, thousands of employees and pensioners at AbitibiBowater became the newest members of the club, as the giant newsprint company sought bankruptcy protection. They joined a throng that includes disillusioned workers at Nortel, Air Canada and the Big Three U. S. automakers, all wondering what, if anything, will be left of their pensions when the dust of the recession clears. Their situation resembles that of a homeowner who spends years scrupulously paying off a mortgage-- and then has his home repossessed anyway.

Added to the unhappy situation is the government's attitude toward savings.

On the surface, Canadians would seem to have plenty of tools encouraging them to save money. Up to $21,000 a year can be contributed to a registered retirement savings plan and protected from income taxation. This year, Ottawa added tax-free savings accounts to the mix, in which another $5,000 a year can be stashed.

The situation isn't all it appears, though. Canadians with company pensions promising a fixed return are prevented from contributing more than a small amount to RRSPs, on the assumption their company plan provides all the security they need. The catch -- as we are learning with each new bankruptcy -- is that private sector plans aren't guaranteed. If the company gets into trouble, the promised benefits suddenly disappear.

Anyone is free to invest their after-tax income outside of RRSPs, of course, but Ottawa's prejudice against saving intrudes again. The safest investments offer the lowest returns and are taxed at the highest rate, so that after inflation there is often little if any return. Anyone seeking to make even a modest profit is driven to take higher risks, yet even the most conservative of Canadian stocks -- the ones meant for "widows and orphans," as it were--are vulnerable to the broad market declines that come along every few years.

The upshot is that tens of thousands of Canadians find themselves in a no-win situation. They can't contribute to private-sector pensions with any guarantee of collecting in the end. They're prevented from contributing more than a minimal amount to RRSPs. Safe after-tax investments are heavily taxed, and riskier investments are hostage to forces beyond anyone's control.

Those pensioners left in the lurch at Abitibi, Nortel and similarly troubled companies will be more likely to turn to government support programs, adding to costs at a time when provincial and federal governments are spending more than they bring in. Quebec already has offered $100-million to help out Abitibi, while Ontario has confessed that a program meant to safeguard pension payments doesn't have nearly enough money in it to cover all the demands.

Ottawa's attitude is a mystery. Why penalize those who seek to provide for themselves rather depend on government? A lot is changing in Ottawa due to the economic crisis, and tax policy on savings should be near the top of the list.